Ottawa overhauls methane reduction fund, criticized by environmental commissioner

Secretary of Natural Resources Jonathan Wilkinson is overhauling a methane abatement program that the Environment Commissioner denounced last fall as poorly designed and a waste of money.

The third round of applications for the Emissions Reduction Fund’s $675 million onshore program was initially slated to close Friday, but it has been shelved as Mr. Wilkinson’s division attempts to allay some of those concerns.

A relaunch is tentatively scheduled for the third week of January with applications for March. Mr. Wilkinson promises that the changes will adjust program requirements to make things more transparent, deliver better results and set limits on how much projects can cost per ton of emissions they reduce.

The program offers loans of up to $50 million to help oil and gas producers meet or exceed regulations that enforce their methane emissions.

The first two rounds resulted in $134 million in funding for 81 projects from 26 companies.

The federal government claims these projects will reduce emissions of more than four million tons of greenhouse gases. But Environment Commissioner Jerry DeMarco raised a number of red flags about the program in an audit released in November, including whether the claimed emissions reductions can be believed.

He also said the program didn’t prevent companies from using the new funds just to pay for projects they already planned to do, meaning the program didn’t deliver any new emissions reductions and wasn’t good value for money.

Mr. DeMarco said several companies had included in their applications a claim that the loan funds would allow them to reduce their methane emissions enough to increase production while still meeting the goals of the new methane regulation.

But, he noted, any increased emissions from producing more oil or gas was not part of the calculation for how much emissions would be reduced by the funds.

Mr. DeMarco said the program needed “a huge improvement.”

Methane, much more potent than carbon dioxide as a warming agent when left in the atmosphere, is critical to slowing climate change.

It accounts for 13 percent of Canada’s total emissions and 40 percent of its oil and gas sector emissions, primarily from the venting and flaring of methane at oil and gas production sites.

Venting is a controlled release of unburned gases left over from the oil and gas production process. Flaring is a controlled combustion of waste gas, often visible from a large flame at the top of a flare at a manufacturing site.

Many projects funded to date have reduced or eliminated venting and flaring, but Mr Wilkinson said going forward only projects that eliminate it will qualify.

The new criteria will also require projects to go beyond existing regulations requiring a 40 percent reduction in methane emissions from the oil and gas sector, compared to 2012 levels, by 2025.

A report released last month claims Canada is on track to get there. Canada is also moving toward the next target of 75 percent below 2012 levels by 2030, joining a global methane pledge in the fall to cut all methane emissions 30 percent below 2020 levels by 2030.

Outside of oil and gas, agriculture and landfills are Canada’s largest sources of methane.

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