This article originally appeared in Alberta Views.
By Heather Exner Pirot, November 3, 2025
Heather Exner-Pirot, the senior fellow at the Macdonald-Laurier Institute, says no.
Greenhouse gas emissions contribute to climate change, and it’s in our self-interest to reduce them. By doing so we would also improve air and water quality. I’m for reducing emissions. But the question is whether Canada should cap oil and gas emissions. I say no, and the main reason is that oil and gas isn’t under Canada’s jurisdiction; it’s under Alberta’s.
Section 92A(1) of the Constitution Act affirms that provinces have the “exclusive” ability to make laws for the “development, conservation and management” of non-renewable natural resources. This was tested with the Supreme Court’s October 2023 ruling in Reference re: Impact Assessment Act. The majority identified that the federal government’s broad scope of “effects within federal jurisdiction” under the IAA would allow them to deny projects solely based on their GHG emissions. They determined that this eroded the balance inherent in the Canadian federal state and was unconstitutional.
Indeed, Alberta has already exercised its jurisdiction on this issue and does have a cap on its oil sands emissions. It passed legislation in 2017, under the Notley government, and limits total oil sands emissions to 100 megatonnes (MT) annually. Currently the oil sands emit about 80.1 MT, and there is no foreseeable future where they would exceed that cap. Emissions intensity—the amount of CO2e per barrel produced—has declined in the oil sands for six straight years.
So, Canada has no jurisdiction to cap oil and gas emissions, and Alberta has already capped its oil sands emissions. This should be the end of the debate. It’s not, however, because the federal government has expressed its intention to impose an emissions cap on Canadian oil and gas and has proposed draft regulations to that effect. These would be a disaster on every front: economically, politically, legally and technically.
It would be hard to imagine a more expensive or divisive policy. The regulations are a relic of Trudeau-era ideology rejected in the 2025 election. They wouldn’t just cut emissions but would cut production too: of oil sands oil, conventional oil, natural gas and liquids such as propane. They would result in less investment, fewer jobs, a diminishment of royalties and corporate taxes, no new LNG terminals, no new pipelines, no Atlantic offshore development and no new export markets. Just the threat of them has already harmed the economy.
The Parliamentary Budget Officer determined that the cost of the emissions cap to Canada’s GDP would be $20.5-billion by 2032 and that the cap would cut 7.1 megatonnes of GHGs. That’s an implied carbon price of $2,887 per tonne. Prime minister Mark Carney “axed” the consumer carbon tax of $80 per tonne. If our goal is to cut emissions, it could be done more cheaply by means other than an oil and gas emissions cap.
Canadians want to build infrastructure, grow the economy and diversify trade. No policy threatens this more than the proposed emissions cap does. It needs to be quashed, for good.
Aly Hyder Ali responds to Heather Exner-Pirot
Heather Exner-Pirot argues that Canada should not cap oil and gas emissions, citing constitutional overreach, economic harm and lack of necessity. But closer scrutiny shows these claims don’t hold. The oil and gas sector is Canada’s largest source of climate pollution, its voluntary emissions reduction methods have failed, and a federal cap is both legally justified and economically necessary.
Exner-Pirot references provincial powers under Section 92A of the Constitution and the 2023 Impact Assessment case. But this misrepresents the scope of federal powers. The Supreme Court has repeatedly affirmed that the federal government has authority over matters of “national concern.” GHG emissions are transboundary pollutants, which means that what Alberta emits affects Quebec, Ontario and the Atlantic provinces. The 2021 Supreme Court reference case on carbon pricing explicitly upheld Ottawa’s right to regulate GHG emissions, calling this a national concern. A federal cap on oil and gas emissions targets pollution, not resource extraction, making it constitutional.
Yes, the oil and gas industry has made some progress in reducing emissions intensity. But total oil and gas emissions continue to be Canada’s largest source of climate pollution. Since 2005 oil and gas emissions have increased significantly, even as other sectors have shrunk theirs.
Exner-Pirot also foresees job losses and GDP decline under an oil and gas emissions cap. But global markets are already shifting: the International Energy Agency projects global demand for fossil fuels will peak this decade. Supporting fossil fuel expansion is bad for the environment and economically irresponsible. Conversely, clean energy investments are surging worldwide.
She also highlights the cost per tonne of reductions but ignores the massive economic and health damages tied to climate inaction. Climate disasters are increasingly expensive: 2024 was the costliest year for severe-weather-related insurance losses in Canadian history, at over $8-billion. And this is only expected to get worse, as 2025 is already our second-worst wildfire season ever. Furthermore, the Canadian Climate Institute estimates that climate impacts will reduce Canada’s GDP by $25-billion starting this year. The damage will only spread if we ignore climate change.
The health costs too are staggering. Air pollution from fossil fuels causes an estimated 34,000 premature deaths annually in Canada, with direct economic and societal consequences. Additionally, a recent study published in the journal Science shows that air pollution from the Athabasca oil sands may be up to 6,300 per cent higher than industry-reported figures. This pollution would rival all other human-made sources in Canada combined, and it raises dire health concerns for nearby communities.
The harms of oil and gas emissions aren’t evenly distributed. Air pollution disproportionally affects communities—particularly Indigenous, racialized and low-income—that are closest to industrial sites or lack resources to protect themselves. Indigenous communities near the oil sands face higher rates of cancer and respiratory illnesses linked to industrial emissions.
