Conservatives Urge Liberals to Cancel Oil and Gas Emissions Cap

OTTAWA — The Conservative Party is calling on the Liberal government to immediately cancel its oil and gas emissions cap, which has yet to be fully implemented. In a session of the House of Commons on Monday, Conservative Leader Pierre Poilievre argued that even the preliminary stages of the cap are deterring private investment in the oil and gas sector, potentially resulting in billions of dollars in lost opportunities.

“It turns out that nobody wants to build a pipeline when the government bans you from producing the oil to put into it,” Poilievre stated, expressing his discontent with the current policy. He is advocating for a motion that would compel Prime Minister Mark Carney to repeal the existing emissions cap.

The cap, a significant commitment from the Liberal Party during the 2021 election campaign, operates as a cap-and-trade system that imposes mandatory reduction targets on industrial emitters. Draft regulations released last fall proposed an initial cap of 35 percent below 2019 emission levels, set to begin in the early 2030s. Noncompliance could result in fines reaching $12 million.

Reports earlier this month indicated that the Carney government might consider abandoning the emissions cap in exchange for commitments to reduce emissions from both the province of Alberta and oil and gas companies. In response, Poilievre urged the Liberals to clarify their position: “If they vote to keep their production cap in place, it will signal that all the flirtations that the prime minister has done, with the possibility of producing more or building pipelines, were nothing more than an illusion.”

The implications of the emissions cap are significant, as the Parliamentary Budget Officer estimated in March that under the current draft regulations, the cap could eliminate 54,400 full-time jobs and reduce nominal GDP by $20.5 billion annually by 2032. This estimate has sparked a contentious debate between the Parliamentary Budget Officer and Liberal officials, who contend that the estimates do not adequately account for potential improvements in carbon capture technologies.

Liberal MP Corey Hogan, who serves as the parliamentary secretary for energy, criticized the Conservative motion, suggesting that the party’s stance is rooted in fear rather than optimism about the future of the energy industry. “I don’t think there’s an environmental regulation the Conservatives don’t think would kill the pipeline industry in Canada,” he said. “The chicken little routine is getting a little bit tiresome.”

In contrast, energy analyst Heather Exner-Pirot noted that while the Conservative motion is unlikely to succeed, it positions the party favorably in the ongoing debate. “This cap was terrible policy from day one, and it now looks to be on its last legs,” she remarked, suggesting that the Conservatives aim to document their opposition to the policy.

Environment Minister Julie Dabrusin confirmed earlier this month that the government is still reviewing feedback on the draft regulations from 2024, with no specific timeline established for releasing the final regulations. “All of that feedback has been gathered and we’re continuing to work through that feedback,” she stated.

As the debate continues, the future of the emissions cap remains uncertain, with potential implications for Canada’s oil and gas industry and broader climate goals.