Alberta giving oil/gas producers $2.3 billion over 5 years to cut methane emissions

methane emissions
Measuring fugitive methane emission leaks.

New regulations take effect in 2020

The Alberta government announced a draft directive to deliver on commitment to cut industrial methane emissions 45 per cent by 2025, according to a press release.

A key component of Alberta’s Climate Leadership Plan is reducing methane emissions, which have a climate change impact that is 25 times greater than carbon dioxide over a 100-year period.

Methane is an invisible, odourless and combustible gas, a major component of natural gas. It is most often released through equipment and well venting, and fugitive emissions or leaks at oil and gas and energy facilities.

Reducing methane pollution is recognized as one of the most cost-effective ways to accelerate greenhouse gas reductions.

The Alberta Energy Regulator (AER) was tasked with developing requirements to reduce methane gas emissions from upstream oil and gas operations by 45 per cent (relative to 2014 levels) by 2025.

It released a draft of the directive called Directive 060: Upstream Petroleum Industry Flaring, Incinerating, and Venting and Directive 017: Measurement Requirements for Oil and Gas Operations, feedback can be made through the AER until May 28th, 2018.

The government says the directive is designed to ensure actions are kept at the lowest cost to Alberta’s energy sector by securing flexibility for companies to innovate and use technologies best suited to their operations through an outcome-based approach, with mandated check-in points to ensure targets are met.

A recent study showed that Alberta’s oil and gas sector methane emissions were under reported by as much as 15 times.

“We know Alberta’s oil and gas industry is up to the challenge of cutting methane pollution. Their early action and commitment to working with us to get this right means we are well on our way to an Alberta-made plan that puts the jobs of hard-working Albertans and a strong economy front and centre,” said Margaret McCuaig-Boyd, Minister of Energy.

The government is providing more than $2.3 billion in assistance to companies in the oil and gas sector, including exempting them from carbon levy costs for the next five years. This will save companies an estimated $2 billion, according to the press release.

“We know what’s at stake here, including good jobs in the energy sector and the health of the planet we leave behind for our kids. That’s why we took the time to get this right. We look forward to continued work with industry on cutting methane pollution for the benefit of all Albertans,” said Shannon Phillips, Minister of Environment and Parks and the Minister Responsible for the Climate Change Office.

Other government supports include:

  • An estimated $200 million to reward early action to reduce methane through emission offsets.
  • Over $30 million of funding for 12 methane-reduction projects funded by Emissions Reductions Alberta as part of its Methane Challenge in 2017. The projects leverage a total investment of over $88 million and reduce emissions by 7.5 megatonnes by 2030.
  • $38 million over three years available under industrial Energy Efficiency Alberta programs – providing rebates for investments in industrial retrofits, including for methane-reducing equipment.
  • $5 million in new support for the deployment of technologies to monitor, detect, measure, verify and reduce methane emissions in partnership with the Methane Emissions Leadership Alliance.

“The government’s investment in readily available technologies will reduce methane emissions while supporting growth of the technology and service sector supporting the oil and gas industry. More than 90 per cent of oil and gas producers are small companies with fewer than 50 employees,” said Jackson Hegland, executive director, Methane Emissions Leadership Alliance.

“This initiative will help these companies with the starting blocks they need to measure, manage and reduce their methane emissions.”

The draft directives include new and enhanced requirements for measuring and reporting methane leaks as well as detecting and repairing them, along with existing and new facility standards and practices.

This is the first time draft AER directives have included mandated check-in points to ensure intended outcomes are being achieved. A multi-stakeholder technical committee will be struck to track progress. Once government receives feedback, it will be incorporated before regulations are finalized by the end of 2018.

Since Alberta’s methane-reduction commitment was announced in Nov. 2015 as part of the Climate Leadership Plan, a similar methane-reduction commitment has been brought in by the Government of Canada.

The province will seek an equivalency agreement with the federal government that recognizes Alberta’s plan within the national climate plan. Both federal and provincial requirements are set to take effect in 2020.

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