What we’re up against in Canada

by Milan on February 16, 2010

in Air pollution, Carbon capture and storage, Climate change, Climate science, Economics, Oil sands, Water pollution, Wildlife

You can argue all you like that exploiting the oil sands is against the long-term interests of Canadians, given the climatic risks it poses. What is much harder is to overcome the influence of so much short-term cash.

This year, for the first time ever, royalties from the oil sands will eclipse those from any other energy resource in Alberta:

Oil sands royalties will outstrip conventional crude royalties by a modest $35-million this year, the government forecast in the budget tabled yesterday. By 2010-2011, the province expects oil sands royalties to roar to $3.2-billion, a 75-per-cent hike that will see bitumen production provide 45 per cent of the province’s total oil and gas royalties.

By 2012-2013, the oil sands will form 53 per cent of Alberta’s royalty stream, which will represent a quarter of total provincial revenues.

In the face of that, it is easy to dismiss the risk of catastrophic or runaway climate change as distant and uncertain. Unfortunately, given the enormous size of the world’s reserves of unconventional oil and gas – including the tar sands – exploiting them is the single thing we can do that most increases the probability of a truly terrible outcome for humanity. In addition, there are all the air and water pollution consequences that accompany oil sands exploitation, as well as the destruction of natural habitat.

Given the fact that most of the fuels being manufactured from Albertan bitumen will eventually be used for vehicles, even cheap and affordable carbon capture and storage (CCS) will not make it safe to exploit these resources. This makes Alberta’s CCS-focused provincial climate change plan laughably inadequate.

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{ 27 comments… read them below or add one }

Anon February 16, 2010 at 8:36 pm

You are up against the fastest-growing source of government revenue in Canada’s fastest-growing province.

Good luck with that.

Tristan February 17, 2010 at 7:20 pm

It’s not actually revenue – it’s robbing one pocket to swell another. None of this is real money – it’s all theft from future generations.

I think this is the right way to talk about the oil sands: there is no real profit, there is only theft giving the appearance of profit.

Tristan February 17, 2010 at 7:21 pm

I think the key move is to kill the discount rate, at least insofar as it is motivated by the notion of indefinite growth. There is no reason to believe indefinite growth is possible, therefore there is no reason to devalue the welfare of future generations.

Milan February 17, 2010 at 7:35 pm

The academic concept of a discount rate is absurdly far removed from the people making these decisions.

They see: “oil sands = billions of dollars in revenue.”

Sarah February 18, 2010 at 3:44 pm

Persuading a majority of Canadians that oil sands exploitation is a bad idea seems unlikely to me, at least in the next decade or so. I suspect the only way to prevent expanding oil sands extraction may to make appeals to foreign citizens to pressure their companies, governments etc to pull out of the oil sands, refuse to buy oil sands derived products, or very highly tax such products. People obviously don’t make decisions solely on short-term personal and/or national economic self-interest, but it’s hard to persuade people to go against their perceived economic interest if it involves really big losses.

Milan February 18, 2010 at 3:51 pm

Convincing foreigners not to buy our oil is going to be hard. Every time the price of gasoline jumps, or some instability arises in the Middle East, politicians and ordinary people are going to start thinking about the Canadian reserves. Also, there are plenty of potential customers with few moral or environmental scruples (such as the Chinese government).

Stopping oil sands production is certainly going to be difficult, but it is a necessary part of the overall strategy for preventing catastrophic climate change.

One other way oil sands production can be limited is by not allowing them to be the only buyer of natural gas from any particular pipeline. If other people can outbid them for the energy inputs they need, more of that bitumen can stay safely below ground.

Sarah February 18, 2010 at 8:34 pm

Yes, it might well be hard to discourage foreigners from buying it. There’s also some hope of getting foreign shareholders of oil companies to pressure them not to invest in the tar sands, although that might prove impractical, especially if other supplies aren’t found and the price of oil stays high. Plus companies can be pressured by shareholders and consumers not to buy products derived from the tar sands. Maybe none of that will pan out to much, but I have more hope in it as a strategy than in persuading a majority of Canadians to elect federal politicians who will cut off tar sands extraction.

Milan February 19, 2010 at 10:06 am

I agree that we are going to need every strategy available to stand a decent chance of preventing catastrophic climate change. Right now, I wouldn’t bet on us succeeding.

But what are you going to do, not try?

Ultimately, we need to replace fossil fuels with truly renewable forms of energy anyhow. The transition is mandatory, so we might as well do it a bit early to avoid cooking the planet. Michael Pollan has a nice definition of sustainability, incidentally:

To call a practice or system unsustainable is not just to lodge an objection based on aesthetics, say, or fairness or some ideal of environmental rectitude. What it means is that the practice or process can’t go on indefinitely because it is destroying the very conditions on which it depends. It means that, as the Marxists used to say, there are internal contradictions that sooner or later will lead to a breakdown.

