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

The document argues that rigid performance standards for Canada's oil and gas sector are likely to result in non-compliance and high costs due to the diverse abatement potentials across subsectors. By implementing flexibility mechanisms—such as in-sector credit trading and out-of-sector options like low-cost domestic reductions (LCDRs) and price ceilings—the government can achieve more stringent emissions intensity targets. Modelling suggests that while a 20% intensity improvement is achievable with in-sector flexibility, a 50% improvement requires flexibility beyond the sector to be feasible.

• The Canadian oil and gas sector is a major emissions source, contributing 22% of national emissions in 2010, with production emissions growing by approximately 54 Mt between 1990 and 2010.
• A rigid regulatory approach with no flexibility would make a 20% emissions intensity improvement target unachievable for the sector by 2020, as only two of seven modelled subsectors could meet such a standard alone.
• Introducing compliance flexibility within the sector via credit transfers makes a 20% intensity improvement target achievable, increasing total emissions reductions by 7 Mt and reducing average abatement costs by 16% compared to a rigid scenario.
• A high-ambition target of 50% emissions intensity improvement is considered out of reach using only in-sector flexibility, but becomes achievable if flexibility is extended beyond the sector through price ceilings and out-of-sector reductions.
• Out-of-sector flexibility, such as a price ceiling, can further reduce costs; for a 20% intensity improvement, it reduces costs by 8% by eliminating the most expensive emissions reductions.
• The document identifies existing blueprints for flexibility in Canada, including the credit banking and trading in federal light- and heavy-duty vehicle regulations, and Alberta's Specified Gas Emitters Regulation (SGER), which uses a technology fund and offsets.
• The feasibility of using low-cost domestic reductions (LCDRs) as a primary compliance pathway is uncertain, as there is limited data on the quantity and cost of available reductions in forestry, agriculture, and land-use changes in Canada.

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} }