Greenhouse Gas Emissions: How is Canada Doing?

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To evaluate Canada’s performance vis à vis greenhouse gases there are several things to consider:  What is the current magnitude, and the trend in emissions today?  What are the sources of those emissions, and how might emissions change in coming decades?  How does the expected trend in emissions compare with the commitment made by Canada as a party to the Paris Agreement?  How does the expected trend in emissions compare to what Canada would need to achieve if it was to do its fair share of emissions reduction to keep the world within a 1.5oC increase in average temperature?

Canada has its geese, but it also has its industry.  How are we doing on GHG emissions?
Photo
© Kevin Frayer/Canadian Press.

I am an environmental scientist.  I am interested in these questions because I care about the environment and believe that there is now more than sufficient information available to establish that humanity faces an existential problem in climate change that could threaten our civilization, if not our persistence as a species.  In the absence of a benevolent world dictator, we have relatively weak mechanisms to drive the global cooperation that seems needed as the only feasible way of wrestling climate change to the mat.  I am not a rabid greenie (at least, I don’t think so), and I do understand that countries only thrive when they have economies that provide jobs and wealth (they need a few other things besides!).  Canada has a very poor record on climate so far, and our resource-intensive economy poses problems for doing better.  In particular, we have encouraged development of a major industry extracting bitumen from tar sands and turning it into something that can be refined into useful fuels.

Closely related questions that should be investigated therefore concern the production of bitumen from the Alberta tar sands, because this activity is the largest source of human-caused GHG emissions in Canada.  Industry and government projections all call for production to rise significantly from its current level, adding to GHG emissions.  A subsidiary set of questions concern the capacity of pipelines to transport bitumen and oil from Alberta, the rail transport capacity which supplements this, and whether there is a shortage of capacity that is curtailing the expansion of this industry.

Beyond the facts that answers to such questions should provide, there are questions about the responsibility that Canada has to reduce GHG emissions and to market its fossil fuel resources.  Although it may seem backwards, I will focus on these questions about responsibilities, after I set out current oil production and GHG emissions data.

Canada’s Oil Industry

Canada is a net exporter of oil, and oil production is a significant part of our economy.  According to Natural Resources Canada, Canada produced 4.2 MMb/d (million barrels per day), exported 3.3 MMb/d, and imported 0.8 MMb/d of crude oil in 2017. Geography, lack of refining capacity, and lack of west-to-east pipelines force us to import some oil from other countries (61% from the USA, 12% from Saudi Arabia, remainder from other countries in 2017).  On these numbers, Canada consumes about 1.7 MMb/d of oil.

The Suncor refinery near Edmonton, just one tiny part of Canada’s tar sands infrastructure.  Photo © Jason Franson/Canadian Press

Alberta was responsible for 80.7% of oil production in Canada in 2017; this breaks down as 64% tar sands bitumen, and 17% light and tight oil.  Of the 2.7 MMb/d bitumen produced, 43% (1.16 MMb/d) was upgraded in Alberta, turning it into ‘synthetic crude’.  The remainder was mixed with diluent (gas condensates) to permit it to flow before export.  This ‘diluted bitumen’ is called ‘dilbit’.  (Some diluent is mined in western Canada, but 430,000 b/d of diluent was imported from the US in 2017, shipped to Alberta, and added to the bitumen, meaning that some pipeline capacity is used to transport diluent.)

The oil reserves represented by the tar sands are prodigious, 168 billion barrels or 10% of global reserves, and third largest reserves in the world.  Plans by the industry, supported by Alberta and the Federal government of Canada, are for significant expansion of the rate of extraction from the tar sands.  While earlier projections spoke in terms of three-fold increases, expectations by the industry have moderated over the last several years.  This has chiefly been because of the great increase in oil production worldwide (so-called tight oil) due to fracking technologies.  This cheaper to produce oil coupled with a soft global economy since 2008 has kept prices (and excess demand) lower than they might have been, curtailing expansion in the very costly to produce tar sands.  Lack of new capital for other reasons may also have tempered optimism.  Still, CAPP, the Canadian Association of Petroleum Producers, projects in its 2018 Crude Oil Forecast, that total Canadian production will be 5.6 MMb/d in 2035, achieved almost entirely by an increase of 1.55 MMb/d to 4.2 MMb/d from the tar sands.  That is a 58% increase in tar sands production over 18 years.  (CAPP projects that production in eastern Canada will decline by 150,000 b/d, while that of conventional oil in western Canada will increase by 200,000 b/d.)

Needless to say, oil production, particularly in Alberta, is a significant portion of the economy.  Again, according to Natural Resources Canada, government revenues from the energy sector were $10.3 billion in 2016, and the industry directly employed 276,000 people in 2017.  While the energy sector, directly and indirectly, represented about 10.6% or $213 billion of Canada’s 2017 GDP, the energy sector is much more than the oil production sector.  The oil industry yielded about 2.6% or $52.2 billion of GDP.  Some 80% of this is produced in Alberta, mostly from the tar sands.

