Alberta's environment minister said Canada's proposed oil and gas emissions cap is a stumbling block in the province's discussions with the federal government about clean-energy policies including in carbon capture and storage (CCS) needed to meet Canada's ambitious 2030 climate targets.

Opposition to federal climate policies from the oil-rich province of Alberta, where premier Danielle Smith is readying for a May election, risks pushing Canada further behind in its emissions-cutting commitments this year.

Alberta Environment Minister Sonya Savage told Reuters in a recent interview that the federal government's proposed emissions cap for the oil and gas industry due this year is holding up work on other issues such as provincial support for CCS.

"We just need to get this emissions cap on a better trajectory and approach it in a different way before we can really succeed in everything else," Savage said. It was the first time Savage has discussed holding up Prime Minister Justin Trudeau's programs needed to lower carbon emissions.

Canada, the world's fourth-largest oil producer, lags many global peers in tackling emissions, jeopardizing the goal of Trudeau's Liberal government to cut greenhouse gas output by least 40% from 2005 levels by 2030.

Right-wing populist Smith, campaigning ahead of the May 29 vote, has tapped into the animosity of many Albertans toward federal environmental policies and accused Trudeau of wanting to phase out the fossil fuel industry. Trudeau's government sees the cap as a key element in getting the oil and gas sector to make significant and timely reductions.

Smith also wants Ottawa to halt plans for clean electricity regulations and a "Just Transition" act intended to retrain oil and gas workers for clean energy jobs.

The oil and gas sector is Canada's highest-polluting industry, accounting for more than a quarter of all emissions. Alberta is threatening to challenge the cap in court, saying it would amount to a cap on production which continues to rise.

Alberta already took the federal government's carbon pricing policy to the court but lost the case in the Supreme Court.

If Ottawa pushes through the oil and gas cap ahead of the provincial election it will get lost "in the spiral of politics," said Andrew Leach, a professor of economics and law at the University of Alberta.

"But the federal government has to move because otherwise you're into another six to eight months of delay."

Ambitious goals

A spokesperson for the federal Environment Ministry said officials are still gathering information to ensure the cap is "ambitious but realistic."

Polls show Smith has a narrow lead on her New Democratic Party rival ahead of the election.

Officials in Ottawa told Reuters that behind closed doors talks with industry and Alberta's government on the various reductions plans are progressing, but political considerations ahead of the vote are undermining final decisions.

Last year, a European Emissions Database for Global Atmospheric Research report showed Canada's emissions rose in 2021 and have only fallen 3% since 2005, meaning the country needs to pack nearly all its decarbonization into eight years to meet its 2030 target.

The EU and the United States have cut emissions 25% and 20% respectively since 2005.

The size of Canada's oil and gas industry means the country will struggle to meet its 2030 goals without significant emissions cuts from that sector, and producers are counting on CCS projects to reduce a large chunk of their carbon pollution.

Even so the Pathways Alliance, a group of six companies representing 95% of oil sands production, says only about 30% reduction in emissions is achievable by 2030 compared to government's goal of at least 40% reduction.

"We've been engaging with their economic modellers, and I think they've recognized that those targets...were probably not completely based on accurate data and are probably overly ambitious," said Mark Cameron, vice president of external relations for the Pathways Alliance.