Draft Oil and Gas Methane Regulations Amendments published in December 2023 to reduce emissions by 75 percent
In 2016, Canada and the United States issued the Joint Statement on Climate, Energy, and Arctic Leadership and resolved to work together to implement their respective commitments under the Paris Agreement. Building on a history of joint activity to reduce air emissions, both countries adopted a target to reduce emissions of methane from the oil and gas sector by 40 to 45 percent below 2012 levels by 2025 and committed to regulating their respective oil and gas sectors to achieve this target. Canada fulfilled its commitment in April 2018 when the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) were finalized.
In 2021, at the United Nations Climate Change Conference (COP26), Canada joined 110 countries in endorsing the Global Methane Pledge, which committed countries to take economy-wide action to reduce total methane by at least 30 percent by 2030. As part of its endorsement, Canada was the first country in the world to set an ambitious target to achieve at least a 75 percent reduction in oil and gas sector methane emissions below 2012 levels by 2030. This initiative builds on the April 2018 regulations, which were designed to achieve a reduction of 40 to 45 percent by 2025. In December 2021, a federal review report, titled Review of Canada’s Methane Regulations for the Upstream Oil and Gas Sector was published, concluding that Canada is on track to meet its 2025 target.
In September 2022, the Government published Faster and Further: Canada’s Methane Strategy, outlining mitigating measures to reduce the largest sources of methane emissions. It reiterated the commitment to strengthen methane regulations to achieve at least a 75 percent reduction of oil and gas methane emissions below 2012 levels by 2030, and to publish proposed amendments to the methane Regulations in 2023.
In November 2022, Environment and Climate Change Canada published a draft regulatory framework for consultation. An update was released in September 2023. There has been extensive consultation on the development and design of the proposed regulations.
Addressing fugitive methane emissions and accurate reporting of methane emissions
Methane is released directly into the atmosphere during oil and gas exploration and production. Oil and gas facilities are the largest industrial emitters of methane in Canada—they release about half of total methane emissions. These releases occur during normal operation of equipment and from leaks. To comply with Canada’s existing methane Regulations, industry had to adopt practices to monitor for leaks and ensure that repairs happen to reduce the amount of gas intentionally vented into the air.
Under the draft methane amendments, the Government of Canada is enhancing the emissions-monitoring requirements through a risk-based approach to structure inspections for fugitive emissions—facilities with equipment that has greater potential for emissions must undertake more frequent inspections. All inspections must be conducted using instruments with a standard minimum detection limit, and repair timelines will depend on emissions rates. Further, the draft regulations introduce an audit system, requiring one annual third-party inspection to validate company program results. The first set of requirements under the proposed measures will come into force in January 2027.
Improving methane monitoring
In parallel, the Government of Canada continues to monitor and support measurement work to better understand methane emissions.
Continuous improvements to quantify and report Canada’s emissions are essential to ensure Canada’s national inventory estimates are based on the best available science and data. This includes regularly engaging with technical experts to identify knowledge gaps and prioritize input to the scientific process that underlies greenhouse gas reporting.
Significant improvements and revisions to oil and gas emissions estimates have been incorporated into the National Inventory Report over the past few years. A new model to estimate fugitive emissions of methane from oil and gas facilities was integrated into the 2022 edition of the National Inventory Report, with further refinements in the 2023 edition. Between the 2021 and 2023 National Inventory Reports, improvements to oil and gas emissions estimates resulted in upward revisions to previously published data. However, oil and gas methane emissions have decreased since 2005.
As described in the National Inventory Report Improvement Plan (Chapter 8), Environment and Climate Change Canada is analyzing atmospheric measurements of methane from Canada’s oil and gas industry. Recent field campaigns in British Columbia, Alberta, and Saskatchewan are being evaluated to further improve the accuracy of National Inventory Report estimates.
To support Canada’s ambitious methane reduction plan, the Government of Canada also announced today a $30 million investment to establish a Methane Centre of Excellence in the near term that will improve our understanding and reporting of methane emissions, with a focus on collaborative initiatives to support data and measurement.
Supporting provincial action on methane
The Government of Canada recognizes the important role of provincial governments in reducing methane.
Equivalency agreements with Alberta, British Columbia, and Saskatchewan are currently in place for the 2018 methane Regulations. Each agreement is valid for a maximum of five years.
Equivalency agreements under the Canadian Environmental Protection Act are a formal regulatory process that requires robust analysis to demonstrate that provincial regulations meet the requirements to replace federal regulations. The development of the agreement requires that the provincial regime meets or exceeds federal greenhouse gas outcomes, and that the underlying legislation provides for a resident's right to complain. It also includes a public consultation process.
Canada’s draft amendments to achieve further methane emissions reductions reflects the results of consultations conducted over the last year on the approach to driving further methane reductions from oil and gas activities.
Canada will continue to collaborate with and consult oil- and gas-producing provinces, Indigenous partners, industry, and interested stakeholders over the coming months to ensure that the final methane regulatory amendments achieve the best result possible.
Canada and the United States
In November 2022 at the United Nations Climate Change Conference (COP27), Canada and the United States agreed to increase cooperation on reducing oil and gas emissions, with a special focus on methane, since it is one of the fastest and most cost-effective ways to combat climate change.
At COP28, both countries reinforced their commitment to rapidly reducing methane and volatile organic compound emissions from the oil and gas sector by putting in place more stringent methane regulations.
The United States Environmental Protection Agency’s methane requirements are broadly comparable to the proposed amendments, with requirements to manage key sources of methane and volatile organic compound emissions. The US Environmental Protection Agency’s rules include requirements for leak detection and repair, and management of vented and flared emissions. They also require zero emissions from pneumatic pumps, with some exceptions.
Canada’s enhanced regulatory approach is similarly a source-based approach, with strict limits and controls on all key methane emissions: leaks, vents, flares, and pneumatic equipment. There is also the potential to opt in to a performance-based approach, if a robust plan is developed.
Both countries have also addressed oil and gas methane emissions through various funding programs. Canada's programs include the $750 million Emissions Reduction Fund and the $1.7 billion Orphan and Inactive Oil and Gas Wells Fund, both announced in 2020. The United States established a $1.6 billion Methane Emissions Reduction Program in 2022 and committed $4.7 billion to address orphaned oil and gas wells in 2021.
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