So, a major industry, centered on the Athabasca tar sands, and potentially of growing importance, but still only 2.6% of our economy.  What about GHG emissions?  Oil production is a messy business, and extraction of bitumen from tar sands is particularly challenging, whether shallow deposits are being extracted by open-pit mining, or deeper deposits are being extracted in situ, via the injection of high-pressure steam (with additives) to warm and liquify the bitumen which can then be pumped from the well.  There are important water and land pollution issues associated with such operations that should not be ignored when evaluating this industry.  There are other forms of air pollution also, but emissions of greenhouse gases are particularly important.  The extraction of bitumen is an energetically demanding task.  Upgrading to produce synthetic crude requires further energy, and oil does not flow through pipelines without being pushed.

Canada’s GHG emissions

According to Environment and Climate Change Canada’s National Inventory Report issued in April 2018, Canada emitted 704 MtCO2eq of greenhouse gases in 2016.  (MtCO2eq or metric tonnes of CO2 equivalent is a way of combining emissions of all greenhouse gases as a single entity, by relating tonnes of each gas to the equivalent amount of CO2.)  In addition to CO2 itself, our emissions include methane (CH4), nitrous oxide (N2O), perfluorocarbons (PFCs), hydrofluorocarbons (HFCs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3).  The 704 MtCO2eq represent a 3.8% reduction from levels in 2005.  I mention this because Canada committed, in 2010, at the Copenhagen climate conference, to reduce its emissions to 17% below 2005 levels by 2020 – we managed to chip away 3.8%, just 13.2% to go.  (Needless to say, Canada long ago stopped trying to meet this goal (if it ever intended to do so).)  Further context for these numbers is provided by the 2018 report of the Global Carbon Project (GCP), released on 5th December to be available for the Poland climate conference.  As reported in a Commentary by Christine Figueres and colleagues in Nature, 6th December, global CO2 emissions rose 1.6% from 2016 to 2017, and are expected to increase a further 2% in 2018.  These increases followed a plateau during 2014-16 when many people believed the world had turned a corner.  Global emissions are dominated by emissions from China (27%), the USA (15%), and India (7%), all of which increased emissions between 2016 and 2018.  In the USA, early estimates show emissions jumped 3.4% in 2018; Chinese emissions are expected to increase 4.7% and Indian emissions 6.3%.  Canadian emissions jumped 2.6% between 2016 and 2017.  In other words, the world is not yet beginning to reduce GHG emissions, largely because economic growth is more than sufficient to use all the carbon-neutral energy generated by wind and solar projects and still require increased use of fossil fuels.

Canada’s GHG emissions by economic sector (2016 data).  Of the 26% due to oil and gas industry, 10.2% are due to tar sands production.  Image from Environment and Climate Change Canada.

Of 2016’s Canadian emissions, 183 MtCO2eq were due to the oil and gas industry.  Of these emissions, 72 MtCO2eq were due to the tar sands operation (not including some costs in upgrading, and the costs for transportation).  The oil and gas sector was the largest contributor, just ahead of transportation (173 MtCO2eq) and heavy industry (75 MtCO2eq).  Emissions from all components of our economy, except tar sands mining, have been falling in recent years.  Tar sands production accounts for more than 10% of GHG emissions in 2016.  This proportion will continue to rise, especially if production increases at the rate expected by CAPP and others.

What are Canadians’ responsibilities?

And so to responsibilities.  The Canadian oil industry and its governmental supporters are quick to highlight the fact that Canada’s GHG emissions are less than 2% of the global total, and tar sands mining accounts for just 10% of that.  Why should anyone care about 0.2% of the emissions that are causing climate change?  Looking after the Canadian economy is far more important than that.

We may be contributing less than 2% of the total, but that still leaves Canada the 10th largest emitter of greenhouse gases on the planet (9th largest if you don’t think ‘international shipping’ is a ‘country’).  We are well behind China (29%) and the USA (14%), but not far behind Germany, Iran or South Korea.  If we look at emissions per capita, Canada’s relatively small population puts us 9th overall, but 3rd among developed countries at 15.5 tCO2eq/capita, compared with the USA (16.1) and Australia (18.6 – all 2015 figures).  (The other six top emitters per capita are all small, low-population, middle eastern states.)  This is not a beauty contest, so being high on the list is definitely not a good thing.  Canada should be trying very hard to reduce its GHG emissions, and to date we have been making only very modest progress.  All the time, progress made is being chipped away at by a tar sands industry that continues to grow.

Why do I say Canada should be ‘trying very hard’?  I watched in despair as Canada failed to come close to its Kyoto target for GHG emissions and eventually withdrew from that treaty.  We have now given up on our commitment made under the Copenhagen Accord.  Are we going to fail a third time with our 2030 target under the Paris Agreement?  At present, it looks like we might.

