Canada Sets Tougher Methane Rules for Oil and Gas, Targeting 75% Emissions Cut by 2035

Canada has unveiled long-awaited regulations aimed at sharply reducing methane emissions from its oil and gas sector, marking a significant step in the country’s climate strategy even as overall fossil fuel production continues to rise. The new rules set Canada on a path to cut methane emissions by 75% below 2014 levels by 2035, strengthening existing standards while extending the compliance timeline.

The regulations deliver on a commitment by Prime Minister Mark Carney to toughen methane controls, though with a later deadline than draft rules proposed under former Prime Minister Justin Trudeau. Trudeau’s plan sought the same 75% reduction by 2030 but faced strong resistance from industry, which argued the targets were unrealistic. The revised timeline aims to balance climate ambition with operational feasibility for producers.

Methane is a potent greenhouse gas, with roughly 80 times the warming impact of carbon dioxide over a 20-year period. In Canada, oil and gas operations account for about half of total methane emissions, released through venting and flaring during production, as well as leaks from wells and aging infrastructure.

Set to take effect in 2028, the new rules largely prohibit routine venting, with limited exceptions, and introduce stricter inspection and repair requirements to detect and fix methane leaks. Companies will be allowed flexibility in how they meet the standards, including designing their own methane control strategies, provided they stay within mandated methane intensity thresholds.

The announcement comes amid broader concerns about Canada’s climate trajectory. Greenhouse gas emissions from the oil and gas sector continue to increase alongside expanding production, and the country is not on track to meet its economy-wide goal of cutting emissions 40% to 45% below 2005 levels by 2030. Carney has also drawn criticism from environmental groups after rolling back some emissions policies to encourage energy investment.

Still, the government says methane regulation remains a bright spot. Existing rules have already put Canada on course to meet its earlier target of a 40% to 45% reduction by 2025. The new framework is expected to cut 304 million tonnes of carbon dioxide equivalent between 2025 and 2035, while reducing oil and gas output by just 0.2%, underscoring methane control as a high-impact, low-cost climate lever.

75% methane cuts by 2035 raise the methane-management bar substantially for Canadian O&G producers, and it directly changes what their LNG competitiveness looks like as the EU Methane Regulation tightens simultaneously. Our energy-transition and sustainability-due-diligence teams help clients evaluate what methane-rule frameworks mean for asset economics and disclosure.