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Canada’s government unveiled a draft framework Thursday for a cap-and-trade system to impose greenhouse gas emission limits on its oil and gas industry, a move hailed by climate and environmental groups and angrily opposed by industry players and the leader of the energy-rich Alberta province.
In a rule that would be finalized in 2025, the sector would be required to cut emissions by 35%-38% from 2019 levels beginning in 2030 but could buy offset credits; the government then would keep lowering allowances in stages until the industry reaches net zero by 2050.
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Alberta Premier Danielle Smith vowed to defy the federal regulations, calling the plan a “de facto production cap on Alberta’s oil and gas sector [that] amounts to an intentional attack by the federal government on the economy of Alberta.”
Environment Minister Steven Guilbeault announced the plan at the COP28 climate summit in Dubai, saying “there is no future for this industry unless they decarbonize,” and “if we continue to produce the most carbon-heavy oil in the world, people won’t buy it.”
The top global crude oil benchmarks fell for the sixth straight session Thursday, with front-month WTI for January delivery (CL1:COM) down less than 0.1% to $69.34/bbl and February Brent crude (CO1:COM) settling -0.3% to $74.05/bbl.
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Crude prices have fallen sharply since the November 30 OPEC+ meeting that underwhelmed traders with a round of additional voluntary cuts, sparking questions about compliance.
Russia’s Vladimir Putin joined Saudi Crown Prince Mohammed bin Salman in Riyadh on Thursday to call for all OPEC+ members to participate in the agreement.
Worries about demand also have plagued the market, and S&P Global reported Thursday that crude imports by China in November fell to 10.37M bbl/day, lowest in four months.