In its Nationally Determined Commitment (NDC) submitted to UNFCCC under the Paris Agreement, Canada committed to “reduce greenhouse gas emissions by 30 percent below 2005 levels by 2030” and to also work to reduce emissions of black carbon, a relatively short-lived pollutant which has particular importance in the Arctic.  The NDC specifies 523 MtCO2eq as its target, however using up-to-date figures that number should be revised downward to 512 MtCO2eq (the 2018 NIR specifies Canada’s 2005 emissions as 732 MtCO2eq).  Canada’s commitment was calculated to be a reasonable effort for this nation to help achieve the stated Paris Agreement goal: “to hold the increase in the global average temperature to well below 2 degrees Celsius above pre-industrial levels, and to pursue efforts to limit that increase to below 1.5 degrees”.  There are two questions to consider here:  How is Canada doing in terms of its stated 2030 target?  And is that target a fair effort by Canada to help limit the global average temperature to well below 2OC?

The graph included in the NDC submission is not very encouraging.  It shows a nearly horizontal line projecting emissions out to 2030 if Canada did nothing new after 2015, and an encouragingly downward trending blue line of emissions assuming adoption of all the mitigation measures included in the Pan Canadian Framework in December 2016.  What?  You don’t remember the Pan Canadian Framework?  It includes a carbon tax in all provinces and a number of measures applied to large emitters such as the oil industry.  There’s been a few delays and backward marches (thank you Premier Doug Ford) since then, so this blue line is not necessarily the trend we are following.  And, worse than that, the blue line ends at 567 MtCO2eq in 2030.  There is a gap to be filled by other measures that are likely to develop, from where is not sure.  In other words, Canada has a plan in place that is guaranteed to fail, unless something unexpected happens.  In baseball, three strikes and you’re out, but this is not baseball.

Figure 1 from Canada’s NDC Report to UNFCCC.  Titled Pathway to Canada’s 2030 target, it’s a pathway that does not get there.  Image © Environment and Climate Change Canada.

No wonder Climate Action Tracker judged Canada’s NDC to be Highly insufficient when it was first submitted to UNFCCC.  Even if Canada was to hit its 2030 target, Canada has not made a commitment sufficiently strong to represent Canada’s fair share of the reductions in emissions needed to achieve a climate warming of less than 2oC.  According to Climate Action Tracker, if all countries responded as modestly as Canada, the world will head towards a 3o– 4oC average warming.  If you believe, as I do, that Canada has a moral responsibility to do at least its fair share of emissions reductions, then you must find both our stated commitment – the NDC – and our plans for achieving it to be disappointingly underwhelming.  So much for being a “leader on climate”.  Why do I think Canada has a responsibility to do better?  Because I believe that climate change is an existential threat to civilization, and if countries are not willing to do their fair share, especially wealthy countries that can afford a tiny bit of belt tightening, what hope do we have for the world?  (And to those who say, ‘why should we try when others are not’, I say, ‘someone has to lead, and wouldn’t it be better, when our descendants look back in 50 years’ time or so, to be one of the leaders instead of a laggard who dragged the world down?’.)

Indeed, I maintain there is reason to be very concerned about Canada’s performance on GHG emissions because recent political developments seem to be building very strong resistance from some sectors to core components of the Federal plan for emissions mitigation.  I include here the non-thinking backward goosestep performed by Doug Ford’s new Ontario government on taking office, cancelling a carbon cap-and-trade program already in place and working, cancelling several programs designed to encourage a shift away from our carbon-intensive lifestyle, and announcing a plan to oppose the Federal carbon tax in the courts as soon as it is implemented next year.  This from a government that has yet to announce anything substantive that it claims it will put in place instead.  Alberta’s cap on emissions from the tar sands, originally to be put in place next year, has now been deferred till after the Alberta election, and its disappearance after that seems quite likely, no matter who gets elected.  I fear Canadians are not behaving responsibly when it comes to climate change.

Right-of-center politicians in Canada are finding opposition to the carbon tax to be a reliable way to fire up their base.  Image © Brian Gable/Globe and Mail.

And this brings us back to the tar sands.  Some in the industry, in Alberta, and in the Federal government seem to be demanding that Canadians develop an individual moral obligation to support the expansion of production in the tar sands.  Nightly on TV, I see happy little stick figures who claim to be enjoying all the benefits that Alberta’s tar sands industry is bringing to us.  But let’s think a bit more deeply.

Yes, it is true that oil production is a major portion of Alberta’s economy.  Its also true that Alberta governments grew fat and lazy, living off the revenues from that oil industry over many years, when they could have been building a sovereign wealth fund, as did Norway very successfully.  Obviously, under such circumstances there will be pain in Alberta if tar sands production ceases to grow, or even shrinks, and that pain will be shared, to an extent, across Canada.  But get a grip; total collapse of the oil industry in Canada represents just a 2.6% loss to our economy, and nobody is suggesting the imminent collapse of the industry.  Furthermore, I dispute that just because corporations built a production industry without taking sufficient care to ensure that there would be capacity to refine, or ship the product, and just because a succession of governments endorsed those corporate plans, advocated for them, and provided substantial subsidies to allow them to proceed (subsidies that continue to be paid, while subsidies for carbon-neutral energy production are scarce), I should be somehow responsible for helping this industry succeed.  What happened to the idea of free markets?  It is emphatically not my problem, even if a downturn in Alberta will hurt me a little bit.  There are lessons in Alberta’s fossil fuel industry and they are not lessons about the need for the nation to ensure that the industry can grow as it wants, to hell with everything else.  They are lessons about humility, and responsibility of industry to plan properly.