Fossil-fuel powered human society certainly seems to fall into this category.

. February 25, 2010 at 3:11 pm

“We can’t seriously combat global warming while getting fuel from the world’s dirtiest source. If we allow Canada’s oil sands project to creep across our border, it will lock our nation into dependence on yet another foreign source of oil, just as our local clean-energy industry is beginning to thrive.

Right now, we are poised to become a leader in the global clean-energy economy. By taking the steps to ensure that we are the leader of the next industrial revolution, we can reignite our economy, bolster national security and improve the health of our people.

One of the most important things we can do to demonstrate that leadership is to say no to Canada’s oil sands. For now, the decision rests with the Obama administration. By denying permits for pipelines and refineries in the United States, President Obama can signal to the world that we are serious about fighting climate change and helping American clean-energy technologies thrive.

If he does, we just might be able to save the winter games we love — and set a new course for the nation we cherish.”

Michael T. Richter is a founding partner in Environmental Capital Partners. He is also the former goalie of the New York Rangers, a three-time Olympian and a member of the Sierra Club’s National Advancement Council.

Milan February 27, 2010 at 6:39 pm

The Russian government is even more beholden to fossil fuels:

Russia now pumps about as much oil as Saudi Arabia, otherwise the world oil leader, and more gas than any other nation. In 2007, the energy sector accounted for one-third of Russia’s GDP, 60 percent of its exports, and half of all government revenue. Russia’s wealth and power come from energy. With existing oil and gas developments passing their peak, Russia must develop more. The Arctic seas are where Russia is going, lawsuits do not stand in its way, and warning of risks from environmental groups are not slowing it up.

Anderson, Alun. After the Ice: Life, Death, and Geopolitics in the New Arctic. (p.187 hardcover)

. March 1, 2010 at 10:47 am

British companies spearheading the drive to exploit the Canadian tar sands will come under renewed assault this week from an increasingly vocal group of shareholders and environmentalists who are planning to turn the forthcoming BP, Shell and Royal Bank of Scotland annual meetings into a referendum on these controversial operations.

The Co-operative and the Fair Pensions lobby group are releasing a special briefing paper designed to counter recent statements by the oil companies that sought to justify their involvement in carbon-intensive oil extraction in Alberta on the basis that it was needed to meet rising oil demand.

Friends of the Earth, Platform and other green groups are publishing a new report, Cashing in on Tar Sands – RBS, UK Banks and Canada’s Blood Oil, which claims RBS has provided loans of $7.5bn (£4.9bn) in the past three years to companies carrying out this kind of mining in North America.

. March 3, 2010 at 2:35 pm

“Oil companies have long been known for their big lobby presence in Washington. Tar sands oil operators include oil majors such as BP, ConcoPhillips, and ExxonMobil. Big oil lobbyists now not only work for the oil companies, they also are diplomats from Canada and the tar sands province of Alberta. There is an active and dishonest lobby seemingly connected to the oil industry that is targeting climate legislation and state low carbon fuel standards. Less well known perhaps is the amount of lobbying that Canadian taxpayers are underwriting to undermine U.S. low carbon fuel standards and efforts to build a clean energy economy nation-wide. Legally, foreign agents and lobbyists are required to register. Their reports tell a tale of the governments of Canada and Alberta hiring lobbyists to sell tar sands oil despite the environmental, health and economic costs. The province of Alberta also has its own diplomatic office in the Canadian embassy in D.C. – from which it pushes a rosy view of tar sands oil. I don’t think that Canadian taxpayers would be happy to see their money going towards helping big oil and hurting our climate.

In the meantime, the revolving door of Canadian pro-tar sands politicians visiting Washington, D.C. continues. Recently it was Canada’s Environment Minister – an apologist for tar sands – and later this week, Alberta’s Sustainable Resource Development Minister comes for an energy conference where he will undoubtedly tout tar sands oil.”

. March 9, 2010 at 12:50 pm

“I would like to see us limit our coal consumption and boost electricity generation from other resources. I know a great number of people who feel this way, but coal is like oil in that replacing it will likely entail economic sacrifices that individuals don’t like to make. Coal produces half of the electricity in the U.S., and I would have a hard time arguing that anything – outside of nuclear power – can scale up and take on the role that coal currently plays.

The realist in me thinks that we will eventually use up all of our coal, as will China, Australia, India, and all of the other major coal producers. This is primarily why I sit out the debates on climate change; I can’t realistically envision anything that will get the world to collectively NOT burn up all the coal. In an energy-constrained future, prices will rise and people who feel morally opposed to coal will suddenly find their moral fiber weakening as high energy prices bite into their budgets.

