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Oil Sands Carbon: When Money and Morals Align

Why the oilpatch is already preparing to surf the green wave it sees coming. Second in a series.

Geoff Dembicki 19 Jun

Geoff Dembicki reports for The Tyee Solutions Society (TSS).

This series was produced by Tyee Solutions Society in collaboration with Tides Canada Initiatives Society (TCI). Funding was provided by Fossil Fuel Development Mitigation Fund of Tides Canada Foundation. All funders sign releases guaranteeing TSS full editorial autonomy. TSS funders and TCI neither influence nor endorse the particular content of TSS' reporting.

When world-renowned climate scientist Andrew Weaver and his colleague, Neil Swart, weighed in last February on the carbon threat posed by Alberta's oil sands, their conclusions set off a storm of protest -- and revealed a moral dilemma at the centre of the response to global warming.

Weaver and Swart's research, which appeared in the prestigious scientific journal Nature Climate Change, was straightforward enough: burn every single barrel of bitumen buried in northern Alberta -- itself, a virtually impossible task -- and you'd raise average global temperatures by 0.36 degrees Celsius. (Bump that figure to 0.42 degrees, if you include the carbon impact of extracting, upgrading and transporting that bitumen.)

Burning all of the world's estimated coal reserves, the paper concluded, would result in 40 times more warming: nearly 15 degrees Celsius, drastically exceeding the two degree threshold deemed safe by scientists and political leaders. "Canada's oil sands: not so dirty after all," read one prominent news headline. "Climate expert says coal not oilsands real threat," read another.

The report had political influence as well. Federal Natural Resources Minister Joe Oliver used it to attack his government's critics, telling Parliament that Weaver's figures proved, "the NDP's opposition to the oil sands is increasingly ideological and unbalanced."  

"Freaking criminal," is how one environmental insider described the report's aftermath. Outraged, Nobel Prize-winning climate economist Mark Jaccard accused Weaver and Swart of propagating the message that, "stopping tar sands will not prevent climate change." 

It was a basic logical fallacy, Jaccard charged, to assume that "since an individual component on its own is not a problem, then it isn't part of a problem that exists when all components are added together." 

In fact, Weaver and Swart had made a similar argument. Limiting global temperatures to safe levels, their Nature article concluded, will require a rapid transition to zero-carbon energy sources on all fronts. Global leaders must also avoid making "commitments to new infrastructure supporting dependence on fossil fuels." That, Weaver later added, included Enbridge's Northern Gateway pipeline, intended to carry increasing volumes of Canadian bitumen to market. 

Cast in moral terms, then, the debate over the greenhouse gas threat posed by Alberta's oil sands invokes an age-old dilemma: how much personal responsibility should one actor bear for a collective outcome?

This is the central tension of our global warming crisis, and the crux of any plan to address it.

Does Alberta, or Canada, have a moral duty to slash oil sands emissions, even if that action on its own may have little impact on the climate? Or, to pose the alternative, how moral is it to get rich selling the continent's most polluting oil and ride free on the carbon reductions of others?  

The Tyee Solutions Society ran variants of this dilemma by some of North America's leading climate thinkers. By and large their responses aligned: there's a moral case to be made for shrinking oil sands emissions, yes. But real impact, if and when it comes, will be driven by the environmental and economic decisions of others. That is, unless we have the foresight to move first.  

The latest federal government figures support the idea that coal should be a greater climate worry for Canadians than bitumen development. 

The country's coal sector pumped 78 megatons of CO2 into the atmosphere in 2010, compared to 49 megatons from the oil sands. Coal took the dubious honour of being Alberta's largest emitter too, with a provincial carbon footprint of 52.6 megatons.

But those figures only tell part of the story. The oil sands industry is expanding so fast, according to Environment Canada in a July 2011, report, that its carbon footprint will nearly double within eight years, reaching 92 megatons and far eclipsing coal emissions.

That 44 megaton increase in oil sands emissions will also more than wipe out the 23 megatons of CO2 reductions that are expected to be achieved over the same time period from phasing coal out from Canada's electricity supply.

The oil sands' 92-megaton footprint, in fact, would dwarf the impact of every provincial and federal climate initiative in Canada. That collective effort is expected to slash 65 megatons of greenhouse gases in 2020. 

"You might hear from people in Alberta that, well, oil sands only represent one one-thousandth of global emissions," Pembina Institute oilsands director Jennifer Grant told The Tyee Solutions Society. "Our argument is, that number has huge implications for Canada being able to do anything meaningful on climate change."

An arms-length advisory panel to the prime minister, known as the National Round Table on the Environment and the Economy (NRTEE), reached a similar conclusion last year just months before the federal Conservative government axed the panel in its 2012 budget.

"Our emissions are growing faster than those in the U.S., principally due to projected oil sands production and export growth," reads a 2011 NRTEE report. "This means achieving emission reduction targets... in Canada and curbing emissions growth is potentially a larger task than in the U.S." 

Canada's inability to meet domestic climate targets is already drawing a harsh international response. China, India, Japan and tiny Tuvalu, which could one day be swallowed by rising Pacific waters, condemned Prime Minister Stephen Harper's withdrawal late last year from the Kyoto Protocol. "[This is] bad news for the fight against climate change," France's foreign ministry said at the time.

'Alberta does not matter'

But putting aside this international outcry, and the potential damage to Canada's reputation of further inaction, we're still faced with that same nagging dilemma, albeit on a slightly larger scale: How will the efforts of Canada, whose emissions comprise about two per cent of the global total, meaningfully impact the climate? 

Some very smart energy thinkers argue not one bit.