I also believe that, given that there is sufficient pipeline capacity to transport oil currently being produced, there is no justification to ease environmental requirements, or the requirement that industry consult appropriately with First Nations and other groups whose lives would be impacted by new pipelines, simply to get pipelines built quickly.  It is nobody’s fault except the oil industry that they find themselves constrained by their ability to get their product to market.  And, where is it written that it is every industry’s right to expand as much as it wants?  Do I admit that some of the opposition to pipelines is politically motivated?  Yes, of course it is?  But Canadians have a right to their own political views, and many of us have not been persuaded that pipelines carrying dilbit are an important part of our future.  In fact, there are strong reasons for arguing that continued expansion of tar sands production is an inappropriate direction for Canada’s economy to move in.

The tar sands currently emit 72 MtCO2eq of greenhouse gases.  If their production increases as CAPP and others expect, and if the carbon intensity of the product remains the same, they will emit 58% more greenhouse gases than now, or 114 MtCO2eq, by 2035.  (If Alberta’s emissions cap is not abandoned, growth will be constrained to limit emissions to 100MtCO2eq; if carbon intensity of tar sands production should decrease it might remain possible to increase production as planned and still keep emissions below 100MtCO2eq.)  Either way, ramped up production in the tar sands makes reducing total Canadian emissions way more difficult than otherwise.

David Hughes considered this issue in his 2018 Canada’s Energy OutlookUsing the data on production trends from the National Energy Board, and data on emissions from Environment and Climate Change Canada, he showed a major squeeze on other sectors of Canada’s economy would be needed.  Needed, that is, if we decide to permit growth in the tar sands and also achieve our NDC targets under the Paris Agreement.

Figure 132 from Canada’s Energy Outlook, 2018, by David Hughes, shows the restrictions that could be imposed on the rest of Canada’s economy if the expansion in the oil and gas sector (almost entirely in the tar sands), as anticipated by the National Energy Board is permitted to go ahead.  Image © CCPA.

If the growth permitted under Alberta’s emissions cap is permitted, as National Energy Board assumes, and if Canada continues to strive to honor its commitment under the Paris Agreement, all non-oil and gas components of the economy must reduce emissions a whopping 49% from 2015 levels by 2030, and an even more whopping 85% by 2040.  Being a retired academic who does not need to concern himself directly with the economic well-being of Canada’s agriculture, construction, heavy industry, transportation or any other economic sector, I can be dispassionate, but does anyone for one second believe all these sectors of the economy will meekly downscale (or invest very heavily in an effort to decarbonize) while the tar sands are permitted to expand their emissions by 100 MtCO2eq?  If anyone does believe this, I have some bridges for sale you may be interested in.

Fact is, Canada is not going to permit the anticipated growth in tar sands production, or Canada is going to fail dismally, yet again, on the world stage and remain a climate pariah.  Let’s assume, for one moment, that Canada behaves rationally (no I have not been smoking dope, even if it seems I have), and puts the well-being of 97.5% of its economy, and the well-being of our shared environment, ahead of that of tar sands bitumen production.  Albertans, if anyone there is reading this, bear with me a moment – I have nothing against Alberta, the west, the oil industry, or even country music, I’m just trying to think logically about what is best for Canada.  If it is simply not going to be politically possible for tar sands production to grow as planned, then we should be asking questions like:  Do we really need more pipelines?  Is there something fundamentally wrong with producing bitumen at the present-day rate over the next several decades (so long as the price makes any production worthwhile), providing decent jobs and making decent profits?  And, wait for it, wouldn’t it be a good idea to leave some of this stuff in the ground (after all, maybe we will discover less polluting ways of recovering it, and uses more valuable than simply exporting it for others to burn)?  Its not going to disappear if we leave it in the ground for the future.

That’s enough about my views on this topic.  Every Canadian is entitled to develop his/her own views.  All I ask is that perspectives be based on the same set of facts:  We produce a lot of dilbit and synthetic crude from the tar sands (2.7 MMb/d in 2017).  That economic activity is particularly polluting, so while it represents just 2.6% of our economy, it is responsible for more than 10% of our greenhouse gas emissions.  The industry, with Provincial and Federal government encouragement and support (those subsidies), wants to increase production 58% by 2035.  Doing this would make it virtually impossible for Canada to honor its international commitments concerning climate change, the existential problem facing humanity.  Do we produce fossil fuel and to hell with the future, or do we try to steer a path for Canada and the world towards a sane future with a climate conducive to continuation of human civilization.  Along the way, are additional pipelines so necessary that they must be built no matter what people along the path think?  (On that issue, David Hughes has some important things to say in Canada’s Energy Outlook, and I have blogged about the topic in the past.).

