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Canada, one of the world’s largest oil producers, is set to announce a significant emissions cap on carbon-based energy sources, according to Reuters. The plan, expected on Monday, will cut C$1 billion ($760 million) annually in federal support for oil, gas, and coal production as part of Canada’s goal to reduce greenhouse gas emissions by 40-45% from 2005 levels by 2030.

The government’s strategy includes setting a gradually tightening emissions cap on oil and gas. According to Canada’s Emissions Reduction Plan, this sector must reduce emissions to 110 million metric tons by 2030 to meet national targets.

Supporters believe the cap will push companies to adopt carbon capture and storage (CCS) technologies to curb emissions without cutting production. However, Alberta officials warn that high CCS costs could limit production, risking up to 150,000 jobs and potentially reducing GDP by as much as C$1 trillion ($720 billion).

Advocates argue that with oil and gas accounting for over a quarter of Canada’s emissions, the cap is critical. Oil and gas emissions rose to 189 million metric tons in 2021—a 3% increase from 2020—counteracting other sectors’ decarbonization efforts.

As Canada seeks to balance economic impact with climate goals, industry and environmental groups are closely watching the outcome of this policy shift.

Written by: Derek Yong