Prime Minister Stephen Harper made it clear today that Canada will not regulate emissions from the oil and gas industry ahead of the United States.

Harper took the unusual step of answering a question in Parliament about the environment, something he usually leaves to ministers or parliamentary secretaries.

But prompted by NDP questions about the latest reports on rising emissions from fossil fuels, Harper called the prospect of regulating the industry at this time "crazy."

"Under the current circumstances of the oil and gas sector, it would be crazy, it would be crazy economic policy to do unilateral penalties on that sector. We're clearly not going to do it," Harper said in question period.

Prime Minister Stephen Harper told the House of Commons Tuesday that it would be 'crazy economic policy' to introduce unilateral emissions regulations on the oil and gas industry at this time. (Adrian Wyld/Canadian Press) "This government has been clear that we want to see oil and gas regulations on a continental basis, given the integrated nature of the industry," he said. "With the current conditions in the oil and gas sector, this government will not consider unilateral regulation of that sector."

The benchmark price for crude oil has dropped by 40 per cent since July, causing oilsands investments to fall.

Outside the House, opposition MPs were scathing.

"The prime minister stood up today and for the first time admitted that they are not going to regulate the oil and gas sector," NDP environment critic Megan Leslie told reporters.

"So he admitted that they are breaking their promise. This was the sector that they promised — in 2007, the prime minister stood in the House of Commons and made that promise and many environment ministers after that. They are abandoning it, they are abandoning meeting our goals."

Aglukkaq defends sector-by-sector approach

Meanwhile, Environment Minister Leona Aglukkaq addressed the UN climate conference in Lima, Peru, on Tuesday, with only a passing reference to oil and gas.

Environment Minister Leona Aglukkaq is attending UN climate talks in Lima, Peru. (CBC) A new report from her own department cites the oil and gas industry as the fastest-growing and largest source of greenhouse emissions in the country.

Instead, Aglukkaq told the UN climate conference that Canada is taking a sector-by-sector approach — reducing emissions from the electricity sector, cutting short-lived climate pollutants like methane and hydrofluorocarbons​ and by working in lock-step with the U.S. on vehicle emission standards.

"This approach allowed us to reduce our emissions while protecting the Canadian economy. We similarly support a North American approach to the oil-and-gas sector."

That was Aglukkaq's only reference to the environmental issue that's been dogging Canada's reputation — rising oil and gas emissions, and the fact that Canada has no federal regulations to control emissions from that industry.

She told the conference of delegates from 190 countries that Canada is still committed to a new climate agreement.

"Canada stands ready to help its international partners, and we will continue to move forward with measures in a way that reduces greenhouse gas emissions while maintaining economic growth," said Aglukkaq.

Environment Canada sees emissions rising

On Monday, Environment Canada's annual report showed Canada will miss its Copenhagen target even if the economy slows down and world oil prices sag, leading to slower oil sands development.

It shows the oil and gas sector now produces 25 per cent of the country's carbon pollution.

The emissions trend report calculates emissions from all fossil fuels burned in Canada up until 2012. It says greenhouse gases will continue to rise until 2020, even though Canada has promised to reduce them by 17 per cent below 2005 levels by the end of the decade.

"Emissions from the oil and gas sector are projected to increase by 28 per cent (from 158 MT to 204 MT) over the 2005 to 2020 time frame," said the report. "This is due mainly to increases in oilsands production."

Emissions from all other sectors, including electricity, transportation and agriculture, have stabilized or dropped compared with 2005. Until now, that has kept Canada's emissions relatively stable at 699 megatonnes a year, the same as 2010.

But Environment Canada says that will change as the fossil fuel industry grows. It provided three different scenarios for its predictions:

High fossil fuel prices and booming economic growth could result in Canada emitting up to 781 megatonnes a year — 27 per cent over its 2020 target.

Low oil prices and a slumping economy could produce lower emissions of 716 megatonnes — 17 per cent over the 2020 target.

A third, uncertain scenario.

The report noted the 65-megatonne range between the first two scenarios will change over time "with further government actions, technological change, economic conditions and developments in energy markets."

The report does have a couple of bright spots. It says per capita emissions have dropped to the lowest level on record. And the intensity of energy use — how much it takes to produce a barrel of oil, for example — also continues to drop, suggesting the economy is becoming more energy efficient.