Construction on the Trans-Mountain pipeline expansion.  Sure there are jobs here, but are new pipelines really needed, or would there be better ways to use these construction skills?
Image
© Kinder Morgan.

Categories: Canada's environmental policies, Climate change, Economics, In the News, Politics, Tar Sands | Comments Off on Greenhouse Gas Emissions: How is Canada Doing?

Crunch Time on Climate, or why Canadians should strongly support Justin Trudeau’s carbon tax

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Crunch time is now.  The IPCC special report, Global Warming of 1.5oC was an early October shot across our collective bows.  It reported the substantial difference in extent of risk in a 2oC world, compared to a 1.5oC world.  The US report in late November was a follow-up to make sure we noticed.  That report: Impacts, Risks, and Adaptation in the United States, is the second volume in the two-volume Fourth National Climate Assessment mandated by Congress.  It was produced by the 13 federal departments and agencies responsible for research and supporting the national response to climate change.  Just to rub some salt in, UNEP released its 2018 Emissions Gap Report on November 27th, revealing the not unexpected news that the emissions reductions committed to by countries are woefully insufficient to achieve the Paris goals for 2030 (meeting those goals is why nations have made their commitments).  Now, with COP24 under way in Katowice, Poland, there is a flurry of news mostly concerning how rapidly the climate is changing and how far beneath a satisfactory level the world’s responses fall.  This week’s issue of Nature, out today, contains several articles and an editorial on this topic.

A wonderfully hypnotic view from high above of the The Gemasolar Thermosolar Plant in Andalusia, Spain.  Image © Markel Redondo/Panos.

Frankly, I don’t know how much more clearly the scope of our predicament could be portrayed.  The Emissions Gap Report begins its Summary for Policy Makers with a paragraph in red:

Current commitments expressed in the NDCs are inadequate to bridge the emissions gap in 2030. Technically, it is still possible to bridge the gap to ensure global warming stays well below 2°C and 1.5°C, but if NDC ambitions are not increased before 2030, exceeding the 1.5°C goal can no longer be avoided. Now more than ever, unprecedented and urgent action is required by all nations. The assessment of actions by the G20 countries indicates that this is yet to happen; in fact, global CO2 emissions increased in 2017 after three years of stagnation.

There’s no scholarly wiggle words here, no hesitant tiptoeing to a conclusion.  The ‘nationally determined commitments’ or NDCs, those promises voluntarily given, perhaps complete with a Boy Scout’s salute, by each participating country, are INADEQUATE.  They won’t do.  They won’t magically let us reach the Paris goal.  Of course, we’ve known that fact ever since the NDCs began to come in back in 2015.  (We’ve also known that most countries have not managed to put in place policies that will achieve their NDCs, so the situation is even worse than the inadequacy of the NDCs implies.)

The concentration of CO2 in the atmosphere continues to increase.  Concentration over Mauna Loa averaged 408 ppm last month and reached 411 ppm earlier in the year during the late spring peak, and the trend shows no sign of slowing down.

The cause of this is pretty clear: in 2018 global anthropogenic emissions of greenhouse gases reached 49 gigatonnes CO2e not including releases due to changes in land use, a 1.1% increase over 2016, and emissions are projected to increase a further 2.7%.  There had been a plateau in emissions 2015 to 2017 leading many to believe the corner had been turned, but that was clearly misplaced optimism.  The reason for the increases?  A growing world economy with energy demand increasing fast enough to suck up all new green energy production and still require an increase in fossil fuel use.  While use of coal has slowed, use of gas and oil continue to grow rapidly.

Trends in GHG emissions from burning of fossil fuel, 1965 to 2018.  There is definitely no sign of a slowdown!  In addition to emissions due to fossil fuel use, there are emissions due to manufacture of cement and due to changes in land use.  In 2017, total GHG emissions were 53.5 gigatonnes CO2e, and total emissions excluding those from land use change were 49.2 gigatonnes CO2eImage © Nature.

 

Trends in energy use from 1965 to 2018, by fuel type.  Despite the enormous growth (proportionally) in solar energy, it still remains a minor part of the global energy mix.
Image
© Nature.

 

The climate is continuing to warm as a consequence of the increasing amounts of greenhouse gases in the atmosphere, and the IPCC special report in October demonstrated the very different consequences of acting to limit warming to 1.5oC or allowing it to reach 2.0oC – a half a degree really does matter in this new Anthropocene world.

The IPCC report shows that global monthly mean surface temperature has now exceeded the range of temperatures typical of the pre-industrial era.  We are effectively in territory totally new to humans, although the world has been here before.  Furthermore, in an article published in this week’s Nature,

An unfortunately low-res, prepublication version of Figure 1.2 of IPCC’s 1.5o report showing the trend in globally averaged mean monthly surface temperature since the start of the industrial revolution.  Temperature (orange line) now exceeds the range of temperatures during the Holocene.  The observed trajectory is towards the high side of the range of projections from global climate models (green band).  Image © IPCC.

