Not only is the Canadian Energy sector contending with an oil price that continues to slide, down another 1.7% thus far today, but a provincial Government that wants to introduce significant penalties if greenhouse gas emission limits are exceeded.

Suncor (TSX:SU,NYSE:SU), Cenovus (TSX:CVE,NYSE:CVE), Canadian Natural Resources (TSX:CNQ,NYSE:CNQ), and Crescent Point (TSX:CPG) are four of the top 5 worst performing large-caps in Thursday’s Canadian market.  The stocks are down 1.9%, 1.6%, 1.4%, and 1.4% respectively in pre-noon trading.

The oil price has taken a hit over the past two days, falling from $97.19 to $92.84, a decline of 4.5%, on the back of several weaker than expected economic releases.

Stacked on top of this commodity decline was the news that the Alberta Government is considering legislation that would force large oil-industry producers to slash greenhouse gas emissions by as much as 40% on each barrel of production or face a significant penalty.  This announcement came as a shock to the companies, as well as the Federal Government.

Alberta, as well as the Federal Government, wants to see TransCanada’s (TSX:TRP,NYSE:TRP) Keystone Pipeline gain Washington’s approval.  Much of the push back from Washington on this project has been on the environmental impact of oil sand related greenhouse gas emissions.  The proposal by Alberta’s Premiere to introduce punitive costs in an attempt to reign in greenhouse gas emissions is being viewed as a potential bargaining chip in the Keystone debate.

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Fool contributor Iain Butler is short $30 April 2013 put options on Cenovus.  The Motley Fool has no positions in the stocks mentioned above.