Federal Liberal Leader Stéphane Dion is calling for energy companies that don't reduce carbon dioxide emissions and water use to face penalties, especially in Alberta's booming oilsands region.

Dion, who is rounding up his first visit to the oil-rich province since becoming Liberal leader in December, told CBC Radio Calgary Friday that the measures would be reasonable for companies that wished to remain competitive.

"The ones who are able to decrease their emissions easily enough, yes, we'll have a reward, but the ones who are not doing it will pay more," Dion said. "At the end of the day, you will have a strong incentive to do the right thing."

Dion said a Liberal government would create a carbon trading market similar to one already running in Europe to allow companies that didn't meet emissions targets to buy credits from those that exceeded the standard.

"We will have a regulation to ask the industry to decrease their emissions by 10 per cent," he said. "The ones who are able to decrease it by 15 per cent will have the capacity to sell the extra cuts in the market."

"This is a very effective way to speed up innovation and to use the technology to go from the lab to the market."

Prime Minister Stephen Harper has rejected the idea of trading carbon credits on the international market.

Oilsands royalties targeted

Dion also took aim at oilsands companies, saying he would like to remove generous royalty incentives if firms didn't meet emissions targets that would be set by the government.

Energy companies have saved billions of dollars over the last decade under a program that allows them to pay a fraction of normal royalties until their giant oilsands projects are fully capitalized.

The new Liberal leader rejected suggestions that such tough regulations would kill investment in the oilsands — one of the main contributors to Alberta's record economic growth.

"I think Albertans want to be sure that our economic growth is sustainable …. The way we are doing it now is not sustainable," he said.

With files from the Canadian Press