Flexibility and Federal Oil and Gas Greenhouse Gas Regulations: Containing costs while increasing ambition

This policy brief by the International Institute for Sustainable Development (IISD) analyzes the design of federal greenhouse gas (GHG) regulations for Canada's oil and gas sector. The authors argue that because the sector has a limited ability to deliver emission intensity improvements by 2020, regulations must incorporate compliance flexibility—both within the sector (via credit trading) and beyond the sector (via price ceilings and offsets)—to remain cost-effective while increasing environmental ambition.

• The Canadian oil and gas sector's emissions are projected to grow by approximately 15 per cent, or 20 Mt, between 2012 and 2020, making the sector a central component of Canada's mitigation efforts.
• A rigid regulatory approach without flexibility would make a 20 per cent emissions intensity improvement target unachievable by 2020, as some firms simply cannot comply.
• Introducing compliance flexibility within the sector through credit transfers makes a 20 per cent intensity standard achievable and reduces the average cost of abatement by 16 per cent compared to a rigid scenario.
• In-sector flexibility alone is insufficient for deeper reductions; a 50 per cent intensity improvement is considered out of reach even with credit transfers between firms.
• Flexibility beyond the sector, such as price ceilings and low-cost domestic reductions (LCDRs), enables the achievement of a 50 per cent intensity improvement and further reduces costs.
• The authors identify existing blueprints for flexibility in Canada, including the federal light- and heavy-duty vehicle regulations and Alberta's Specified Gas Emitters Regulation (SGER).

APA

Sawyer, D., & Beugin, D. (2012). Flexibility and Federal Oil and Gas Greenhouse Gas Regulations: Containing costs while increasing ambition. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/regulating_carbon_canada_flexibility_oil_gas.pdf

Chicago

Sawyer, Dave, and Dale Beugin. Flexibility and Federal Oil and Gas Greenhouse Gas Regulations: Containing costs while increasing ambition. International Institute for Sustainable Development, 2012. https://www.iisd.org/system/files/publications/regulating_carbon_canada_flexibility_oil_gas.pdf.

Wikipedia

{{cite report |last1=Sawyer |first1=Dave |last2=Beugin |first2=Dale |title=Flexibility and Federal Oil and Gas Greenhouse Gas Regulations: Containing costs while increasing ambition |publisher=International Institute for Sustainable Development |date=October 2012 |url=https://www.iisd.org/system/files/publications/regulating_carbon_canada_flexibility_oil_gas.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sawyer2012flexibility, author = {Sawyer, Dave and Beugin, Dale}, title = {{Flexibility and Federal Oil and Gas Greenhouse Gas Regulations: Containing costs while increasing ambition}}, institution = {International Institute for Sustainable Development}, year = {2012}, month = oct, url = {https://www.iisd.org/system/files/publications/regulating_carbon_canada_flexibility_oil_gas.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }