Canada Gazette, Part I, Volume 159, Number 27: Order Declaring that the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) Do Not Apply in Alberta, 2025
July 5, 2025
Statutory authority
Canadian Environmental Protection Act, 1999
Sponsoring department
Department of the Environment
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Issues
The current equivalency agreement between the Minister of the Environment and the Province of Alberta, which forms the basis for the non-application of the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) [the Federal Regulations]footnote 1 in the Province of Alberta, is set to expire on October 26, 2025.
A new equivalency agreement is now being negotiated. An updated order (the proposed Order) is required to avoid regulatory overlap.
Background
In April 2018, the Government of Canada published the Federal Regulations. The Federal Regulations introduced control measures (facility and equipment standards) to reduce fugitive and venting emissions of hydrocarbons, including methane, from the upstream oil and gas sector. The Federal Regulations came into force on January 1, 2020.
In December 2018, the Alberta Energy Regulator finalized amendments to the Directive 060: Upstream Petroleum Industry Flaring, Incinerating, and Venting and Directive 017: Measurement Requirements for Oil and Gas Operations (the Alberta Directives),footnote 2,footnote 3 which put in place requirements for methane emissions reductions. These requirements are given force of law by the Methane Emission Reductions Regulation (the Alberta Regulations),footnote 4 which came into force on January 1, 2020.
In 2020, the Minister of the Environment entered into a five-year equivalency agreementfootnote 5 with Alberta and an associated order was made to declare that the Federal Regulations do not apply to the province over the period of the equivalency agreement.footnote 6 This approach reduces regulatory overlap and administrative burden. Alberta continues to apply its own methane emission regulations and facilities only face one set of requirements. This equivalency agreement recognized that Alberta’s regulations would achieve equivalent outcomes in reducing methane emissions compared to the Federal Regulations. The current equivalency agreement is in force until October 26, 2025, unless terminated earlier by either party on three months’ notice.
Equivalency agreements under the Canadian Environmental Protection Act, 1999
Protection of the environment is a shared jurisdiction between the Government of Canada and provincial governments. Section 10 of the Canadian Environmental Protection Act, 1999 (CEPA) authorizes the Governor in Council, on the recommendation of the Minister of the Environment, to make an order declaring that the provisions of a regulation made under certain subsections of CEPA do not apply in a province or territory. For this to occur, the province or territory must first enter into an equivalency agreement with the Minister of Environment. An equivalency agreement is a written agreement entered into by the Minister of the Environment and the province or territory declaring that there are in force in the province or territory laws containing provisions that are equivalent to the Federal Regulations, and laws containing provisions that are similar to sections 17 to 20 of CEPA for the investigation of alleged offences under environmental laws of the province or territory. Under subsection 10(8) of CEPA, an equivalency agreement has a maximum term of five years after the date on which it comes into force. An equivalency agreement may be terminated before this time subject to a three-month notice by either party.
The Department of the Environment (the Department) has indicated that it is willing to consider developing equivalency agreements for greenhouse gas (GHG) emission regulations with interested provinces and territories in order to reduce regulatory overlap and provide greater flexibility for regulated sectors. In the case of GHG regulations, provincial or territorial laws are considered equivalent if they meet the above requirements under CEPA, which includes resulting in equivalent or better GHG emission outcomes compared to what emissions would have been if the corresponding federal regulations had been applied instead, calculated in terms of carbon dioxide equivalent (CO2e).
Alberta equivalency agreement (2025–2030)
The Government of Canada is publishing a draft equivalency agreement for the period from 2025 to 2030. This agreement is based on equivalent methane emission reductions in CO2e, under provisions of the provincial laws in force in the jurisdiction of the Government of Alberta, and on the fact that these provincial laws contain similar provisions to sections 17 to 20 of CEPA for the right to require an investigation of alleged offences. These provisions are set out under the provincial Environmental Protection and Enhancement Act.
This agreement would come into force on the date of registration of the proposed Order declaring that the Federal Regulations do not apply in Alberta except with respect to federal works or undertakings. The agreement would be reviewed on an annual basis. The agreement is similar to the previous agreement, and institutes expanded information sharing requirements for Alberta that include facility level emissions data, verification activities, and enforcement measures. The new agreement also includes a requirement for an annual meeting between Canada and Alberta to discuss implementation of the agreement. This agreement would end five years after the date of its coming into force, unless terminated early by either party with at least three months’ notice. This draft equivalency agreement will be published in the CEPA registry with a notice of its availability published in the Canada Gazette, Part I.