Yangyang Xu of Texas A&M, and V. Ramanathan and DG Victor, both of UC San Diego, argue that the IPCC report did not pay sufficient attention to the fact that rising emissions are combining with two other factors to increase the rate at which warming is taking place.  They point to improving air quality in many cities mostly due to use of more efficient cars, trucks, buses and trains, which is allowing more sunlight to reach the surface, thereby enhancing warming.  In addition, the planet is now entering the natural warming phase of the Interdecadal Pacific Oscillation, expected to last a couple of decades. Xu and colleagues are saying, “Hey, wait a minute, as bad as IPCC made things seem, the overall warming rate is going to be faster, and increasing in rate over the near term”.  They suggest we may reach the 1.5oC target as much as a decade earlier than IPCC suggested!

And just to repeat, our mitigation efforts are nowhere near being sufficient to plateau at 2.0oC let alone 1.5oC.

According to Xu et al, the combined effect of continuing GHG emissions, improving air quality, and the Interdecadal Pacific Oscillation now entering its warming phase means that warming is going to proceed even faster than IPCC was projecting in its October special report on keeping warming to 1.5oC.  Image © Nature.

So, what do we do now, other than assume the fetal position and hope for the best?  Nature managed to include some good news this week.  In an article titled, Emissions are still rising, Christiana Figueres and colleagues report that while decarbonization by 2050 may appear impossible now, key technologies are on track.  Costs of generating solar energy have fallen 80% in the last decade, and solar electricity is being produced in Morocco, Mexico, Chile and Egypt for 3 cents or less per kwh, cheaper than using natural gas.  Today, more than 50% of new electricity generating capacity is renewable, with wind and solar doubling every four years.

Coal is being priced out and coal-fired power plants are being retired in the USA despite the supporting bluster from a certain large, not very nice politician there.  In October, the World Bank cancelled planned funding for a 500 watt coal project in Kosovo – the last coal project in its pipeline.  There were lower cost ways to provide the needed energy.

Giant strides are being made in developing new, more efficient batteries, and electric vehicles are starting to surge.  Norway, France, the UK, the Netherlands and India have all set deadlines for stopping the sale of non-electric cars, with Norway’s deadline in 2025.  The recent North American plant closures announced by General Motors are part of a massive restructuring to switch R&D and production towards electric vehicles.  And, while OPEC projected 46 million by 2040, it now projects 253 million by that date.

Of course, even Figueres could not be totally optimistic.  Their article noted the growing trend away from support for international cooperation in reducing emissions, specifically mentioning the brilliant White House decision to have the USA withdraw from the Paris Agreement, the pro-harvesting attitude towards the Amazon rainforest by the newly elected populist President of Brazil, and the prevalence of climate sceptics among Australia’s political leaders, who worship at the coal shrine every chance they get.  Still, refusing to end on a down note, Figueres and colleagues lauded the widespread support for climate action at regional and local levels even within countries that are intransigently opposed to moving on climate at the national level.

Reading Figueres’s article did cheer me up.  It goes on to enumerate actions by private industry, and strong support by some countries for the Paris Agreement.  Its worth a read if only for the uplift it provides (and it is open access, even if in Nature).  Still, for me the uplift did not last: I remain pessimistically unconvinced.

You see, here in Canada, the Trudeau government has got itself all tangled up in unbuilt pipelines, and the most ridiculous wailing coming out of Alberta because they are having difficulty selling their oil at a decent price.  These days, every time there is a price dip, a chorus of voices rises like angels on high, singing out that its all because we don’t have enough pipelines, and the downturn in the tar sands is going to lead the Canadian economy to abject ruin.  Fingers are pointed at Justin Trudeau, who simply has not done enough for Alberta, the most misunderstood, and poorly treated Province in all of Canada.

I’ve talked before about the mythical lack of pipeline capacity, and have yet to see anyone provide evidence to the contrary.  There WOULD BE a shortage of capacity if the production of bitumen had grown as rapidly, and to such high levels, as was being predicted by all the oil-savvy experts back in the Harper years.  Production is going to increase three-fold!  Have to get those pipelines built (all of them)!  Cannot delay!

Justin Trudeau and Rachel Notley fixing Canada’s claimed pipeline shortage.
Image
© David Parkins/Globe & Mail

But growth has been a lot more anemic (thank god, given impacts on the climate), and present-day problems have been caused by four things that have come together as the proverbial perfect storm.  First there is a glut of oil on the global market partly because lifting of sanctions has allowed Iran back into markets, partly because of growing fracking output in the US, and partly because demand has not kept up with supply.  Second, Suncor has successfully brought new production online ahead of schedule, contributing to a glut of product within Alberta.  Third, a number of refineries in the US Midwest that process Canadian heavy crude (read ‘tar sands gluggy stuff’) have shut down for maintenance at the same time.  And fourth, Canada has pipelines that only go to US refineries, so any slowdown in that pathway hits Alberta which has no alternative destinations for its oil.  This October, even if we had a twinned Trans-Mountain, and a new Keystone XL in operation, Alberta would have faced discounted prices.  Nevertheless, despite these facts, numerous authoritative sources and politicians (not necessarily the same thing) were criticizing anyone who had the temerity to wonder about the climate, or the environment, or who argued against building every more pipelines from Alberta.  The normally sane and sage Globe & Mail even wrote an editorial to this effect!

