Energy and Natural Resources Minister Tim Hodgson speaks to the media after announcing the Canada Infrastructure Bank has loaned Cando Rail and Terminals $100 million to expand the rail hub, in Sherwood Park, Alta., on Wednesday, Sept. 10, 2025. THE CANADIAN PRESS/Amber Bracken
OTTAWA — The federal government is in discussions with Alberta and the oil industry about the future of the sector’s emissions cap, Energy Minister Tim Hodgson said Friday.
At a news conference in Winnipeg, Hodgson didn’t say if Ottawa plans to scrap the emissions cap, but said Alberta and industry agree with the federal government that there needs to be a “fundamental change in the emissions intensity of the oilsands.”
Hodgson didn’t answer directly when asked if Alberta had committed to lowering emissions as a condition of Ottawa ditching the policy, but he said Prime Minister Mark Carney was “focused on results, not objectives.”
“We are in the middle of discussions around how we get to the results,” he said, calling the talks “productive.”
Hodgson didn’t provide further details on what’s being discussed as he will “not negotiate through the media,” but he touted the “unity” of all involved in the discussion.
“We should start focusing on the good things that are happening and the unity that’s happening and how we are committing together to develop our resources in an environmentally responsible way.”
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Alberta Premier Danielle Smith, in a statement Friday, said the emissions cap was one of the “biggest problems” facing her province and the oil industry, the success of which is joined at the hip of her government’s annual budgets.
Referencing the “exceptionally productive” meeting she had with Carney earlier in the week, Smith said she told him there’s a “chicken and egg” issue the cap presents when it comes to the feasibility of a new oil pipeline.
A new pipeline could happen as part of Carney’s major projects strategy, the prime minister said Thursday, since one project up for future referral to the new Major Projects Office is the Alberta-based Pathways Alliance carbon capture and storage proposal.
He said once that project is done, it could lead to a new “decarbonized” pipeline, though he noted that no proponents have stepped up.
Smith, in her statement Friday, said she told the prime minister that he “won’t have proponents willing to step up and pledge barrels to a new pipeline if you have an emissions cap that makes them shut it in the ground.”
“I think this is resonating with him and I’m confident we’ll see real progress on this well before the end of the year.”
Smith, speaking on CBC’s “Power and Politics” show Friday, also provided few details on what scenarios were being discussed when it comes to changing or scrapping the emissions cap, but said she thinks Carney understands that the proposed 2030 implementation timeline behind it isn’t manageable.
“We’re having some very constructive conversations about being able to reorient around that timeline,” she said.
“You can’t just put a policy in place with no plan on how to achieve it, because then the only way to achieve it is to shut in production or shut down the development of new energy, and that doesn’t make sense for any of us.”
Oil and gas production accounts for about one-quarter of Canada’s total greenhouse gas emissions — and Canada can’t hit its emissions reduction target without lowering emissions in this key sector.
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The federal government last year announced it would impose an emissions cap on oil and gas production to lower emissions by 35 per cent compared with 2019 levels.
Smith and the federal Conservatives have insisted the policy is a barrier to investments and economic growth and have demanded its cancellation.
Federal Environment Minister Julie Dabrusin, speaking alongside Hodgson at the press conference, said the government is still focused on the issue of climate change and is reviewing feedback on the emission cap regulations.
“We’re in a very special moment right now, and that includes making sure that we are fighting climate change and we’re moving to net zero,” Dabrusin said.
The Carney government has already scaled back or cancelled some climate policies introduced under former prime minister Justin Trudeau. It killed the consumer carbon price and delayed a mandate for electric vehicle sales by at least a year.
Reacting to the news that the future of the emissions cap is up for negotiations, a senior energy strategist with Greenpeace Canada said backpedalling on climate policy to appease U.S. President Donald Trump is not what Canadians voted for.
“It would be a tragic mistake for the Liberal government to back off on climate action while wildfires are still burning across this country,” Keith Stewart said in a media statement.
“Oil and gas production is the largest and fastest rising source of greenhouse gas emissions in the country and there is no way we can meet our international climate commitments without tackling that sector, which is what the emissions cap was designed to do.
“Mark Carney talks of striking a ‘grand bargain’ with the oil industry where they reduce emissions per barrel while producing more barrels, but that is at best a recipe for maintaining the status quo.”
— by Alessia Passafiume in Ottawa and Jack Farrell in Edmonton
This report by The Canadian Press was first published Sept. 12, 2025.
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