Equivalent environmental outcomes
For the purposes of determining equivalent outcomes between the Alberta Regulations and the Federal Regulations, the Department has maintained the analysis associated with the existing agreement showing methane reduction outcomes (in CO2e) from the Federal Regulations and the Alberta Regulations using the departmental reference case as published in Canada’s Greenhouse Gas and Air Pollutant Emissions Projections: 2018 (the 2018 Reference Case).footnote 7
The analysis was conducted by first developing detailed, bottom-up engineering emission estimates for the baseline and regulatory scenarios for each emission source. The departmental reference case for the oil and gas sector was determined using historic emissions from the departmental National Inventory Report and the production forecast of oil and gas from the Canada Energy Regulator.
Based on these estimates, the Alberta Regulations are expected to result in cumulative emission reductions of 38.68 megatonnes (Mt) of methane (in CO2e) for the period starting on January 1, 2025, and ending on December 31, 2029, compared to reductions of 37.77 Mt for the Federal Regulations, as summarized in Table 1 below. These estimates differ by 2.4% and are considered equivalent given the uncertainty of modelled results. As illustrated in Table 2, the Alberta Regulations are expected to result in greater emission reductions over a five-year time horizon. These emission reduction trends are expected to continue into 2030, when the equivalency agreement would be set to expire.
| Emissions source | Alberta Regulations | Federal Regulations | Difference |
|---|---|---|---|
| Compressors | 4.69 | 3.29 | 1.39 |
| Fugitive emissions | 4.01 | 4.96 | −0.95 |
| Glycol dehydrators | 1.59 | 0 | 1.59 |
| Pneumatic controllers | 21.54 | 12.38 | 9.17 |
| Pneumatic pumps | 3.00 | 7.07 | −4.07 |
| Routine venting |
3.85 | 10.07 | −6.22 |
| Total | 38.68 | 37.77 | 0.91 |
| Year | Alberta Regulations | Federal Regulations | Difference |
|---|---|---|---|
| 2025 | 7.12 | 7.30 | −0.18 |
| 2026 | 7.44 | 7.43 | 0.00 |
| 2027 | 7.73 | 7.56 | 0.17 |
| 2028 | 8.08 | 7.68 | 0.40 |
| 2029 | 8.31 | 7.79 | 0.52 |
| Total | 38.68 | 37.77 | 0.91 |
While the existing equivalency agreement (from 2020 to 2025) was negotiated based on modelling results derived from the Department’s 2018 reference case, the Department continues to support the conclusion of equivalent methane emission reductions for the period of the new agreement, as neither the Government of Alberta nor the Government of Canada have made substantive changes to their regulations. If amendments are made to the Federal Regulations, then a new equivalency agreement may be required, and it would be based on emission estimates that reflect the amended regulations.
Objective
The objective of the proposed Order is to reduce regulatory overlap and reporting burden, as it has been established that Alberta’s laws are expected to achieve equivalent GHG emission reductions in the oil and gas sector in a manner that best suits its particular circumstances.
Description
The proposed Order, made pursuant to subsection 10(3) of CEPA, would suspend the application of the Federal Regulations in Alberta with the exception of federal works or undertakings as defined in subsection 3(1) of CEPA. The proposed Order will cease to have effect upon the termination of the equivalency agreement, which has a maximum term of five years from the day that the Order is registered but may be terminated earlier by either party with at least three months’ notice.
Regulatory development
Consultation
Officials from the Government of Alberta and the Government of Canada have been engaged in bilateral discussions on the renewal of the equivalency agreement. These discussions have been focused on key policy and technical parameters used in support of the determination of equivalent outcomes, as well as information-sharing arrangements agreed to with Alberta representatives allowing the conduct of annual reviews of the agreement.
Modern treaty obligations and Indigenous engagement and consultation
In Alberta, facilities subject to the Federal Regulations were identified on the reserve lands of 26 First Nations. The proposed Order would suspend the application of the Federal Regulations in Alberta, including for those facilities on reserve lands. Equivalent environmental outcomes are expected to be achieved under the Alberta Regulations. Moreover, the proposed Order is expected to result in incremental cost savings for facilities affected by the Federal Regulations, including facilities managed by Indigenous peoples. No modern treaty obligations are expected to be impacted by the proposed Order.
Instrument choice
An order is the only regulatory instrument under CEPA for the Governor in Council to declare that the Federal Regulations do not apply in Alberta. Non-regulatory options, such as a voluntary option or code of practice, are therefore not suitable tools for achieving the objective.
Regulatory analysis
Benefits and costs
The Alberta Regulations will regulate methane emissions in a manner that results in equivalent outcomes to the Federal Regulations and in a manner designed with the specific characteristics of the Alberta oil and gas industry in mind. Furthermore, the proposed Order would reduce regulatory overlap and reporting burden by suspending the requirements of the Federal Regulations in Alberta. As a result, the proposed Order is expected to result in incremental compliance and administrative cost savings to industry.