Amazingly, fantastically, and revealing just how inflated the rhetoric about a shortage of pipeline capacity had become, as soon as Alberta’s Premier Notley promised to buy some rail cars, and create some legislation to force a slowdown in production, the low prices disappeared.  Whereas prices for Western Canadian Select (the tar sands product) had bottomed out in October at $50 below the price for West Texas Intermediate, leading to all the wailing from Alberta, the prices rebounded today to a $15 discount on West Texas Intermediate – slightly better than the long-term average of $17, due to the greater difficulty with handling and processing this stuff.  Look at the graph and explain to me a) how the claimed chronic shortage of pipeline capacity could produce such a yo-yoing price differential, and b) how some calming words and a promise from Premier Notley for some changes in production sometime in 2019 could have produced the recovery over the last few days.  Main message here?  Take with a grain of salt any crisis talk out of Alberta.

This delightfully zig-zaggy trend line shows the difference in price between tar sands ‘oil’ and conventional oil (West Texas Intermediate).  A shortage of pipelines that is claimed to have existed for years could never be responsible for these gyrations.  On the other hand, that gifted politician, Premier Notley has been able to save the day at the end of November by a promise of government help sometime next year.  Wow, does she have charisma or what!
Chart
© Globe & Mail.

Prime Minister Trudeau, who has already committed Canadians to buying a pipeline we did not ask for, is now being asked by Rachel Notley to help her buy the rail cars she has promised.  Hell, why not go into the railroad business together to please Alberta?  Trudeau has wisely kept his lip buttoned on rail cars, but I wait with bated breath while the meeting this weekend between the PM and all the Premiers – political promises are seldom cases of careful rational deliberation.

Still, it is undeniable that Justin Trudeau has found himself tangled up in pipelines more than he ever expected, and this has kept him from taking pressing action on climate change.  Canada is still saddled with the original NDC (nationally determined commitment) for the Paris agreement.  It had been cobbled together by Stephen Harper, a person noted for his complete disdain of climate change, and it was delivered to IPCC by the newly elected Trudeau team.  It has been widely condemned as one of the least adequate – make that most inadequate – NDCs offered by a developed country.  And Canada is hopelessly far behind on even achieving this modest little effort.  Meanwhile the sunny ways of the early Trudeau years have faded into a particularly nasty political battle in which conservative politicians (both in the federal opposition, and in power in provinces) are gleefully using spurious claims that the planned federal carbon tax is just a tax grab by the government.  Men (and they are all men) who should know better are feverishly stoking resentment from the public, who are believed, apparently, to be too stupid to actually understand a) that putting a price on carbon pollution is the most effective way of reducing it, and b) the proposed tax will generate revenues that are being passed back to the public.  No Net Increase in Taxes.

One of Canada’s less thoughtful provincial Premiers, who goes by the name @FordNation and has spent his first six months in office scrapping every piece of environmental legislation he can find.  Goose-stepping backwards into the past ain’t a bit like John Cleese’s ‘silly walk’.
Photo
© Now Magazine

There have been several opportunities to resuscitate the climate policies.  Each of the reports from IPCC or other bodies over the last few months has pointed to the urgent need for countries to do more than they are doing.  But on each occasion, I have watched and waited, and neither Justin Trudeau, nor his Minister of Environment and CLIMATE CHANGE, Catherine McKenna, has grabbed the ball and run with it.  It’s got so bad that @CathMcKenna has been tweeting about all the wonderful things Canada is going to do to solve the problem of plastic in the ocean.  I mean, who is going to be opposed to doing something to reduce plastic pollution.  Yes, we’ll all give up plastic straws, and live happily ever after as the world grows warmer and warmer.

On the other hand, I am not a politician, and maybe keeping one’s powder dry is a useful posture given that they never planned to bring in the tax until next year anyway…. Except, next year is also an election year, and the Conservatives are already beating the drum about why we must not pay taxes to curb greenhouse gases.

Its possible that there is more real support in Canada for curbing global warming than I believe is the case.  But I have watched in distress as the newly elected Ford government of Ontario (now there is a political leader to admire) has methodically wound down every progressive environmental measure put in place by its predecessors.  Ontario’s cap-and-trade program, barely in place, was scrapped the moment they assumed power (at some cost to the treasury, too).  Various other environmental advances made by the former government have also been rolled back.  And I have heard only silence.  Like its too bad, but it probably doesn’t really matter.  It DOES matter.

Elsewhere, I see the city of Paris on fire as people riot against a gasoline tax to curb carbon emissions.  It’s touching.  It makes for great theatre – all those yellow vests in the dark night, and it did get the tax cancelled for now.  But how does France move forward?

