Canada is poised to outline a federal emissions cap on the oil and gas sector using a cap-and-trade system that would begin as early as 2026, says a federal government source.

The source, who spoke on the condition of anonymity to discuss matters not yet made public, tells The Canadian Press that a framework for the cap will be published Thursday.

The target will not be as strict as the emissions cap estimated last year in the government's emissions reduction plan.

That plan suggested the oil and gas industry needs to cut emissions to 110 million tonnes by 2030 from more than 200 million tonnes in 2019.

Oil sands companies say it would take them at least another five years beyond 2030 to get close to that.

Draft regulations are now expected by mid-next year and the final regulations in early 2025, with some flexibility to allow companies to meet their targets using offset credits or paying into a decarbonization fund.

This report by The Canadian Press was first published Dec. 6, 2023.