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Court Rulings Have Complicated Canada Promise on Oil-and-Gas Carbon Caps, Minister Says - MarketWatch

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By Paul Vieira

OTTAWA-Canada's Environment Minister said Friday that court rulings this fall that deemed certain of his government's climate-change policies as unconstitutional have delayed efforts to unveil a long-promised cap on oil-and-gas sector emissions.

Steven Guilbeault, speaking to reporters from Dubai at United Nations' annual climate talks, said the government intends to provide details of its oil-and-gas emission cap for energy producers before 2023 ends. The Liberal government promised such caps during its 2021 re-election campaign, to ensure carbon output from the industry doesn't increase from current levels and help achieve its carbon-reduction targets - chief among them, reaching net-zero emissions by 2050.

Prior to heading to Dubai, Guilbeault said he may reveal the broad outline of the policy while in the Middle East, where global policy makers are gathered to assess progress toward targets agreed to in a landmark 2015 climate-change treaty.

Complicating matters, Guilbeault said Friday, were court decisions issued in October and November that found two key Liberal government policies aimed at addressing climate change as unconstitutional. In October, the country's Supreme Court said the environmental-assessment regime intruded on the exclusive rights, as embedded in the country's constitution, to manage their natural resources. And last month, a Federal Court of Canada judge said the government's ban on some single-use plastics was unconstitutional and unreasonable, and that the decision-making process was flawed.

Those court rulings, Guilbeault said, indicated the federal government can intervene in matters related to pollution, but "we have to be very careful not to impede on privilege on provincial jurisdictions. That has meant we have to make sure that our regulation does exactly that."

He added that as a result, "it has taken a little bit more time than maybe we had initially anticipated" in releasing its promised oil-and-gas emission caps. The resource-rich Canadian provinces of Alberta and Saskatchewan have opposed the Liberal's government's cap plan.

Legal experts, such as Alan Harvie, a lawyer with environmental expertise at Norton Rose Fulbright, have said the court rulings might force Canada to scale back its ambitions regarding climate change.

Among Canadian industrial sectors, the oil-and-gas industry accounts for about 28% of total greenhouse-gas emissions, government data indicate. "It doesn't make any sense to anyone that the oil-and-gas sector should have an unlimited ability to pollute," Prime Minister Justin Trudeau said earlier this week, when asked about opposition to the promised policy measure.

Canadian business groups and economists have warned the government that such a cap could undermine its carbon-tax scheme, which is intended to treat all emissions equally.

Write to Paul Vieira at paul.vieira@wsj.com

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