"It puts a price on carbon so we no longer use our atmosphere as a free garbage dump, and encourages business to invest in tangibly reducing their pollution," Dion said.

The Liberal plan operates on the goal of trying to reach Canada's targets under the Kyoto protocol of cutting emissions to 6 percent below 1990 levels, even though in 2004 they were 27 percent over.

Each sector would start with its emissions in 1990 and have to achieve the reductions needed, even if, as in the case of the oil and gas industry, emissions have risen swiftly with output.

The plan projects that three sectors -- electricity generation, upstream oil and gas, and energy-intensive industries -- would have to cut emissions by an average 33 percent to 261 megatonnes from the 388 megatonnes they are projected to hit in 2010 if no changes were implemented.

A megatonne is a million tonnes.

They would have to pay C$20 (US$17) a tonne, or C$20 million per megatonne, for any amount that was over their limit in 2008. That would rise to C$25 million a megatonne in 2009 and C$30 million in 2011.

By 2011, if none of the reductions were made, they would have to pay out C$4.2 billion a year on the expected 127 megatonnes in cuts that should have been made.

Oil and gas would have to cut emissions by 46 percent, or 66 megatonnes. The electricity generators would need a 36 percent or 49 megatonne cut. Energy-intensive industries would need to drop by 12 megatonnes or 11 percent.

The minority Conservative government says it is unrealistic to try to cut emissions by a third in the next few years without badly hurting the economy.

It plans instead to announce intensity-based requirements over the next few weeks, imposing limits per barrel of oil or per dollar of goods produced, even if overall emissions rise because more oil or goods are produced.

The Liberals say their plan would only cost US$1.17 a barrel extra for companies producing oil from oil sands without new technology.

That is manageable given current crude prices between US$50 and $60 a barrel, they said. The total hit on the oil and gas industry, if reductions were not made, however, would be around C$1.3 billion in 2008 and C$2.0 billion by 2011.

The Liberal plan would also allow for buying credits abroad.