Oil and gas producers in Canada will be required to reduce carbon emissions by 35% from 2019 levels over the next eight years under new regulations published Monday by Prime Minister Trudeau's government.

The plan would be implemented through a cap-and-trade system that sets a legal limit on the energy sector's emissions and then allows companies to buy and sell a limited number of emissions allowances, Environment Minister Steven Guilbeault said.

The government is expected to begin enforcing the cap in 2030 and gradually lower it until Canada's economy reaches net zero in 2050; the plan is set to be finalized next year, and would be phased in starting 2026. The Canadian Association of Petroleum Producers said the cap would lead to production cuts and reduce business investment.

Implementation of the policy is uncertain, as the governing Liberal Party trails the Conservative Party by a wide margin in polls, with the Conservatives tipped to gain power in an election that must be held no later than October 2026.

Potentially relevant companies include Suncor Energy (NYSE:SU), Imperial Oil (IMO), Canadian Natural Resources (CNQ), Cenovus Energy (CVE), TC Energy (TRP), Enbridge (ENB), Ovintiv (OVV), Baytex Energy (BTE), MEG Energy (OTCPK:MEGEF), Athabasca Oil (OTCPK:ATHOF), Whitecap Resources (OTCPK:SPGYF).