Canada and Alberta reach agreement-in-principle on methane equivalency

The world is changing rapidly. In response, Canada is transforming its economy to be more resilient, competitive, and prepared for a low-carbon future. A key part of this effort is reducing emissions from the oil and gas sector and ensuring Canadian energy remains a reliable and responsible choice in global markets. By working with provinces and territories, Canada is cutting pollution, driving innovation, and supporting high-paying careers – strengthening its position as a global energy leader.

Methane has a warming impact far greater than carbon dioxide, and lowering Canada’s methane emissions is an essential and cost-effective way of reducing greenhouse gases without impacting production. Furthermore, it is an essential part of our plan to strengthen Canada’s position in global energy markets, as global customers prioritise low-carbon oil and gas.

That is why, today, the Government of Canada and the Government of Alberta announced an agreement-in-principle to lower emissions of methane in the oil and gas sector. Building on the November 2025 Canada-Alberta Memorandum of Understanding (MOU), this new agreement includes the objective of reducing methane emissions by 75% below 2014 levels by 2035 in Alberta.

Under the proposed framework, Alberta would implement a performance-based approach that combines regulations, offset credits, and targeted investments. Canada therefore intends to continue to work with Alberta to develop an equivalency agreement under the Canadian Environmental Protection Act, 1999, whereby federal methane regulations would be stood down in Alberta, provided that the necessary equivalent emissions reductions are realised.

The agreement-in-principle commits to:

Develop an outcome-based equivalency agreement with a pathway to the 2035 emissions reduction target.
Use an independent, jointly selected third party to conduct methane modelling and assess emissions reductions.
Enhance transparency through published information on covered emission sources and Alberta’s approach to reducing methane emissions.
Take corrective action if reductions are not achieved as expected.

Once Alberta and Canada arrive at an equivalency agreement, it will undergo a 60-day consultation period, with the goal of finalising it by the end of the year and implementing it no later than January 1, 2027, for a 10-year period, subject to legislative amendments. Alberta’s existing equivalency agreement will remain in place until the new agreement is finalised.

Reducing methane emissions by the oil and gas sector is one of the most effective ways to achieve near-term climate benefits. Canada’s enhanced methane regulations also reduce air pollutant emissions, which means cleaner air for Canadians living near oil and gas activities. This agreement will provide regulatory certainty while supporting innovation and emissions reductions across the sector.

Canada and Alberta continue to make good progress on all the elements of the MOU. This work will extend over the coming weeks to ensure it is done right. Both governments are focused on moving forward as quickly as possible to provide certainty.

Together, we are building a stronger, more sustainable, more independent Canadian economy. At this pivotal moment, federal-provincial cooperation is enabling practical, outcome-based approaches that provide regulatory certainty and support growth, innovation, and emissions reductions across the energy sector.

Quotes

“Canada is strongest when we work together. By partnering with Alberta on a methane equivalency agreement, we will cut emissions while ensuring we protect Canadian jobs and build a more competitive and resilient energy sector. This is how we build a stronger, more sustainable, and more independent Canadian economy – by driving innovation, reducing pollution, and positioning Canada as the world’s supplier of choice for responsibly produced energy.”

“Albertans have long known that responsible energy development and strong environmental performance go hand in hand. This agreement reflects that approach, keeps decision-making here in Alberta, and builds on a system that is already delivering results. We will keep lowering emissions while supporting the energy sector that drives our province forward.”

“Strong partnerships with provinces and territories are essential to building a sustainable and competitive Canada. Through this new agreement, Canada and Alberta are taking steps to reduce methane emissions with clear, measurable actions that also strengthen the energy sector. By working together, we are taking real steps to protect the environment, to create good jobs, and to reinforce Canada’s global reputation as a reliable and responsible energy producer.”

— The Hon. Dominic LeBlanc, President of the King’s Privy Council for Canada and Minister responsible for Canada-U.S. Trade, Intergovernmental Affairs, Internal Trade and One Canadian Economy

“Methane reductions are some of the fastest, most cost-effective ways to protect our environment while growing our energy sector so we can deliver energy security for Canada and our allies. This agreement-in-principle with Alberta shows the Team Canada approach in action, provides clarity and flexibility for producers, and reinforces Canada’s reputation as a responsible energy superpower.”

“The Canada-Alberta agreement-in-principle builds on a history of successful federal-provincial collaboration on methane. A new equivalency agreement with Alberta will provide certainty for investors, strengthen competitiveness, support good jobs, and drive investment in clean energy and technology. This agreement demonstrates a strong continued collaboration between the governments of Canada and Alberta on oil and gas emissions reductions, which is key to building a prosperous and responsible energy future for all Canadians.”

Quick facts

In November 2025, Canada and Alberta signed an MOU that strengthens federal-provincial collaboration in the energy sector to achieve net-zero emissions by 2050, unlock the full potential of Alberta’s energy resources, support export diversification, and create hundreds of thousands of new high-paying careers for Canadians.
Under this MOU, Canada and Alberta released a draft Co-operation Agreement on Environmental and Impact Assessment earlier this month. This agreement-in-principle would bring a “one project, one review” approach to major infrastructure initiatives in the province – creating a more streamlined assessment process that delivers major projects faster, reinforces strong environmental protections, and ensures the rights of Indigenous communities are respected. The agreement is currently under consultation.
Methane is a powerful greenhouse gas that has about 80 times the global warming impact of carbon dioxide over a 20-year period. Nearly a quarter of the Canadian oil and gas sector’s total greenhouse gas emissions are methane.
Canada first adopted oil and gas methane regulations in 2018 and finalised Enhanced Methane Regulations for oil and gas in December 2025. The enhanced regulations are projected to deliver 304 million tonnes (Mt) of greenhouse gas emission reductions across Canada from 2028 to 2040.
Enhanced methane regulations are expected to accelerate the clean-tech sector’s growth as it supplies technologies that will help the oil and gas industry comply. There are already over 130 methane mitigation firms in Canada, with 47 established over the past 12 years. This sector has grown since Canada’s first oil and gas methane regulations were adopted in 2018.
To date, Canada and Alberta have negotiated two successful equivalency agreements on oil and gas methane, with an initial agreement developed in 2020 and a second in 2025.
Methane regulations in Canada are working: by 2023, oil and gas methane emissions in Canada had fallen by 40% since 2014, while oil and gas production has continued to grow.
Through the Major Projects Office (MPO), the Government of Canada is driving tens of billions of dollars in investments and creating the conditions for a better connected, more productive, and ambitious country. Earlier this month, Prime Minister Carney announced new projects in Canada’s Arctic and Northern region being referred to the MPO, building on two previously announced tranches of projects across the country (see tranches one and two). These projects represent a combined potential investment of more than $126 billion in our economy and will create thousands of well-paying careers for Canadians.
The MPO is providing $40 million over three years to increase the capacity of Indigenous Peoples to engage early and consistently on major projects.