03/05/2013 12:38 EST | Updated 05/05/2013 05:12 EDT

Environment minister hopes for new oil and gas regulations by mid-year

OTTAWA - Less than a month after U.S. President Barack Obama put Canada on notice about climate change, environmental regulations for the oil and gas sector are in their final stages, Environment Minister Peter Kent said Tuesday.

The long-promised rules would seek to curb the sector's greenhouse-gas emissions to help Canada meet a 2020 target for a 17 per cent cut in overall emissions from 2005 levels.

Rules have recently been put in place to regulate emissions for the transportation and coal-fired electricity industries, but estimates suggest they get Canada only halfway to that goal.

Kent said he expects the new regulations to help close the gap.

"We're in the final stages now of setting the stringency levels and I would hope that certainly by mid-year we would be in a position to share those," Kent said told a House of Commons committee Tuesday.

A promise to regulate the oil and gas sector's emission levels was first announced by the Tories in 2008 with new rules promised to take effect in 2010, but the plan never materialized.

Word that the regulations are now nearing completion follows the United States essentially putting Canada on notice that it wants to see more aggressive action on curbing climate change.

The Conservatives have announced a flurry of climate-change-related initiatives in the last few weeks, in response partly to Obama's State of the Union address, which warned Congress to agree to market-based solutions to climate change or face executive orders from the Oval Office.

The message was widely viewed north of the border as being meant as much for Canadian interests as it was for those in the U.S.

Indeed, what happens in the U.S. is taken into account in crafting policy north of the border, deputy environment minister Bob Hamilton told the committee.

"The recent announcements, the president's inaugural speech, and the increased intensity of climate change discussion in the U.S. is obviously important to us," Hamilton said.

Canada, he added, has aligned its greenhouse-gas reduction targets with the U.S., and worked with Washington on regulations for the transportation sector.

"What the U.S. does or thinks about climate change is obviously something important we have to consider within our policy structure and framework."

Kent said the current set of regulations for the oil and gas sector have been in development since fall 2011, but they are taking longer than expected.

"They haven't been delayed, it's just been the capacity of the department," he said following his testimony.

"We spent more time than originally intended on the coal-fired electricity generation sector, but we're in the final stages now, and that's always the toughest area in terms of setting stringency."

It took more than two years to introduce regulations on coal-fired power plants, and opposition from industry and provincial governments helped delay them until last fall.

Meanwhile, most of the benefits may have little impact on overall 2020 targets as they apply mainly to new operations.

Kent said he was trying to avoid a repeat of the process that bogged down the coal regulations by consulting widely ahead of time.

As home to the oil and gas industry, Alberta opened an office in Ottawa this year to ensure its voice is heard in the process, and the province has been central in the talks to create the new rules.

It's expected the regulations will contain a provision that will allow provincial governments to administer the regulations themselves, as long as they meet or exceed federal standards.

For their part, environmental activists are watching to see whether regulations could actually bring down emission levels or just slow the rate at which they're rising.

Development in the oilsands is considered a key factor in emissions growth, but activists on both sides of the border have been vocal in demanding that Obama reject TransCanada's proposed Keystone XL pipeline on those grounds.

Last week, the U.S. State Department released a draft environmental assessment of the project and determined the pipeline wouldn't contribute significantly to global greenhouse gas emissions, nor would it spur further oilsands development.

The paper put wind in the sails of Canadian emissaries including Alberta Premier Alison Redford, Saskatchewan Premier Brad Wall and Natural Resources Minister Joe Oliver, all of whom are aggressively promoting the project south of the border.