The federal government is expected to realize incremental cost savings from suspended administrative activities related to enforcement, compliance promotion, and administration of the Federal Regulations in Alberta. These cost savings are estimated to total about $1,638,577 over a five-year period (2024 Canadian dollars).footnote 8
Small business lens
Given that the proposed Order is not expected to result in incremental costs to industry, it is not expected to result in incremental cost impacts to small business.
One-for-one rule
The one-for-one rule would apply to the proposed Order, constituting an “OUT” as per the Policy on Limiting Regulatory Burden on Business. However, those cost reductions have already been accounted for in the Regulatory Impact Analysis Statement for the previous order, which covered the 2020–2029 analytical period. Accordingly, no additional impact was assessed for the proposed Order.
Regulatory cooperation and alignment
Protection of the environment is a shared responsibility in Canada. The use of equivalency agreements, together with an order suspending the application of a federal regulation in a jurisdiction, is included in section 10 of CEPA as a tool for avoiding regulatory duplication.
The Alberta Regulations require the oil and gas sector to reduce methane emissions in a manner equivalent to the Federal Regulations. If the Minister is satisfied that the CEPA section 10 requirements regarding equivalent provisions and that the requirements in sections 17 to 20 regarding investigations have been met, the parties may sign the equivalency agreement. If the Governor in Council then approves the proposed Order, it will suspend the application of the Federal Regulations in Alberta.
International obligations
This proposal is not linked to any international agreements or obligations.
Effects on the environment
The Federal Regulations were developed under the Pan-Canadian Framework on Clean Growth and Climate Change. A strategic environmental assessment (SEA) was completed for this framework in 2016. The SEA concluded that proposals under the framework will reduce GHG emissions and are in line with the 2022–2026 Federal Sustainable Development Strategy (FSDS) (PDF) goal of effective action on climate change.
Gender-based analysis plus
No impacts based on gender and other identity factors have been identified for this proposal.
Implementation, compliance and enforcement, and service standards
Implementation
The proposed Order declares that the Federal Regulations do not apply in Alberta effective on the day on which the Order is registered, except for federal works and undertakings, which includes interprovincial pipelines.
Contacts
Clare Demerse
Acting Director
Oil, Gas and Alternative Energy Division
Energy and Transportation Directorate
Environmental Protection Branch
Department of the Environment
351 Saint-Joseph Boulevard
Gatineau, Quebec
K1A 0H3
Email: methane-methane@ec.gc.ca
Matthew Watkinson
Executive Director
Regulatory Analysis and Valuation Division
Economic Analysis Directorate
Strategic Policy Branch
Department of the Environment
351 Saint-Joseph Boulevard
Gatineau, Quebec
K1A 0H3
Email: darv-ravd@ec.gc.ca
PROPOSED REGULATORY TEXT
Notice is given, under subsection 332(1)footnote a of the Canadian Environmental Protection Act. 1999 footnote b, that the Governor in Council proposes to make the annexed Order Declaring that the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) Do Not Apply in Alberta, 2025 under subsection 10(3) of that Act.
Any person may, within 60 days after the date of publication of this notice, file with the Minister of the Environment comments with respect to the proposed Order or a notice of objection requesting that a board of review be established under section 333footnote c of that Act and stating the reasons for the objection. Persons filing comments are strongly encouraged to use the online commenting feature that is available on the Canada Gazette website. Persons filing comments by any other means, and persons filing a notice of objection, should cite the Canada Gazette, Part I, and the date of publication of this notice, and send the comments or notice of objection to Clare Demerse, Director, Oil, Gas and Alternative Energy, Department of the Environment, 351 Saint-Joseph Boulevard, Gatineau, Quebec K1A 0H3 (email: methane-methane@ec.gc.ca).
A person who provides information to the Minister may also submit a request for confidentiality under section 313footnote d of that Act.
Ottawa, June 27, 2025
Janna Rinaldi
Acting Assistant Clerk of the Privy Council
Order Declaring that the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) Do Not Apply in Alberta, 2025
Declaration
Non-application
1 Except with respect to a federal work or undertaking, the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) do not apply in Alberta.
Cessation of Effect
Termination of agreement
2 This Order ceases to have effect on the day on which the agreement between the Minister of the Environment and the Government of Alberta entitled “Agreement on the Equivalency of Federal and Alberta Regulations Respecting the Release of Methane from the Oil and Gas Sector in Alberta, 2025” terminates or is terminated under subsection 10(8) of the Canadian Environmental Protection Act, 1999.
Repeal
3 The Order Declaring that the Provisions of the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) Do Not Apply in Alberta footnote 9 is repealed.
Coming into Force
Registration
4 This Order comes into force on the day on which it is registered.
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