I don’t discount that renewable energy can eventually make a bigger impact (I hope so, because that’s what I am doing for a living), but it is starting from a very small basis compared to electricity generated from coal. While coal produces about half of the electricity in the U.S., renewables other than hydropower account for only about 3.5% (per the EIA).

So I think Big Coal will continue to be a very big part of our lives for many years to come – although with a strong political commitment the nuclear option could put a dent in our coal dependence.”

. March 23, 2010 at 3:38 pm

Working Around Alberta on Climate Change

If Canada wants to reduce emissions, an opt-in program might be the best way forward.

Despite Canada’s international reputation as a laggard on climate change, a large majority of the provinces are in fact prepared to increase energy efficiency and to transition to less carbon-intensive forms of energy production and consumption.

If Alberta is excluded from the equation, the provincial targets add up to a 14 per cent reduction in greenhouse gas emissions below 1990 levels by the year 2020. This aggregate target, though short of the pace advocated by the European Union, is far ahead of the U.S. target of 3 per cent below 1990 levels by 2020 that was recently adopted by the Harper government. If the federal government reversed course and announced a national plan to achieve that aggregate provincial target, Canada would be widely applauded.

The problem comes when Alberta is included in the equation.

The target set by the Alberta government works out to a 56 per cent increase in greenhouse gas emissions above 1990 levels by the year 2020. Add that to the other provincial targets, and the national emissions target becomes a 7 per cent increase over 1990 levels by 2020, not a 14 per cent decrease.

Just as the Harper government cannot wish away climate change, environmental groups cannot wish away Alberta’s increasingly oil-based economy. No amount of negotiation or investment in carbon capture and storage research will fill the gaping chasm between the target set by Alberta and the targets set by the other provinces.

. April 19, 2010 at 12:36 pm

UPDATE: Canada’s tar sands emissions vs. 350 ppm
By Brent Patterson
April 19, 2010

In parts-per-million language, the full exploitation of the tar sands and the U.S. tar shale reserves could increase atmospheric carbon by 49 to 65 ppm.

And so, the situation is dire. The tar sands should not be allowed to continue to expand and a plan to reduce our emissions is needed now.

Milan July 19, 2010 at 2:04 pm
. August 10, 2010 at 5:40 pm

At the peak of the commodity boom in 2008, energy was Canada’s largest export. As a result, the sands have only been lightly regulated. Instead of being 6% below 1990 levels of greenhouse-gas emissions by 2012, its commitment under the Kyoto protocol, Canada will be 30% above.

. January 23, 2011 at 8:23 pm

At 173 billion recoverable barrels, the tar sands are worth $15.7 trillion at today’s price. As the resource owner, Alberta captures much of this wealth, but a good deal filters through to the rest of Canada in contracts for goods and services as well as in federal equalisation payments that send some of the rich west’s billions to poorer eastern provinces.

. February 23, 2011 at 10:28 pm

Climate change an issue in Canada: Poll

Far more Canadians than Americans believe climate change is real, according to a report produced by U.S. and Canadian think tanks.

The report, based on the results of two national surveys of public opinion on climate change, was to be released Wednesday by the Public Policy Forum and Sustainable Prosperity and their project partners.

Respondents on both sides of the border were asked their opinion on a range of issues on climate change, starting with whether they believed it was real.

In Canada, 80 per cent believe in the science behind climate change, compared with 58 per cent in the United States.

Alex Wood of Sustainable Prosperity, a research and policy network at the University of Ottawa, says there’s a message there for the federal government.

. February 26, 2011 at 6:28 pm

Alberta sees its rebirth in an age of $100 oil and a surging dollar, and is confidently projecting another energy boom that would drive a return to surplus and claim the province a spot at the forefront of Canada’s economic recovery. The province has been a shadow of its former self since the global recession and the collapse of natural gas prices sunk revenues and triggered major deficits.

It now hopes the tides will soon turn. Royalties from conventional oil and oil-sands bitumen are already outpacing expectations, GDP is expanding at about 3 per cent annually, and the province’s annual budget projects revenue from oil-sands royalties will double in three years to more than $7-billion.

“Growth has returned to Alberta,” Finance Minister Lloyd Snelgrove said on Thursday after tabling the province’s annual budget.

. July 3, 2011 at 12:57 pm

The value of Canada’s oilsands grew 23-fold to $441 billion from $19 billion between 1990 and 2009, Statistics Canada reports.

That put the value of crude bitumen from the oilsands higher than the value of coal, crude oil and natural gas combined, according to a report on the economy and the environment released Tuesday. The oilsands only became Canada’s highest value energy resource in 2006, when they surpassed natural gas.

The value of the oilsands has grown faster than their development. The amount of reserves under active development increased eight-fold to 4,300 million cubic metres from 500 million between 1990 and 2008. The report credits improvements in extraction technology, new discoveries, and an increase in global demand for crude oil.


