Upstream Methane Abatement Toolbox: Oil and gas methane regulations
Type of tool: Regulation
Status: In 2016, Canada set a target of reducing methane emissions from the oil and gas sector by 40-45 percent below 2012 levels by 2025. Regulations were registered in 2018 and came into force in stages, starting in 2020, with all requirements in effect by 2023.
Amendments to the regulations were announced in New York in October 2023 to help achieve a strengthened target of at least 75 percent below 2012 levels by 2030. The proposed amendments would expand the scope of the existing regulations to apply to a wider set of sources, eliminating exclusions, and driving as many individual sources as possible toward zero emissions. This includes expanding application of the regulatory measures to virtually all facilities that handle natural gas in production and transmission. Additionally, other measures are under consideration to further reduce oil and gas methane emissions including in the offshore and distribution subsectors.
The Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) is the regulatory instrument used to abate methane emissions in Canada. A regulatory approach was chosen to ensure that methane emission reduction targets are legally enforceable.
The Regulations introduce nation-wide emissions limits for the extraction, transportation and processing of oil and natural gas. Regulations have reduction targets associated with specific pieces of emitting equipment and require industry to regularly inspect and repair equipment. The approach supplements or complements regulatory approaches of some Canadian provinces (sub-national governments).
Key points of interest
Government regulations were established to oblige emission reductions by private companies. These regulations are replaced by equivalent regulations in some Canadian provinces through limited and renewable term agreements.
Canada is on track to meet the target of reducing the sector’s methane emissions by 40-45 percent by 2025, relative to 2012 emissions.
- Remote operations – In the context of Canada’s geographically dispersed oil and gas sector, costs can be higher for methane emission reduction solutions in remote locations, as they can be only accessible during specific time windows during the year (e.g. ice road access only).
- Overlapping jurisdiction – Several sub-national governments have introduced specific methane policy measures, including regulations that use different data sources, and focus on different sources of methane emissions. These different approaches respond to local geology and production practices.
- Understanding methane emissions trajectory as regulations are implemented requires multiple approaches to track progress. The Government of Canada can see industry reported data through regulatory data systems, but also supports research efforts to track emissions using technology for aerial and satellite measurements, regional air quality monitoring networks, and facility-level methane emissions measurements. Progress is updated every year through Environment and Climate Change Canada’s Departmental Results Report.
- Incorporating flexibilities into regulatory design can lower compliance costs across the oil and gas sector. Examples of flexibilities within Canada’s 2018 regulations include:
- Phased in implementation to allow industry lead time to manage the required changes.
- Exempting smaller facilities that emit less methane.
- Providing options to develop innovative compliance pathways.
- Streamlining of reporting obligations can reduce regulatory burden (e.g. use existing data collection mechanisms and sources).
- Working in transparent partnership with sub-national regulators, Indigenous groups, civil society, the oil and gas industry and ENGOs fosters creative approaches and facilitates implementation of regulatory direction.
- Using regulatory approaches that are measurable, achievable and time-bound, and adjusted as required during implementation. Continuous improvement of the regulatory construct and associated emission reduction goals enables steady and early progress towards the ultimate goal of net zero by 2050.
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