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Provincial regulation of oil and natural gas activities, pipelines, and distribution systems is administered by provincial utility boards.The producing provinces impose royalties and taxes on oil and natural gas production; provide drilling incentives; and grant permits and licenses to construct and operate facilities.
Canadian energy policy reflects the constitutional division of powers between the federal government and the provincial governments.As a result of the differing energy characteristics of the provinces there is creation of multiple federal and provincial strategies, sometimes complementary, but often contradictory.The Canadian energy policy is based on three important principles.The United States is Canada's major trade market for energy products and services.Canada sends around 98% of its total energy exports to the United States, meaning that Canada is the largest supplier of energy exports to the world's largest economy.On the other hand, the federal government has the power to make treaties with foreign countries.
This has important implications for treaties involving energy production, like the Kyoto Protocol, which the Canadian government signed in 2002.
The energy and climate policies in Canada are interrelated.
These energy and climate policies are implemented at both the federal and provincial government level.
Provincial governments have jurisdiction over the exploration, development, conservation, and management of non-renewable resources, as well as the generation and production of electricity.
Federal jurisdiction in energy is primarily concerned with regulation of inter-provincial and international trade and commerce, and the management of non-renewable resources on federal lands.
The consuming provinces regulate distribution systems and oversee the retail price of natural gas to consumers.