Global Processing

New environmental regulations to govern Canada's oil and gas industry

March 7, 2013

Canada's oil and gas businesses are likely to see new regulation governing the industry by mid-year, according to the country's environment minister Peter Kent, who announced that new environmental rules are in the final stages of preparation.

The regulation will focus on reducing the industry's greenhouse-gas emissions to help Canada meet its target for a 17 percent cut in overall emissions from 2005 levels by 2020. Environmental regulation is already being implemented for the transportation and coal-fired electricity industries but it is estimated that the country is still only halfway to the target. Introducing the rules for the oil and gas industry could significantly boost the chances of Canada reaching its environmental goal, Kent told a House of Commons committee.

Finalizing the regulation is taking longer than initially planned and although work on the rules started in 2011, they are still not finished. There has not been any delay but the capacity of the department does not allow speeding up of the process. Kent explained that at present the department was setting the stringency levels of the rules.

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Giving more details on the process of developing the regulation, the environment minister stated that a long time was spent on drawing the rules and implementing them in the coal-fired electricity sector. Overall, it took more than two years to introduce the new regulation on coal-fired power stations, with opposition from both industry representatives and provincial governments resulting in a delay in implementation until the fall of 2012.

Kent noted that the department was trying to ensure that the same situation would not happen again with the oil and gas industry by starting consultation in the early stages of setting up the rules. To make the rules more flexible and easy to implement, it is expected that provincial governments will be given the right to administer the regulation as they see fit, provided that federal standards are fully met, according to the Globe and Mail.

The House of Commons committee was also told that Canada is taking into account the actions in response to climate change that U.S. President Obama outlined in his inaugural speech. Climate change discussions south of Canada's border are certainly important to the country, said deputy minister Bob Hamilton, pointing out that Canada had aligned its greenhouse-gas reduction targets with the United States and has teamed up with Washington on setting up regulations for the transportation sector.

Last week, Canada's natural resources minister Joe Oliver visited the United States in an attempt to persuade Washington to reconsider its plans to turn down the construction of TransCanada's Keystone XL pipeline on environmental grounds. Recently, the U.S. State Department issued a draft environmental assessment of the project and ruled that the pipeline would not make a significant contribution to global greenhouse gas emissions and is unlikely to lead to new oil sands development.