New Oil-and-Gas Sector Regulations for Methane Emissions
On April 26, 2018, the Minister of Environment and Climate Change, Catherine McKenna, announced new regulations under the Canadian Environmental Protection Act, 1999 to reduce methane emissions in the oil and gas sector by almost half. The purpose of the regulations are to reduce methane emissions from the oil and gas sector in order to meet Canada’s climate reduction targets.
As part of the Pan-Canadian Framework on Clean Growth and Climate Change, the federal government indicated its commitment to reduce methane emissions from the oil and gas sector by 40 to 45 percent from 2012 levels by 2025. Methane is a greenhouse gas (GHG) that makes up approximately 15 percent of Canada’s total GHG emissions. Methane is considered toxic under the Canadian Environmental Protection Act, 1999. When oil and gas are extracted and processed, methane can leak accidentally, or alternatively be released intentionally into the environment.
The methane regulations:
- Create new clean-technology jobs in the oil-and-gas industry;
- Result in a reduction of carbon pollution by approximately 20 million tonnes annually;
- Produce better air quality for Canadians who live and work in close proximity to oil and gas facilities.
These federal regulations come into force in 2020 and are phased in over a period of three years until 2023. The goal in drafting the regulations was to limit impacts on smaller facilities by focusing on larger facilities producing the majority of the emissions.
The federal methane regulations provide a backstop for the reduction of methane emissions. Under the equivalency provisions of the Canadian Environmental Protection Act, 1999, each province and territory can choose to develop their own regulations. These regulations can replace federal measures provided that they can clearly demonstrate equivalent emission reductions.
The question is whether or not the federal government will take the position that the federal regulatory requirements apply until the provincial and/or territorial requirements are at a minimum equivalent or more restrictive from an environmental perspective.
We note that after the enactment of the federal regulations, Alberta recently circulated a draft plan for the reduction of methane that provides the oil-and-gas industry with $2-billion in assistance and includes a five-year exemption from the carbon tax. The draft regulatory requirements proposed by Alberta will allow oil and gas sites to release more methane and conduct less monitoring. Also, these Alberta regulations give oil and gas companies the ability to not consistently comply with the regulatory requirements since it is the company who determines whether or not the emission limits are being respected.