. December 7, 2011 at 6:50 pm

Opinion: Why Canada won’t skip out on the oil sands

It’s too valuable, and letting it be won’t necessarily help the planet
By Andrew Leach

Canadians, and I would expect many Albertans, are simply unaware of the scale of the oil sands resource. That needs to change in order for us to have a meaningful discussion with respect to its development, and the conditions under which that development should proceed.

Let’s start with the basics – how much oil is there? If you want to talk about oil in the ground, the number is somewhere between 1.5- and 2.5-trillion barrels of oil, depending on which estimates you use. That number includes resources we know are there but which cannot be extracted profitably given expected oil prices and production costs, or given current technology. If you apply price and technology filters, you get down to the figure of 170 billion barrels, give or take a billion barrels. That’s about 15 per cent of the world’s proven oil reserves, and about half of the reserves not held by member countries of the Organization of Petroleum Exporting Countries.

How much is all that oil worth? In a 2009 report on Canada’s resource wealth, Statistics Canada puts the figure at $441 billion – more than the value of Canada’s coal, conventional crude oil and natural gas reserves combined. If you assume that the reserve quality declines linearly, such that the last barrel in the 170 billion is marginally profitable, the total value in the oil sands reserves would still be over $1-trillion dollars, and that’s likely a very conservative estimate.

. December 16, 2011 at 7:56 pm

Blocking pipelines to B.C. would entail loss of billions: study

Carrie Tait
Calgary – Globe and Mail Update
Last updated Thursday, Dec. 15, 2011 7:43PM EST

Canada will forgo billions of dollars in gross domestic product and government revenue if oil companies are unable to access markets off the Pacific coast, according to a new study.

Moving Canadian heavy oil to the West Coast, where it can be shipped to markets in California and Asia, could add up to $131-billion (U.S) to Canada’s GDP between 2016 and 2030, according to a new study prepared by researchers at the School of Public Policy at the University of Calgary. This translates to $27-billion in federal, provincial and municipal tax receipts, the academics calculated.

. January 23, 2012 at 5:03 pm

The Alberta government has acknowledged that the Obama administration had accurate information about environmental impacts of oilsands development, but unsuccessfully urged it to disregard the industry’s footprint on the planet’s climate in an evaluation of the Keystone XL pipeline project, newly released correspondence has revealed.

The letters, exchanged between Alberta Environment, the U.S. Environmental Protection Agency and Canada’s U.S. Ambassador Gary Doer, reveal new aspects of a Canadian lobbying campaign to persuade the Americans to exclude climate change from its final decision about the expansion of TransCanada’s proposed Keystone pipeline expansion project. The proposed expansion would link the oilsands industry with refineries on the Gulf Coast of Texas.

But the EPA’s top officials said in separate letters that the U.S. government should factor in the entire footprint of oilsands pollution in the decision since it affects its own citizens as well as the rest of the world.

“Given that the possible consequences of greenhouse gas emissions are global in nature, they include potential impacts on the United States, and we believe it is appropriate that the State Department consider these upstream greenhouse gas emissions in its evaluation,” EPA Administrator Lisa Jackson wrote on Dec. 7, 2010 in response to a letter from Doer.

. February 29, 2012 at 5:34 pm

Canada’s government muzzles scientists, stonewalls press queries about health, environment and climate

The Canadian Harper government’s policy of not allowing government researchers to speak without approval and without being attended by political minders is in the news again. A series of speakers at an AAAS meeting told the international science community that climate, environmental and health research that calls government policy into question is routinely suppressed. Prof Andrew Weaver of U Victoria said, “The only information [the press] are given is that which the government wants, which will then allow a supporting of a particular agenda.”

. November 15, 2012 at 12:19 pm

Oil sands will be Canada’s economic engine for next 25 to 30 years: Deloitte

Canada’s oil sands are key to the country’s prosperity and for it to grow, the industry needs more pipelines, more collaboration, and dialogue that does not fuel “a climate of antagonism,” said a study by Deloitte Canada.

“The oil sands are going to be the economic engine for the country for the foreseeable future, for the next 25 to 30 years, and it is akin to the impact of building the national railway in the 1880s,” Marc Joiner, a partner at Deloitte in Toronto, told the Edmonton Journal. “There was dissent back then about spending all that money on the railway, but now we ask how could you not have done that. It is the same with the oilsands.”

. December 5, 2019 at 7:41 pm

New oil sands project approved for northern Alberta

EDMONTON — The province is pushing ahead with more oil development. The Grizzly Oil Sands’ May River oil sands project has been approved.

The project will be located northwest of Conklin, between Fort McMurray and Lac La Biche, and produce about 12,000 barrels of bitumen per day.

The proposal is to use a steam-assisted gravity drainage technology, which the government says reduces the environmental impact.

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