Ottawa Introduces Tougher Methane Regulations for Oil and Gas Sector

The Canadian federal government has announced stricter regulations aimed at reducing methane emissions in the oil and gas sector as well as in landfills. This initiative marks the beginning of a series of environmental policies under the leadership of Prime Minister Mark Carney, who took office in March. The new regulations will take effect in 2028 and are part of a broader effort to combat climate change while balancing economic interests.

During an announcement in Burnaby, Julie Dabrusin, the Federal Environment Minister, outlined two primary options for oil and gas producers to decrease their methane emissions. The first option prohibits the practice of venting, which involves burning off excess natural gas, and mandates regular inspections to locate and repair leaks, a significant source of methane emissions. The second option provides producers with more flexibility, allowing them to develop their own methods for controlling methane, provided they meet emission thresholds comparable to standards set by leading international voluntary certification programs.

Despite the government’s intentions, industry representatives have previously expressed skepticism about the feasibility of alternative approaches. Dabrusin emphasized that these enhanced regulations are designed to significantly reduce methane emissions while offering operators the flexibility needed to comply effectively.

These changes represent the first stringent environmental measures implemented by the Carney government, which has rolled back several policies established under former Prime Minister Justin Trudeau. Among the previous policies repealed are the consumer carbon tax and a cap on industrial emissions. Dabrusin stated her anticipation of collaborating with Alberta in addressing methane emissions.

The new regulations are likely to draw criticism from major oil and gas companies, which have acknowledged Canada’s commitment to cut methane emissions by 75 percent from 2012 levels but prefer to chart their own course to achieve this target. The government also aims to address methane emissions from landfills, which accounted for 17% of Canada’s methane emissions in 2023. Under the new rules, owners and operators of regulated landfills will be required to monitor their facilities closely to control methane emissions.

According to the government’s press release, these regulations are expected to yield a significant reduction in methane emissions, projecting a cumulative decrease of 304 million tons of carbon dioxide equivalent by 2040. However, the government acknowledged that the new measures could slightly slow the anticipated growth of oil and gas production in British Columbia, Alberta, and Saskatchewan, as well as impact Canada’s GDP.

Specifically, the government estimates that production could be reduced by 0.2%, approximately 500 petajoules, over the next decade compared to current projections. The impact on GDP is projected to be 0.01% by 2035. Despite these potential setbacks, the government maintains that the enhanced regulations will help position the oil and gas sector competitively as markets increasingly shift toward lower-emission sources.

The proposed measures are expected to incur costs of $48 per ton of carbon dioxide equivalent reduced for the oil and gas industry. The government argues that this represents one of the most cost-effective strategies to make significant progress towards climate goals without passing costs onto consumers. Nevertheless, historical disagreements between Environment and Climate Change Canada and the oil and gas sector regarding compliance costs suggest that industry stakeholders may contest these figures.

Overall, the implementation of stricter methane regulations reflects a pivotal moment in Canada’s environmental policy, aiming to balance climate commitments with economic realities.