Study Shows Oil and Gas Methane Reductions Are Cheaper Than Carbon Tax

Using the most recent data on Canada’s methane emissions, a new study reveals that achieving reduction targets for the powerful greenhouse gas would be significantly more cost-effective for the energy sector than paying carbon taxes on it. 

“The federal government’s target for 75 percent reduction is achievable,” said Kris Chapman of Dunsky Energy and Climate Advisors.

According to Chapman, the Canadian oil and gas industry can reduce methane emissions by 75% by 2030 while only spending roughly $11 per tonne of carbon. Methane is exempt from the federal carbon tax of $65 per ton due to climate change policies in some provinces.

New analyses provide a foundation for those predictions, showing that official methane release figures likely minimize the problem considerably. The federal government’s inventory of methane releases, based on data from industry, is significantly too low in a series of published articles.

“Several Canadian scientific studies suggest that total emissions are under-reported in the national inventory and that the distribution of emissions is likely inaccurate,” according to the analysis.

According to Chapman, the Dunsky research makes a more realistic estimate of methane emissions by dividing Canada’s national inventory by 1.7.

“We’re pretty confident that 1.7 is representative of reality.”

Dunsky’s cost is very similar to what the International Energy Agency has predicted. It was estimated earlier this year by the organization that the cost to eliminate methane equivalent to about 30,000 tonnes of carbon from the Canadian oilsands would be around $13 per tonne.