"Can dogs dream?"
For innate abilities you use 会. 能 (or 可以) is used to say that something is (im)possible due to outside factors (可以 has a somewhat greater tendency to imply permission/prohibition specifically). For example:
- 我不会开车。"I can't (= don't have the ability to) drive."
- 这里不能开车。"[You] can't drive here (maybe it's prohibited or maybe there is not enough space)."
- 这里不可以开车。"It's not allowed to drive here."
Both fine, but most of the time people use 会 for this topic (“dreaming”).
Here “会” is most likely to be interpreted as “be likely/possible to”. Dreaming is more of an uncontrollable instinct than a learnable ability. 能 is more for chance about feasible matters, though colloquially it can be used for very uncertain things too. However, people just prefer 会.