Oil and Gas Greenhouse Gas Pollution Cap – Backgrounder to CGI Regulations
Ottawa, Ontario – November 4, 2024 – On April 1, 2023, the Government of Canada introduced the Clean Growth Incentive (CGI) Regulations under the Greenhouse Gas Pollution Pricing Act (GGPPA). These regulations set out requirements for facilities that emit greenhouse gases (GHGs) from oil and gas operations to reduce their emissions or pay for the pollution they create.
Background
The oil and gas sector is Canada’s largest industrial emitter of GHGs, accounting for approximately 26% of total emissions. The CGI Regulations are a key part of Canada’s plan to reduce GHG emissions from this sector and meet its climate change commitments.
The CGI Regulations are designed to:
- Set a declining GHG emissions cap for the oil and gas sector, starting in 2024
- Require facilities that exceed the cap to reduce their emissions or pay a levy
- Provide incentives for facilities that reduce their emissions below the cap
Key Elements of the CGI Regulations
- Facilities subject to the regulations include those that emit 10,000 tonnes of CO2 equivalent or more per year from oil and gas operations.
- The GHG emissions cap will decline by 4.5% annually, starting in 2024.
- Facilities that exceed the cap will be required to reduce their emissions or pay a levy of $60 per tonne of CO2 equivalent for excess emissions.
- Facilities that reduce their emissions below the cap will be eligible for credits that can be sold to other facilities.
- The regulations include a range of measures to support facilities in reducing their emissions, such as technology and innovation, energy efficiency, and carbon capture and storage.
Implementation
The CGI Regulations will be implemented in phases:
- Phase 1 (2024-2027): Reporting and quantification requirements will come into effect, and facilities will be required to register with the federal government.
- Phase 2 (2027-2030): The GHG emissions cap will be introduced, and facilities will be required to reduce their emissions or pay a levy for excess emissions.
- Phase 3 (2030 onward): The emissions cap will continue to decline, and additional measures to support emission reductions will be introduced.
Benefits of the CGI Regulations
The CGI Regulations are expected to significantly reduce GHG emissions from the oil and gas sector, contributing to Canada’s climate change goals. The regulations are also expected to:
- Drive innovation and investment in clean technologies.
- Create economic opportunities in the clean energy sector.
- Enhance Canada’s competitiveness in the global clean energy market.
Consultation and Engagement
The Government of Canada has been consulting with provinces, territories, Indigenous peoples, industry, and other stakeholders throughout the development of the CGI Regulations. The government is committed to working with these stakeholders to ensure the successful implementation of the regulations.
Additional Information
For more information on the CGI Regulations, please visit the following website:
Oil and gas greenhouse gas pollution cap – Backgrounder to CGI Regulations
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