Oil and Gas Greenhouse Gas Regulations: The implications of alternative proposals

The policy brief analyzes four regulatory scenarios for Canada's oil and gas sector, pairing emission-intensity improvements (20% to 40%) with price ceilings ($20 to $60). It argues that a 40% intensity standard with a two-tiered price ceiling ($30 and $60) provides an optimal balance by delivering 42 megatonnes of compliance in 2020 at an average cost of $28 per tonne. The author notes that while higher intensity targets increase costs, the average cost per barrel remains low (under $1), suggesting that such regulations would not significantly deter industry investment, as project hurdle rates already account for a $40 marginal cost.

• A hybrid policy scenario featuring a 40 per cent intensity standard and a two-tiered price ceiling is identified as a balanced approach, capable of delivering 42 megatonnes (Mt) of compliance in 2020 at an average cost of $28 per tonne or $0.42 per barrel of oil produced.
• The oil and gas sector is unlikely to achieve more than a 20 per cent intensity improvement by 2020 unless costs reach $100 per tonne.
• The 40/40 proposal (40% intensity reduction and $40 price ceiling) creates an incentive to abate that is comparable to or higher than major global policies, such as British Columbia's $30 carbon tax, California's $13 carbon permits, and European Union permits trading at $3.75 as of April 2013.
• Formalizing a $40 marginal cost is unlikely to severely impact industry investment because project hurdle rates used for investment decisions already incorporate a $40 marginal cost.
• The proposed regulations are designed to have lower competitiveness impacts than standard carbon taxes; for example, if the 40/40 proposal were implemented as a carbon tax like British Columbia's, the cost to firms in 2020 would be three times larger due to payments on remaining emissions.
• The effectiveness of the proposed technology fund—where payments are made in lieu of emission reductions—depends on whether funds are used for long-term research, development and demonstration (RD&D) or short-term reductions in other sectors.

APA

Sawyer, D., & Beugin, D. (2013). Oil and Gas Greenhouse Gas Regulations: The implications of alternative proposals. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/oil_and_gas_ggr.pdf

Chicago

Sawyer, Dave, and Dale Beugin. Oil and Gas Greenhouse Gas Regulations: The implications of alternative proposals. International Institute for Sustainable Development, 2013. https://www.iisd.org/system/files/publications/oil_and_gas_ggr.pdf.

Wikipedia

{{cite report |last1=Sawyer |first1=Dave |last2=Beugin |first2=Dale |title=Oil and Gas Greenhouse Gas Regulations: The implications of alternative proposals |publisher=International Institute for Sustainable Development |date=May 2013 |url=https://www.iisd.org/system/files/publications/oil_and_gas_ggr.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sawyer2013oil, author = {Sawyer, Dave and Beugin, Dale}, title = {{Oil and Gas Greenhouse Gas Regulations: The implications of alternative proposals}}, institution = {International Institute for Sustainable Development}, year = {2013}, month = may, url = {https://www.iisd.org/system/files/publications/oil_and_gas_ggr.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }