New research using the latest figures for Canada’s methane emissions concludes it would be much cheaper for the energy industry to meet reduction targets for the potent greenhouse gas than it would be to pay carbon taxes on it.
“The federal government’s target for 75% reduction is achievable,” said Kris Chapman of Dunsky Energy and Climate Advisors, a Montreal-based consultancy hired by the environmental group Environmental Defence.
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Chapman said Canada’s oil and gas industry could meet Ottawa’s goal of a 75% reduction in methane emissions by 2030 for the equivalent of about $11 per tonne of carbon, The Canadian Press reports. The current federal carbon tax is $65 a tonne, although methane is shielded from that tax under some provincial climate change regimes.
Dunsky’s calculations are based on recent studies that suggest official figures for methane release are significant underestimates. A flurry of recent published papers has concluded the methane releases inventoried by the federal government from industry reports are far too low.
Those concerns are echoed in a report this year from the auditor general’s office.
“Several Canadian scientific studies suggest that total emissions are under-reported in the national inventory and that the distribution of emissions is likely inaccurate,” it says.
Chapman said the Dunsky paper multiplies methane emissions in Canada’s national inventory by 1.7 to achieve a more likely estimate of what’s actually being released into the atmosphere.
“We’re pretty confident that 1.7 is representative of reality.”
Dunsky’s cost estimate is close to that of the International Energy Agency, CP says. Earlier this year, that body estimated that methane equivalent to about 30,000 tonnes of carbon could be eliminated from the Canadian oilpatch—roughly what it would take to meet the federal goal—for $13 a tonne or less.
And in 2021, the Calgary-based Pembina Institute concluded Canada could reduce methane emissions by 80% from 2012 levels for less than $25 per tonne of carbon dioxide equivalent.
The Dunsky paper comes as the federal government prepares a long-awaited set of regulations for methane, a climate pollutant about 85 times more potent than carbon dioxide over the crucial 20-year span when humanity will be scrambling to get climate change under control. Its conclusions should encourage Ottawa to set strict standards, said Ari Pottens of Environmental Defence.
“We’re looking for the regulations to be as ambitious as the proposed [federal] framework was,” he said.
Environmental Defence wants the new rules to ban venting and flaring of methane from oil and gas sites, mandate regular and frequent inspections to ensure compliance, and ban on certain types of equipment prone to leak.
The Canadian Association of Petroleum Producers did not immediately respond to CP’s request for comment on the Dunsky report.
So far, industry has committed to reducing emissions by 45% by 2025. Alberta’s 2021 progress report found methane releases from oil and gas fell about 44% between 2014 and 2021, although that figure was based on the official emission estimates that have now been superseded by the Dunsky analysis.
Pottens said it makes sense for government and industry to go hard after methane. The effort is cost-effective, he said, and can result in a more saleable product for natural gas producers. But because methane affects climate so strongly at first and then gradually fades, tackling it presents an opportunity.
“If we’re able to cut back on methane emissions now, we’re actually buying ourselves time later to address some of the tougher climate issues.”
That position echoes the latest summary for policy-makers from the Intergovernmental Panel on Climate Change, which identifies methane controls as methane controls in the oil and gas industry as one of the three quickest, most affordable ways to achieve major emission reductions by 2030.
This report by The Canadian Press was first published July 19, 2023.
