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Natural Resources Minister Jonathan Wilkinson is overhauling a methane-reduction program that the environment commissioner slammed last fall as poorly designed and a waste of money.

The third round of applications for the $675-million onshore program of the Emissions Reduction Fund was initially set to close Friday, but it has been put on hold while Mr. Wilkinson’s department tries to address some of those concerns.

A relaunch is tentatively scheduled for the third week of January with applications due by March. Mr. Wilkinson promises the changes will adjust program requirements to make things more transparent, achieve better results and set limits on how much projects can cost per tonne of emissions they reduce.

The program offers loans of up to $50-million to help oil and gas producers meet or exceed regulations enforcing cuts to their methane emissions.

The first two rounds resulted in $134-million in funding for 81 projects by 26 companies.

The federal government claims those projects will cut more than four million tonnes of greenhouse gas emissions. But environment commissioner Jerry DeMarco raised a number of red flags about the program in an audit released in November, including whether the claimed emissions cuts can be believed.

He also said the program did not ensure companies weren’t just using the new funds to pay for projects they were already planning to do, which meant the program wasn’t achieving any new emissions cuts and wasn’t good value for money.

Mr. DeMarco said that several companies included in their applications a claim that the loan funds would allow them to reduce their methane emissions so much they could increase production and still hit the targets set by new methane regulations.

But, he noted, any increased emissions from producing more oil or gas were not part of the calculation for how much emissions were going to be reduced through the funds.

Mr. DeMarco said the program needed “a vast improvement.”

Methane, far more potent than carbon dioxide as a global warming agent when left in the atmosphere, is critical to slowing climate change.

It accounts for 13 per cent of Canada’s total emissions and 40 per cent of emissions from the oil and gas sector, mostly from venting and flaring of methane at oil and gas production sites.

Venting is a controlled release of unburned gases that are left over during the oil and gas production process. Flaring is a controlled burning of waste gas, often visible from a large flame at the top of a flare stack on a production site.

Many projects funded to date reduced or eliminated venting and flaring, but Mr. Wilkinson said going forward only projects that eliminate it will qualify.

The new criteria will also include a requirement that projects go above and beyond the existing regulations that require a 40-per-cent cut in methane emissions from the oil and gas sector, compared to 2012 levels, by 2025.

A report released last month claims Canada is on track to get there. Canada is also starting work on the next target, of 75 per cent below 2012 levels by 2030, and in the fall joined a global methane pledge to cut all methane emissions 30 per cent below 2020 levels by 2030.

Outside of oil and gas, agriculture and landfills are the biggest sources of methane in Canada.

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