Ottawa is reportedly in active talks to drop the planned oil-and-gas emissions cap this autumn, replacing it with a broader “climate competitiveness strategy” after sources said the cap—set at 137 million tonnes by 2030, or 37% below 2022—could be scrapped if Alberta and producers deliver alternative reductions.
The cap has never been legislated but has drawn consistent industry opposition on grounds it would effectively constrain production.
The policy shift would mark a sharp departure from campaign-trail messaging when Prime Minister Mark Carney said he would keep the cap, and drafts released last year under the previous government envisioned a 2030 limit via regulation.
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The Environment Department confirmed it is reviewing feedback on the cap and reiterated that mechanisms like caps can play a role but “we are not going to get there through regulation alone.”
Natural Resources Minister Tim Hodgson declined details but underscored a results-first stance: “What I can tell you is that our government is focused on results, not how we get there.”
Two sources said any move to drop the cap would hinge on “renewed, serious commitments” from Alberta and the oil sands—explicitly including progress on the Pathways carbon capture and storage hub. While the CCS project sits at the center of industry decarbonization plans, regulators and investors will look for concrete timelines and capital commitments if the cap is to be traded away for other measures.
Oil and gas remains Canada’s highest-emitting industry. Without materially faster decarbonization from the sector, Ottawa risks missing its national 40%–45% reduction pledge by 2030 versus 2005 levels. Under the cap proposal, sector emissions were to be forced down to 137 Mt by 2030.
Carney’s team aims to unveil the climate competitiveness strategy later this fall as the emissions cap file remains unlegislated and under consultation.
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