A cap is not an extra burden. It’s risk mitigation and protection for public health and the economy.
Exner-Pirot says an oil and gas emissions cap would be divisive. But depending solely on households and small businesses to shoulder Canada’s emissions-mitigation burden while oil and gas companies continue to pump out vast amounts of pollution with no accountability is inequitable. Rather than divisive, an oil and gas emissions cap would share responsibility fairly. It would ensure that industry’s operations align with national and international climate goals. If industry were to support a cap, they would show they’re serious about reducing emissions. This would send clear signals to investors, workers and communities that a smooth, fair transition is possible—rather than a chaotic collapse.
Exner-Pirot calls a cap unconstitutional, economically damaging and unnecessary. But constitutionality is established by a Supreme Court ruling. An early transition is far more economically prudent than clinging to fossil-fuel dependence, as renewables offer stronger long-term returns and avoid risk of stranding assets. Emissions data contradict the promise of voluntary emissions reduction from the oil and gas industry. And the health and environmental costs of delay are crippling, with climate disasters and pollution already exacting a heavy toll.
Canada promised in 2021 to cap oil and gas emissions. Fulfilling that commitment is not about ideology but about survival. Implementing an enforceable federal cap is about safeguarding our climate, economy and communities. It is time to deliver on that promise.
Heather Exner-Pirot responds to Aly Hyder Ali
What’s the case for capping oil and gas emissions? According to Aly Hyder Ali, it boils down to some tried and true environmentalist warnings: we can’t meet our Paris Agreement commitments without a cap; companies won’t reduce emissions without a cap; and we’ll be left behind in the energy transition if we don’t do it.
I’ll grant him that our efforts to meet the Paris goal are all but certain to fail. That doesn’t preoccupy me much. For those people who still prioritize that goal, however, I reiterate it could be achieved at less cost to the Canadian economy than through imposing an emissions cap.
Hyder Ali argues that “the oil and gas industry has made little effort to meaningfully reduce its carbon footprint” and that “emissions have risen by roughly 80 per cent since 1990.” The first point is demonstrably false, and the second is a red herring.
Emissions from Canada’s oil and gas sector peaked in 2015, even though we’ve added over a million and a half barrels of production since then. How was this accomplished? Through industry’s sincere efforts to reduce its carbon footprint, including through methane capture, electrification and efficiency measures.
Emissions intensity per barrel in Canada has decreased by over one-third since 2000. This kind of achievement takes significant human, physical and financial capital, and yet it is totally dismissed.
It’s unfair for Hyder Ali to point to 1990 as a benchmark year. Emissions rose sharply between then and the early 2010s because a couple hundred billion dollars of investment in the oil sands came to fruition and production grew dramatically. But ever since 2015—the year of the Paris Agreement—we have seen a decoupling between production growth and emissions. We know that the oil sands can meaningfully reduce GHGs.
The argument that Canada will be “left behind” unless we turn to greener alternatives is rarely substantiated. The main markets for our oil, led by the US, do not pay a premium for lower-carbon products. And our LNG is already some of the least GHG-intense in the world.
We can plainly see Europe’s economic trajectory as it has tried to decarbonize its energy and offshore its industrial activity. This isn’t a path to emulate. Today most of the world isn’t ramping up its energy transition but rather plateauing—or, in the case of the USA, retreating. Bans on offshore drilling and fracking in New Zealand and Mexico have been reversed. Canada would be an outlier if it didn’t recalibrate some of its own expensive climate measures.
At any rate, there’s no reason to believe that a supportive environment for oil and gas production detracts from investments in renewables, electric vehicles and clean tech. Quite the opposite: the revenues generated from a healthy oil and gas sector allow governments and corporations to invest in such technology. Starving the industry of capital and growth with a cap would inevitably result in it spending less on decarbonization, not more.
But my main criticism of Hyder Ali’s argument and those like it is they remain in the abstract, indifferent to the trade-offs involved. These are emotional and ideological appeals. They fail on the details. They’re impracticable. When the federal government proposed draft regulations and modelled the costs of an emissions cap, it was a hot mess. The assumptions made no sense, unintended consequences weren’t accounted for, the costing wasn’t logical and there were inherent contradictions.
How would a cap work with Alberta’s existing industrial carbon pricing and emissions trading system and comparable frameworks in BC, Saskatchewan and Newfoundland? How can the energy sector meet ambitious targets without limiting production? How can operators plan without knowing their exact compliance obligations? We don’t know.
The proposed cap is emblematic of a policy approach that has put Canada’s unrealistic Paris commitment at the top of a hierarchy, with every other policy issue subordinate. This isn’t what Canadians want. We’re preoccupied with housing, the high cost of living, Trump’s threat to our economy. Prime minister Mark Carney ran on a promise to make Canada an energy superpower with the strongest economy in the G7. Paris and the 2030 commitment weren’t even mentioned in his platform. Nor was an emissions cap. Not only does his government not have the jurisdiction to enforce an emissions cap, it doesn’t have the mandate.
We all want a healthy environment alongside a strong economy. We all want world-class environmental, social and governance standards. But it’s manifestly not in our interest to regulate our oil and gas to the point where production is so uncompetitive that other jurisdictions, likely higher-emitting ones, take up our market share. That’s the choice: produce oil and gas in Canada or let someone else—likely not a democracy or an ally—produce it instead. Hyder Ali is arguing for the latter.
