A coordinated suite of provincial and federal policies has dramatically cut methane emissions well ahead of schedule. Cutting even more will require coordinated action.
British Columbia, Alberta and Saskatchewan can celebrate a climate win this year—and in the oil and gas sector, no less. As of 2022, these provinces had beaten their 2025 targets for reducing methane emissions from the upstream oil and gas sector. They did so by setting specific reduction targets and implementing a coordinated policy framework.
Methane is an especially potent greenhouse gas, and the oil and gas sector is the largest industrial contributor to these emissions in Canada. Fortunately, the methane emissions from this sector are largely due to methane gas leaks from equipment, and reducing these leaks can be relatively low cost, making it a no-brainer when it comes to policy action.
This Insight explores the latest data on oil and gas methane reductions, and the lessons it offers for additional effort in this space.
Oil and gas methane has been cut by more than half in under a decade
Reducing methane emissions is a high priority globally and in Canada. In 2021, Canada announced its support of the Global Methane Pledge—where by 2024 nearly 100 countries have completed national methane action plans or are in progress—and committed to developing a plan to reduce oil and gas methane emissions by at least 75 per cent below 2012 levels by 2030. The Oil & Gas Decarbonization Charter has over 50 signatories—including some of the world’s largest oil and gas companies such as Shell, Exxon Mobil, and BP—who are aiming for near-zero methane emissions by 2030 at upstream operations, among other goals.
Methane accounted for 117 million tonnes (or megatonnes, Mt) of CO2e emissions in 2022, or over 16 per cent of national greenhouse gas emissions, according to Environment and Climate Change Canada’s National Inventory Report1. The oil and gas sectors emitted 56 Mt CO2e of methane, just under half of total methane emissions.
The provinces have been leaders on emission reduction policies in the oil and gas sector, with Alberta being the first oil and gas producing jurisdiction to limit emissions from flaring. In 2018, the federal government introduced federal methane regulations to meet Canada’s commitment to reduce methane emissions from the oil and gas sector by 40 to 45 per cent below 2012 levels by 2025. Alberta developed their own methane regulations to reflect regional priorities and worked with the federal government to reach an equivalency agreement. British Columbia and Saskatchewan also worked with the federal government to reach equivalency agreements.
As shown in Figure 1, each province has reported significant emission reductions and achieved their methane reduction targets ahead of time.
Success cutting methane came from multi-pronged coordinated policy
The numbers show a clear policy success story. Methane targets were met and exceeded thanks to a range of coordinated policies, including collaboration with the federal government.
First, each province introduced technology-based regulations that aligned with federal methane reduction measures, as described above.
Second, all three provinces incentivized research and development related to both methane measurement and mitigation, with some funding provided through compliance payments. For instance, penalties from Saskatchewan’s methane regulations were directed toward methane capture projects.
Third, governments have created incentive structures that reward emissions reductions. In Alberta, fugitive emissions were integrated into the provincial large-emitter trading system, enabling these reductions to contribute to a facility’s compliance and avoid more expensive mitigation options (In British Columbia and Saskatchewan fugitive emissions are largely excluded from industrial pricing systems). Alberta also enabled offset credits for reductions from pneumatic devices—typically pressure controllers, pumps, and other equipment that run on compressed gas or propane at wells and processing facilities—- that were installed prior to the regulation, which encouraged early action.
On the federal side, the government provided financial and technical support through research and development funding and in 2024 by launching the Methane Center of Excellence.
A significant benefit of the provincial and federal funding has been the improvement in methane leak measurement methodologies in the last five years. The federal government has made substantial updates to the estimates in the National Inventory Report, resulting in higher reported emissions, with fugitive methane emissions from oil and gas increasing by 12 Mt (27 per cent) to 19 Mt (32 per cent) per year for the period from 1990 to 2022 (the range reflects differences by year). This means the footprint of the oil and gas sector is larger than previously thought. However, the updates impact the reported base year emissions as well as recent years, meaning the per cent reduction targets may still be met. For example, research from Saskatchewan with improved measurement concludes that the province likely met its reduction target. Overall reporting updates have improved accuracy and reliability of the reported methane values, which is an essential step for emissions monitoring and policy action in future years.
How to cut even more methane emissions from oil and gas
Now is the time for provinces and the federal government to up their game with targets and policies aimed at deeper reductions and a wider scope of oil and gas methane emissions. The success in reducing methane has contributed to modest declines in the emissions intensity of oil and gas production overall, but production growth has outpaced these intensity improvements. This means that total sector emissions have continued to grow, adding to the increasingly costly impacts of global climate change.
Recent analysis from 440 Megatonnes shows that reducing methane emissions by 75 per cent or more by 2030 is one of the more promising policies to help get Canada’s emissions on track to meet the legislated 2030 emissions reduction target.
Some governments are signalling more ambition. British Columbia has already amended their regulations with increased stringency aiming to reduce methane to 75 per cent below 2014 levels by 2030. As mentioned earlier, the federal government committed to developing a plan for 75 per cent reductions in 2021 and have released new draft oil and gas methane regulations as a key plank in this plan. Importantly, the draft regulations introduced a performance-based compliance option, which adds flexibility for compliance relative to the 2025 regulations.
However, not all governments have committed to this goal and the current draft regulations may need greater stringency. The Saskatchewan government has not adopted a new target, even though the provincial oil and gas sector has already cut venting and flaring emissions by 67 per cent. In addition, analysis the province commissioned indicates that methane reductions are projected to be among the lowest-cost options for the oil and gas sector. The Alberta government announced it would engage with Albertans on meeting an even stronger target, 75 to 80 per cent methane emissions reductions. However, this doesn’t appear to have happened yet and the government’s technical submission states their opposition to the draft federal regulations, arguing that they are overly prescriptive and underestimate costs. While showing progress, British Columbia’s regulations have also faced criticism for not covering all oil and gas activities that could further reduce methane emissions, and some compliance deadlines extend to 2035.
Provinces can address these challenges by building on their previous successes, setting clear, achievable goals, and testing new technical and policy approaches through collaboration with industry, public or private sector researchers, Indigenous peoples, and others. Continued cooperation with the federal government will also be essential in achieving ambitious methane reduction targets.
Action to further reduce methane emissions from the upstream oil and gas sector is a smart move for British Columbia, Alberta and Saskatchewan. These provinces have demonstrated that coordinated, regionally tailored policies can lead to substantial emission reductions without compromising economic production. Methane is a high-impact greenhouse gas, and the success of the methane reduction policies in the oil and gas sector offers valuable lessons for the current urgent opportunity for much deeper reductions by 2030.
Alison Bailie is a Senior Research Associate at the Canadian Climate Institute
1 The contribution of methane to global warming has higher uncertainty than carbon dioxide emissions, with some scientists arguing that methane emissions have higher impact than CO2e calculations suggest while others suggest the impact is lower. For this Insight we have used the values reported by each province in their own discussion of oil and gas methane reductions in Figure 1. Canada’s national emissions data follow international standards that assume the global warming potential (that is, the warming effect) of methane to be 28 times that of carbon dioxide over a 100-year period.