"China's additional emissions in 2010 were greater than Canada’s total emissions, and there is also always India, waiting to burn all of its coal," wrote Vaclav Smil, a University of Manitoba professor who's won accolades from Bill Gates and others, in an email to The Tyee Solutions Society. "Alberta does not matter, it is just a tiny part of the whole." 

This is also the view of Canada's Conservative government, whose natural resources minister, Joe Oliver, ridiculed environmental critics in a January speech to the Calgary Chamber of Commerce. 

"Some claim the development of the oil sands, which is responsible for one-one thousandth of global emissions, will destroy the planet," he said. "Yet they are upset to be called radicals."

But others, such as Mark Jaccard, call Oliver's argument bogus, a way for individual actors to opt out of a shared responsibility. In the end, they argue, each emitter, no matter what its size, will play a role in saving or sinking the climate we all rely upon.

"The only people who can't figure this out are those whose self-interest it is to delude themselves," Jaccard told The Tyee Solutions Society. 

Get ready, or get caught

Were this debate taking place only in lecture halls, textbooks and academic journals, it could continue indefinitely. On the question of oil sands emissions, though, events unfolding outside Canada's borders may someday force a resolution. And if we fail to prepare, some prominent climate and energy thinkers argue, the outcome will bode poorly for Alberta's bitumen industry.  

Talk these days of national climate policy regimes in Canada and the U.S. may be political suicide. Yet other jurisdictions aren't waiting. Coal-dependent Australia is moving forward with a national carbon tax. Mexico has just passed an ambitious global warming agenda. 

While nobody expects climate action in either of these countries to impact Alberta's oil sands development on their own, they belong to a global trend that already is.

Consider California, the planet's eighth largest economy, and the European Union, its largest. The two jurisdictions are leading the planet's nascent carbon emissions cap-and-trade market. And both are proposing ambitious, if highly contentious, additional fuel carbon standards that would limit the sale of oil sands-derived fuel and other high-emission energy sources.

Canada's leaders have been very clear that the major reason they're lobbying so hard against the EU's proposed fuel standard is fear that the legislation will be adopted by other countries.

"We're concerned about standards being set that might be copied elsewhere in the world," former Alberta energy minister Ted Morton said last year. Indeed, this is what happened to the EU's automobile air pollution standards, which, from the mid-1990s onwards, were replicated in China, India and other Asian countries. 

China has also pledged to have a national carbon tax in place by 2015. And in the U.S., where support for a federal cap-and-trade scheme briefly flourished before dying with the recession, President Barack Obama recently promised to "take further steps to deal with [climate change] in a serious way."

Should a global consensus emerge over the decade ahead that stringent limits, and steep market prices, need to be placed on the planet's carbon, it could transform oil sands emissions from an environmental sore point to a massive financial liability. 

Exactly how big that liability might be was suggested in a 2010 MIT study. In it, several researchers modeled the impact of emerging global climate policies on Alberta's bitumen industry. Their conclusion: "The niche for the oil sands industry seems fairly narrow and mostly involves hoping that climate policy will fail." 

The more stringent global climate measures become, the team concluded, the less demand there is for petroleum products. This trend would especially hurt oil sands development, with its high carbon footprint and tight profit margins. Bitumen producers could lower their emissions with carbon capture and storage technology, but that results in an even more expensive product.   

"It's kind of a bind that the industry is in. These types of relatively expensive petroleum sources would likely not be economic," senior MIT lecturer and study co-author John Reilly told The Tyee Solutions Society. 

The Alberta government is not oblivious to these developments. In fact, another group of experts closer to home repeated essentially the same warning in May 2011.

"The world is changing," read a report from the Premier's Council for Economic Strategy. "We cannot afford to shut our eyes to this transformation. Neither can we let today’s prosperity make us complacent."

Chairing the council was David Emerson, a former YVR chief executive who served in both Liberal and Conservative federal cabinets and was Stephen Harper's industry minister. On the council sat several veterans of Alberta's hydrocarbon industry, including Clive Mather, a former executive of Shell Canada. Its outlook for the oil sands was sobering. 

"We must plan for the eventuality that oil sands production will almost certainly be displaced at some point in the future by lower-cost and/or lower-emission alternatives," the report read. "We may have heavy oil to sell, but few or no profitable markets wishing to buy."

Never mind moral dilemmas. This was existential. And perhaps Globe and Mail columnist Jeffrey Simpson was correct in calling the report "dead on arrival," its vision "too far-sighted and bold." Emerson's warnings raised a few media ripples then appeared to sink for good.

Except that an interesting thing happened during Alberta's recent down-to-the-wire provincial election. Campaigning for a personal mandate to lead the province, Progressive Conservative Premier Alison Redford made a far-reaching announcement at Wapisiw Lookout in Fort McMurray, a former Suncor tailings pond the industry claims will someday be a functioning wetland.   

"In order for us to be able to continue to grow the economy in Alberta," Redford told reporters, "we have to be global leaders with respect to energy development and with respect to environmental sustainability."

With that Redford pledged to spend $3 billion over the next 20 years, improving the environmental performance of the oil sands industry and funding emerging fuel technologies that could one day replace it.

Both commitments may be futile. A scientific study published in the same month argued that land disturbed by bitumen mining can never be reclaimed to its former state. David Keith, an internationally recognized climate and energy expert who now teaches at Harvard, questioned whether it was even worth the government's time or money to improve the industry.

"In the end, the oil sands are going to be crushed by climate policy," he told The Tyee Solutions Society.   

But Keith and Redford could perhaps agree on thing: the economic climate may be changing as dramatically as the physical one. And on both counts, the sooner Alberta begins shifting to a low-carbon economy, the less painful that transition will be.   

Tomorrow: Where do you think a lot of Canada's petro-executives stand on taxing carbon? You may be very surprised.  [Tyee]

Read more: Energy, Politics, Environment

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