Sources say that Canada could drop its oil emission cap as part of a new climate plan

Three sources familiar with the discussions said that the Canadian government was in talks with Alberta and energy companies about removing a federal cap on the emissions of the oil and gas industry if they reduced their carbon footprints in other ways. Three sources who weren't authorized to publicly discuss the talks said that the government of Prime Minister Mark Carney has discussed the removal of the cap with the oil companies and Canada’s top oil producing province if both parties make other concessions on the environment. The legislation to implement Canada's emission cap is still pending. The prospect of a cap has been widely condemned by Canadian oil companies, who say it would force them to reduce production. Carney, who was elected in April on a promise to protect Canada's economic interests from U.S. Tariffs, has been criticized for moving away from the environmental focus of his Liberal Party.

Sources said that the tone of his government has changed dramatically from a few short weeks ago. They added that officials had suggested until recently that the cap on emissions would remain in place. Carney stated during his election campaign that he would maintain the cap on emissions, which will not take effect until 2030. Justin Trudeau, his predecessor, published draft regulations on the cap in November last year. Sources said that the current discussions could lead to the cap being scrapped in order to implement a new "climate competition strategy" which the federal government plans to announce later this fall.

Carney's Office referred an inquiry for comments to the federal Environment Department, which did no respond immediately.

Canada's Natural Resource Minister Tim Hodgson refused to disclose details of the negotiations but stated in an interview with the media on Thursday that the federal government was committed to providing clean and conventional energy while being environmentally responsible.

Hodgson: "I can tell you that our government is focused not on how we get to where we are going, but the results."

Two sources stated that any move to remove the cap would depend on Alberta and its oil sector renewing their commitments to reduce emissions, including but not limited moving forward with the Pathways Carbon Capture and Storage project.

Carney, speaking at an Edmonton meeting of the ruling Liberal Party this week, said that Canada's new strategy for climate competitiveness will be based on "results rather than objectives and investment over prohibition".

The oil and gas industry is the most polluting in Canada. Its emissions are increasing due to increased production of the country's Oil Sands region.

Ottawa is unlikely to meet its international climate commitments to reduce greenhouse gas emissions by 40 to 45% from 2005 levels by the year 2030, unless oil and gas sectors intensify their efforts to decarbonize.

The cap would force the oil and gas industry to reduce emissions by 37%, or 137 million tons, below the levels of 2022, by 2030. Carney pledged to make Canada "the world's leading superpower in energy", advancing clean energy development and making the conventional oil-and-gas sector more competitive.

He also tries to repair the federal relationship with Alberta that had been strained under Trudeau due to their heavy focus on environmental concerns. (Reporting from Amanda Stephenson, Calgary; Additional reporting by David Ljunggren, Ottawa; Editing done by Caroline Stauffer and Marguerita Choy)

(source: Reuters)