SUMMARY
- Canada’s enhanced methane regulations are a game changer for the nation.
- With strong implementation across all provinces, Canada can set a new standard among the international community for how to affordably and effectively reduce methane emissions.
On December 16th many Canadians were getting their holiday shopping done, and Canada’s Minister for Environment and Climate Change, Julie Dabrusin, was no exception. Luckily for all Canadians concerned about climate change and the competitiveness of our energy on world markets, she had a very special holiday present for us that was several years in the making: the finalization of new enhanced methane regulations for the oil and gas sector.
Methane is a powerful climate pollutant and the main chemical component of natural gas. Canada’s new rules will curtail these emissions by requiring energy producers to capture natural gas that would otherwise be wasted during the production process.
The new regulations are projected to reduce emissions by 72% by 2030 from 2012 levels, equivalent to the carbon pollution produced by over 70 million gas-powered cars in one year.
The enhanced standards are a massive step forward for Canadian climate policy and will deliver economic benefits for Canadians nationwide, but it is understandable that news of this major policy win may have gotten lost amidst the holiday season blur. Here is a crib sheet on these new requirements that highlights three big takeaways followed by a deeper dive into specific regulatory language.
1. Nationwide requirements should mean no special treatment for Canada’s largest emitting province
In 2021, Canada set a national target of reducing methane emissions by 75% by 2030. However, the federal government recently signed a Memorandum of Understanding with Alberta that discusses a delayed 2035 target date.
Minister Dabrusin clarified how these targets, and the new regulations, can coexist in an interview on CBC’s Power and Politics. The Minister explained that the MOU doesn’t represent a delay because all provinces will need to achieve 72% by 2030, and that this outcome is compatible with Alberta achieving 75% by 2035.
Alberta is overwhelmingly the country’s largest emitter, responsible for 68% of Canada’s oil and gas methane emissions. The Minister’s assurance that all provinces will be subject to the regulations – and specifically the same 2030 target date – is encouraging, as the Pembina Institute estimates that granting a 5-year extension to Alberta would result in 1.9 million tonnes of additional methane in the atmosphere.
Besides the climate cost, special treatment for Alberta is even harder to justify while neighboring British Columbia has already developed and implemented its own regulations aimed at meeting the 2030 federal target.
2. Economic benefits for all Canadians
An independent report looking at the methane mitigation industry – including 136 manufacturers and service providers that help Canadian energy producers reduce emissions – shows that Alberta is home to more than half of these companies’ offices. There’s good reason to expect the industry to grow quickly in the coming years: an EDF analysis estimates that 34,000 jobs are likely to be created by regulations that target 75% reductions. About half of these estimated jobs would be in Western Canada near the point of energy production, while the other half would be predominantly in Ontario’s and Quebec’s manufacturing hubs. Beyond job creation, regulations that prevent wasted gas also lead to more royalties for provinces. Giving special treatment to Alberta (like a 5-year delay) would mean delaying the onset of these benefits.
Prime Minister Mark Carney’s new Climate Competitiveness Strategy reorients climate policy around economic outcomes, noting that Canada can position itself to meet foreign markets’ demand for low-carbon energy. Ensuring all provinces meet the methane mitigation target by 2030 will help guarantee Canadian energy products can access large markets in Europe and Asia at a time when trade with the United States has become fraught.
3. Restoring Canadian energy leadership
At COP30 in Brazil, Canada signed onto a statement acknowledging that proven solutions exist to drastically cut oil and gas methane emissions by 75% by 2030 and that recognizes the importance of pursuing “efforts to near zero methane emission… including clear policies to end routine venting and flaring by 2030.”
The new regulations, and the Minister’s assurance that Alberta will be subject to them, will help enable Canada to meet domestic and international climate targets while supporting economic development in Alberta and nationwide.
Affordable, low-cost reductions: A deeper dive into the key provisions from Canada’s enhanced methane regulations
Environment and Climate Change Canada (ECCC) estimates that the average reduction cost for one tonne of carbon dioxide equivalent (CO2e) emissions through the regulation is approximately $48 CAD. A study by Dunsky Energy + Climate calculates these emissions at just $11 CAD per tonne. By comparison, a 2019 IEA analysis converted to present-day Canadian dollars shows that direct air capture of CO2 is estimated to cost up to $535, and capturing CO2 from industrial processes like cement and power generation are estimated to cost up to $155 and $187/tCO2e, respectively. The provisions in Canada’s new regulations are, in part, affordable because capturing methane means conserving valuable natural gas.
Some of the regulation’s key provisions include:
Leak Detection and Repair (LDAR): The regulation takes a risk-based approach to comprehensive leak inspections, meaning upstream oil and gas facilities must be inspected quarterly with either an infrared capable camera or an instrument capable of detecting hydrocarbons at a concentration of 500 parts per million by volume (PPMV). Facilities with equipment prone to leaks or malfunction such as flares, compressors, and pneumatics, are subject to the quarterly inspection requirement. All other facilities must be inspected annually. Additionally, operators must conduct monthly instrument-based screening for large leaks provided an operator visits the site in that month. Lastly, operators must hire an independent auditor to conduct an annual inspection with the aim of identifying large leaks.
Venting: The regulation essentially prohibits venting from pneumatic controllers and limits venting from all but low-emitting/low-pressure storage tanks, dehydrators, and casinghead gas. The regulations include several exceptions for venting, including one for low producing oil facilities.
Destruction of gas: Flaring or combustion is prohibited unless the operator demonstrates that they are unable to use the gas to produce useful heat or energy. Hydrocarbon gas destruction equipment must include several features to ensure their efficient and proper function.
Continuous monitoring: As proposed, operators can opt out of the LDAR, venting, and flaring provisions if they install a gas monitoring system if their facility emission intensity stays below specified thresholds. Operators that install emission monitors must conduct an annual audit for leaks.
Implementation timeframe: New sources of emissions must comply with all requirements by January 1, 2028. Existing sources must implement LDAR provisions by January 1, 2028, but have until January 1, 2030 to comply with all other requirements in the regulations.
