A new report published by the Canada West Foundation shows that Alberta’s oil and gas sector is quietly making significant progress in reducing its methane emissions, showcasing the greenhouse gas (GHG) reductions that are possible when policymakers and industry are pulling in the same direction.
This Quick Read highlights the report’s findings and discusses some of the policy challenges accompanying Canada’s increasingly stringent methane reduction target to 2030.
Why do methane emissions matter?
Discussions about emissions reduction tend to focus on carbon dioxide, but there are actually several different kinds of GHGs, and they each have a different impact on the climate; they linger in the atmosphere for different timespans and retain the earth’s heat by different amounts. Carbon dioxide’s impact on temperature increases is used as the baseline for all other GHGs, giving it a Global Warming Potential (GWP) of 1.
Over a 100-year time horizon, methane has a GWP of 25, meaning that its warming impact is 25 times stronger than carbon dioxide’s. Therefore, if a given volume of methane and carbon dioxide can be reduced at a similar cost, it makes economic and environmental sense to target methane reductions first. This is especially true in the oil and gas sector* which produces approximately 38% and 21% of Canada’s methane emissions and total emissions respectively.
Canada’s policies to reduce oil and gas sector methane emissions
Canadian governments and industry all recognize methane’s relatively low cost of abatement and have collaborated on developing policy to measure and reduce upstream fugitive methane emissions.
In 2015, Alberta set a goal to reduce upstream methane emissions in the conventional oil and gas sector by 45% below 2014 levels by 2025. It passed regulation to that effect in 2018. Similarly, in 2016 Canada established a nation-wide upstream methane reduction target for oil and gas of 40-45% below 2012 levels by 2025. Those regulations were also implemented in 2018. The federal government recognizes Alberta’s regulation as sufficient for meeting its own target.
Together, Alberta’s and Canada’s overarching policy approach to reducing methane emissions includes a mixture of regulatory and financial supports, including the following:
- Command-and-control regulatory standards for measuring and tracking methane emissions as well as for equipment deployment and operational best practices;
- Value-creating opportunities for voluntary, additional methane reductions in the province’s carbon market system; and
- Provincial and federal government funding for technology development and deployment, including for improving methane measurement.
These measures have been remarkably successful to date. According to the Government of Canada’s accounting, Alberta met the federal target five years early, reducing methane emissions by 47% as of 2020.
Compared to Canada’s mere 7.9% reduction in total GHG emissions since 2014—much of which came from a decrease in economic activity during 2020’s pandemic depths—Alberta’s success at meeting federal methane targets should be celebrated.
New targets bring new challenges
The federal government is currently revising its methane regulations for the oil and gas sector, targeting an ambitious 75% reduction below 2012 levels. Achieving this target could position Canada as global leader and help improve sectoral competitiveness in a carbon-constrained world.
The challenge is that we are hitting the limits of what can be accomplished using existing command-and-control based regulations and technology—where specific equipment installations are mandated. In other words, the lowest-hanging fruit has already been picked. Additional cuts to methane emissions will become increasingly expensive and could require new innovations or technological breakthroughs. We may even get to a point where additional methane reductions could become more expensive to achieve than equivalent GHG reductions elsewhere in the economy.
For its part, the federal government is discussing moving to a performance-based regulatory approach rather than its existing command-and-control approach. This is better suited to addressing the challenges going forward. While command-and-control regulation can be good at spurring swift change when low-cost pathways to solving a problem are known, performance-based regulation is better suited to encourage innovative (rather than prescribed) solutions to complex problems with uncertain compliance pathways and costs.
One complication pointed out in the CWF report is that there is some dispute over how methane emissions are measured in Canada. Some suggest Canada’s measurement protocols are entirely insufficient. A lack of clarity on this point can undermine both further mitigation efforts as well as the credibility of those measures already taken.
Alberta has made excellent progress in reducing oil and gas methane emissions. To continue making progress towards more stringent 2030 targets, updated regulations—both federally and provincially—will need to account for unknown compliance pathways and higher reduction costs.
Governments should (1) continue their collaborative approach, working alongside industry to address technology funding and deployment; (2) commit to fair and efficient regulations; (3) favour compliance flexibility rather than prescribed solutions; and enable these principles by (4) ensuring that accurate and efficient methane tracking mechanisms are established.
* This includes oil and gas extraction and fugitive emissions.
Dylan Kelso, Policy Analyst