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Minister of Environment and Climate Change Steven Guilbeault takes part in a news conference in Ottawa, on Sept. 15.Adrian Wyld/The Canadian Press

Canada’s Environment Minister said he sees at least one advantage of using an emissions cap over a pricing system to bring down the oil and gas industry’s burgeoning output of greenhouse gas.

In an interview on Monday with The Globe and Mail at the COP27 climate conference in Egypt, Steven Guilbeault, who has been Minister of Environment and Climate Change for a year, said “one of the advantages of a cap is emissions reduction certainty.” That is, a cap would allow the government to predict with some degree of accuracy that Canada’s emissions targets would be met.

Canada is struggling to reduce its carbon output by at least 40 per cent by 2030 and achieve net-zero emissions by 2050. The government wants the oil and gas industry to cut its emissions by 42 per cent from 2019′s levels by 2030.

A modified carbon pricing system is the alternative to a cap, although both systems would cap and cut emissions from the sector.

Mr. Guilbeault insisted no decision has been made on which route the government will take, although he acknowledged the “predictability” of emissions reductions as a benefit of a cap system. He expects a decision to be made by the spring, after a long consultation period, with regulations to be put in place by the end of 2023.

Prime Minister Justin Trudeau, who was a no-show at COP27, had promised some sort of emissions cap during his 2021 election campaign.

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Canada’s oil and gas industry, dominated by the Alberta oil sands, is responsible for slightly more than a quarter of all emissions. Mr. Guilbeault has criticized the industry for raking in record or near-record profits as energy prices rise, while devoting relatively small amounts of that lavish income to carbon-reduction.

“I find this somewhat puzzling and aggravating at the same time,” he told The Globe. “Canada cannot not do our fair share internationally if they don’t reduce their emissions.”

A price cap would be part of a cap-and-trade system that would apply specifically to the oil and gas industry.

The industry’s total emissions would be divided into allowances that would be allocated to individual companies. As the emissions cap is tightened, companies that fail to reduce their emissions fast enough would have to buy credits from rivals that had more success in bringing down their carbon output.

The pricing option would encourage emissions reductions by modifying, perhaps boosting, the levy on carbon output. In April, the government set the tax at $50 per tonne of carbon dioxide. It is to rise to $65 next year and is set to reach $170 in 2030.

Once again, Canada has come under pressure to cut its emissions as fears intensify that the Paris Agreement goal of limiting global average temperature increases to 1.5 C over preindustrial levels will not be met. Average temperatures have climbed 1.1 C as global emissions continue to rise.

On Monday, the new edition of the Climate Change Performance Index placed Canada in the 58th spot among the 63 countries on the list, though that was up from 61st last year. Only Russia, South Korea, Kazakhstan, Saudi Arabia and Iran ranked lower. The index is a blended ranking that measures factors such as emissions, energy use, renewable energy rollout and climate policy.

In a statement, the CCPI, which was designed by the Germanwatch environmental group, said that Canada’s output reduction trajectory is “not 1.5 C compatible and must be considerably strengthened.” It also was critical of Canada’s intentions to keep boosting the country’s oil, gas and coal production.

While acknowledging Canada has a lot of work to do to meet its legally binding net-zero commitment, Mr. Guilbeault said the country’s methane reduction plan was working well; regulated output reductions are happening quickly. The goal is a 40 per cent to 45 per cent reduction in methane emissions by 2025, and 75 per cent by 2030, making it one of the most ambitious targets in the world.

“I suspect we will get there sooner than 2025 by the looks of it,” he said. “I think Saskatchewan is almost there, and I think Alberta is not too far away.”

Methane reductions globally are a key part of the battle to keep the 1.5 C goal alive, since the gas is about 25 times more potent than carbon dioxide in trapping heat in the atmosphere.

Speaking at a climate event on Wednesday, John Kerry, the U.S. Special Presidential Envoy for Climate, said he has been trying to work with China on methane reductions. But he said relations with China are strained because of House Speaker Nancy Pelosi’s visit to Taiwan in August. He said that China called off a “major negotiating session” ahead of COP27 because of her visit.

Mr. Guilbeault said Canada supports discussions to design a “loss and damage” fund, but appeared to hold out little hope that the fund’s architecture would make much progress by the time COP27 ends on Nov. 18.

The fund would pay for reparations triggered by catastrophic climate events, such as the floods that inundated Pakistan earlier this year. The fund would recognize that carbon emissions from rich, industrialized countries are largely responsible for causing such damage – and make then pay for it.

“It can’t be about liability,” he said. “I can’t put Canadians on the hook for tens of billions of potential damages in the developing world.”

Other ministers and leaders from wealthy countries have said the same. Mr. Guilbeault, however, said discussions need to be held about the design, implementation and financing of any loss and damage fund, such as whether it should come from public, private or international financial institutions such as the World Bank.

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