Oil and gas cap framework being crafted with recent court decisions in mind, Guilbeault says

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The federal government is taking longer than expected to craft its oil and gas emissions cap, in part because of recent court decisions that found Ottawa had overreached with previous environmental protection laws.

Environment Minister Steven Guilbeault explained the delay at a Friday news conference in Dubai, where he is attending the latest round of United Nations climate talks, called COP28.

Prime Minister Justin Trudeau first announced the oil and gas emissions cap during the 2021 election campaign, as part of the government’s effort to reach net-zero greenhouse-gas emissions across the economy by 2050. The fossil fuels industry is responsible for the largest share of Canada’s emissions.

The government has repeatedly delayed releasing the policy, which it has previously said will take effect in 2025.

The cap would put a ceiling on emissions, which would then decrease in five-year increments. On Wednesday, Mr. Guilbeault said he expects to release a framework for the cap during COP28, which began Thursday and runs for two weeks.

Although the cap is a critical part of Canada’s emissions-reduction policies, it is potentially open to legal dispute. Under the Constitution, natural resource development falls under provincial purview. But the Supreme Court has ruled that the federal government can set limits on greenhouse-gas emissions because climate change requires a national response.

While Ottawa’s federal carbon-pricing law was upheld by the Supreme Court, the court deemed the government’s environmental assessment law unconstitutional. Its ban on some single-use plastics was struck down in Federal Court.

The latter two decisions, which both landed this fall, gave the minority Liberals pause as they continued crafting their sector-specific emissions cap for the oil and gas industry, Mr. Guilbeault said.

He said the government is taking the time to ensure its proposed emissions cap is on the right side of the line between Ottawa’s authority to regulate emissions and provincial jurisdiction over natural resources.

“That has meant that it has taken a little bit more time than maybe we had initially anticipated,” Mr. Guilbeault said.

Alberta strongly opposes the emissions cap. The provincial government has said the measure would be unconstitutional and act as a de facto production cap.

In a statement sent to The Globe and Mail on Friday, Alberta Premier Danielle Smith said the province would fight the imposition of the cap.

“Ottawa has no constitutional authority to regulate in these areas of exclusive provincial jurisdiction,” Ms. Smith said. “We would strongly suggest the federal government refrain from testing our government’s or Albertans’ resolve in this regard.”

She accused Mr. Guilbeault of making “unilateral and unconstitutional policy pronouncements that threaten the economic well-being of Albertans and Canadians.”

Stewart Elgie, a law professor and director of the Institute of the Environment at the University of Ottawa, said he believes the federal government is on “pretty strong constitutional ground” with regulations on oil and gas emissions.

He said he expects the rules to be made under the Canadian Environmental Protection Act (which has already been upheld by the Supreme Court) and to rely on Ottawa’s criminal law power under the Constitution.

Prof. Elgie said that in the Supreme Court’s recent decision to strike down the environmental assessment law, it still confirmed that Ottawa has broad, but not unlimited, authority over the environment and climate change. This is something he said lawyers for Alberta and Saskatchewan had conceded.

Although it is difficult to assess the cap’s constitutionality absent details of how it would work, University of Alberta law and economics professor Andrew Leach said Ottawa risks overreaching. If the sector-specific cap ends up in a legal challenge, he said, the court’s decision will hinge on whether it views the policy as an emissions regulation or a resource regulation.

“My sense has always been that it’s a bridge too far, but I’ll be in the minority on that among legal scholars,” Prof. Leach said.

The federal government argues that the cap won’t hurt the oil and gas sector, because the industry must decarbonize in order to remain competitive in an economy transitioning to net-zero emissions. But in an interview with The Globe this week, Kendall Dilling, the chief executive officer of the Pathways Alliance, a major carbon capture project, cautioned that the cap could put a chill on investment.

“There could be some unintended consequences with an emissions cap in terms of it sending the wrong signal to the investment community that there isn’t support for the industry, which we don’t believe to be the case,” Mr. Dilling said.

“We believe to the extent we can shore up our ability to decarbonize, that there is broad support in Canada for providing low-carbon, responsibly produced barrels of oil to global markets for as long as those markets exist.”

With a report from Emma Graney