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Canada Targets Oil & Gas Emissions, Introduces Framework
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Canada’s Liberal government recently revealed a regulatory framework for capping emissions in the country’s oil and gas sector, aiming to reign in pollution without limiting production. Environment minister Steve Guilbeault highlighted the sector's significant emissions, responsible for 28% of Canada's total.
The framework proposes a 2030 emissions cap at 35-38% below the 2019 levels, culminating in net-zero emissions by 2050. Published now for industry input, the detailed regulations are expected in mid-2024. The suggested blueprint entails a cap-and-trade mechanism, offering flexibility in achieving targets. Emitters can opt to acquire offset credits or contribute to a decarbonization fund, reducing mandatory reductions to 20-23% while being allowed to increase production by 12% from 2019 levels.
Some notable Canadian Oil/Energy firms that could be impacted by the proposed regulatory framework include Suncor Energy (SU - Free Report) , Canadian Natural Resources (CNQ - Free Report) and Imperial Oil Limited (IMO - Free Report) , among others.
Targets Moderated to Avoid Legal Conflicts
The emissions limits set by Canada for its fossil fuel industry, aiming for a 35-38% reduction by 2030, are less aggressive than the initial 42% target. This adjustment, attributed to recent court decisions, seeks to avoid legal conflicts with provinces. The framework's implementation by 2026 considers achievable reductions and aims to balance climate action without jeopardizing production. Provinces like Alberta strongly oppose the plan, viewing it as an intentional attack on their economy and resources.
Provinces Critical of the Plan
Leaders in energy-producing provinces like Alberta and Saskatchewan criticized the emissions cap plan, considering it a threat to their economies. Alberta Premier Danielle Smith sees it as an intentional attack, while Saskatchewan Premier Scott Moe anticipates increased regulations hindering the oil and gas sector. The federal government asserts that the framework aligns with Canada's net-zero 2050 target and invites input. Provinces have voiced concerns about economic impacts and intend to protect their constitutional rights for economic development.
Environmentalists Lukewarm to the Proposal
Environmentalists generally support Canada's emissions cap framework, but concerns arise regarding the timeline, with calls for more rapid implementation. They see the plan positively, citing it as an instance of combining diplomacy with domestic action. While there is unanimity in underscoring the significance of meaningful emissions reduction in the oil and gas sector, climate advocates emphasize the urgency for prompt action.
Canada Bets on a Two-Pronged Approach
Canada's federal government has introduced a dual approach to cut fossil fuel emissions. The framework proposes a 20-23% decrease through technological changes, allowing additional reductions through offsets or a decarbonization fund. Industry critics argue the new regulatory system is overly complex, impacting investment and job losses. The government insists that the approach aims to balance emission cuts without hampering production, aligning with Canada's net-zero goals by 2050.
Companies That Could be Affected
While all Canada-based energy firms will come under the purview of the proposed regulations, we look at three of the biggest names in the space:
Suncor Energy: Founded in 1917, Alberta-based Suncor Energy is Canada's premier integrated energy company. The Zacks Rank #3 (Hold) company’s operations include oil sands development and upgrading, conventional and offshore crude oil and gas production, petroleum refining, and product marketing. SU is one of the largest owners of oil sands in the world.
Canadian Natural Resources: Established in 1973, Canadian Natural Resources Limited is one of the largest independent energy companies in Canada engaged in the exploration, development and production of oil and natural gas. The #1 Ranked company boasts a diversified portfolio of crude oil (heavy as well as light), natural gas, bitumen and synthetic crude oil.
Imperial Oil: Founded in 1880, Imperial Oil Limited is one of the largest integrated oil companies in Canada, mainly engaged in the oil and gas production, petroleum products refining and marketing and chemical business. The Zacks Rank #3 company is Canada’s largest jet fuel supplier and a major producer of asphalt.
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Canada Targets Oil & Gas Emissions, Introduces Framework
Canada’s Liberal government recently revealed a regulatory framework for capping emissions in the country’s oil and gas sector, aiming to reign in pollution without limiting production. Environment minister Steve Guilbeault highlighted the sector's significant emissions, responsible for 28% of Canada's total.
The framework proposes a 2030 emissions cap at 35-38% below the 2019 levels, culminating in net-zero emissions by 2050. Published now for industry input, the detailed regulations are expected in mid-2024. The suggested blueprint entails a cap-and-trade mechanism, offering flexibility in achieving targets. Emitters can opt to acquire offset credits or contribute to a decarbonization fund, reducing mandatory reductions to 20-23% while being allowed to increase production by 12% from 2019 levels.
Some notable Canadian Oil/Energy firms that could be impacted by the proposed regulatory framework include Suncor Energy (SU - Free Report) , Canadian Natural Resources (CNQ - Free Report) and Imperial Oil Limited (IMO - Free Report) , among others.
Targets Moderated to Avoid Legal Conflicts
The emissions limits set by Canada for its fossil fuel industry, aiming for a 35-38% reduction by 2030, are less aggressive than the initial 42% target. This adjustment, attributed to recent court decisions, seeks to avoid legal conflicts with provinces. The framework's implementation by 2026 considers achievable reductions and aims to balance climate action without jeopardizing production. Provinces like Alberta strongly oppose the plan, viewing it as an intentional attack on their economy and resources.
Provinces Critical of the Plan
Leaders in energy-producing provinces like Alberta and Saskatchewan criticized the emissions cap plan, considering it a threat to their economies. Alberta Premier Danielle Smith sees it as an intentional attack, while Saskatchewan Premier Scott Moe anticipates increased regulations hindering the oil and gas sector. The federal government asserts that the framework aligns with Canada's net-zero 2050 target and invites input. Provinces have voiced concerns about economic impacts and intend to protect their constitutional rights for economic development.
Environmentalists Lukewarm to the Proposal
Environmentalists generally support Canada's emissions cap framework, but concerns arise regarding the timeline, with calls for more rapid implementation. They see the plan positively, citing it as an instance of combining diplomacy with domestic action. While there is unanimity in underscoring the significance of meaningful emissions reduction in the oil and gas sector, climate advocates emphasize the urgency for prompt action.
Canada Bets on a Two-Pronged Approach
Canada's federal government has introduced a dual approach to cut fossil fuel emissions. The framework proposes a 20-23% decrease through technological changes, allowing additional reductions through offsets or a decarbonization fund. Industry critics argue the new regulatory system is overly complex, impacting investment and job losses. The government insists that the approach aims to balance emission cuts without hampering production, aligning with Canada's net-zero goals by 2050.
Companies That Could be Affected
While all Canada-based energy firms will come under the purview of the proposed regulations, we look at three of the biggest names in the space:
Suncor Energy: Founded in 1917, Alberta-based Suncor Energy is Canada's premier integrated energy company. The Zacks Rank #3 (Hold) company’s operations include oil sands development and upgrading, conventional and offshore crude oil and gas production, petroleum refining, and product marketing. SU is one of the largest owners of oil sands in the world.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Canadian Natural Resources: Established in 1973, Canadian Natural Resources Limited is one of the largest independent energy companies in Canada engaged in the exploration, development and production of oil and natural gas. The #1 Ranked company boasts a diversified portfolio of crude oil (heavy as well as light), natural gas, bitumen and synthetic crude oil.
Imperial Oil: Founded in 1880, Imperial Oil Limited is one of the largest integrated oil companies in Canada, mainly engaged in the oil and gas production, petroleum products refining and marketing and chemical business. The Zacks Rank #3 company is Canada’s largest jet fuel supplier and a major producer of asphalt.