In Australia, the endless spewing of nonsense out of the Parliament House about the lack of need for Australia to do anything towards curbing greenhouse gases leaves me wondering.  They built that Parliament building half underground.  Perhaps they should just bury it fully, with the politicians inside, and plant trees on top of it.

A nation that has put up with exceptionally severe droughts, fires, cyclones in recent years should surely be aware that climate is changing in ways that make Australia a far more difficult place in which to live and prosper than it once was.  The nation that prides itself on its management of the Great Barrier Reef, and recognizes that reef as of iconic value, a major generator of tourism jobs and dollars, and a piece of Australia’s national heritage that absolutely defines that country, is being led by politicians who find it appropriate to throw $444 million at an NGO ill-equipped to use it effectively, and claim that by so doing they are protecting the Great Barrier Reef, following its severe bleaching two years in a row because of climate change.  Meanwhile the demand to dig up coal and export it to India continues unabated.  If all Australia’s coal was dug up and used, the world would be in exactly the same mess as if all Canada’s delightful tar sands were dug up and used.  We collectively cannot afford to do either of these things, and the sooner people realize that and stop trying, the better.  The world is not a larder full of stuff for us to use willy nilly.  No matter what any economist thinks.

Why not cut 9 million out of the 10.7 million acres previously set aside to protect this amazing bird?  More land for mining and drilling!  What a great, forward-thinking step to take by an Administration that has yet to find a single environmental issue it supports.  Is this what Americans voted for?  Image © Dan Cepeda/Associated Press.

And then there is the United States.  Led by a madman who clearly has never seen a natural environment he might consider protecting.  This morning’s paper had a wonderful picture of a sage grouse in courting pose.  This amazing creature has already had its numbers greatly reduced because we prefer to use prairie differently, and the photo was there because Mr. Trump has found yet another environmental reserve, set up to protect the grouse on their lekking ground, that needs to be trashed so that there is more land available to drill for fossil fuels.  Getting that pesky bird out of the way was one step.  Almost simultaneously, rules governing emissions from coal-fired power plants have been rolled back. Yes, there are large parts of the USA that are trying their best to make progress on climate change, but I think the world needs far more from the USA than a partial response, while the disease which is the current central government does all it can do to undo any progress from past years.

At present, despite rereading the Figueres article in Nature, and trying to become inspired again, I find myself looking into a very warm and chaotic future.  It won’t be the 1.5o or the 2.0o future that IPCC talks about.  IT’s going to be the 4o or the 6o or the 7o future that nobody who understands these things wants to contemplate.  A future in which we will lack the water needed for crops to feed our people, one in which our major cities will all be moderately or severely damaged by rising sea level.  A future with a sea level that continues to rise until all the ice in polar regions is gone, and virtually all our major cities are so many Atlantises.  A future that will make the scenes of refugees today the new normal across vast stretches of the planet.  And we will have caused it.  Through our carelessness, our greed, and our blind stupidity.

Or maybe, just maybe, we will find a way to at last begin to take due notice of what is the most profound set of changes unleashed on this planet since we began to learn how to farm.  I sure hope there is going to be some good news in 2019.  For now, my advice to everyone is to let your political leaders know you support taking strong action on climate change, you want to see results.  For Canadians, particularly, it is imperative that people who have been convinced that climate change is a real and present danger all communicate their concern to the federal politicians, as loudly as possible.  We want a carbon tax.  We want other actions to shift the Canadian economy away from fossil fuels as quickly as possible.  We want a progressive, well-thought-out, coordinated program that will address greenhouse gas emissions while also building the infrastructure and creating the new technology that will provide high-value jobs for the future.  Canada is lucky to be in a part of the world where climate change risks will be manageable.  We need to seize that luck to ensure a great future for our people.

Categories: Canada's environmental policies, Climate change, Coal, In the News, Politics, Tar Sands | Comments Off on Crunch Time on Climate, or why Canadians should strongly support Justin Trudeau’s carbon tax

Why Canada will Waste Money on the Trans-Mountain Pipeline

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As I stare at the blank page. Thinking how to begin, I sense I am about to pound my head against a rather solid wall yet again.  Logic does not always overcome politics, and to understand Canada’s love affair with what used to be called the Kinder-Morgan Trans-Mountain Pipeline, we need to understand the politics.  Trans-Mountain is a small part of our wider love affair with pipelines built (or not) to ship tar sands product to market.  Trans-Mountain already exists and is being used to ship product to Burnaby BC for export (mostly or entirely to refineries on the US west coast).  It is the expansion of this pipeline, its twinning, that is the subject of concern.

The expansion of the Trans Mountain pipeline involves twinning its entire length and operating in a way that will almost triple carrying capacity.  Image © National Energy Board

Back in that long-ago time when Stephen Harper was Prime Minister of Canada, our nation maintained or accelerated or consolidated the idea that our prosperity as a country was intrinsically tied to the rapid expansion of extraction and export of product from the tar sands near Fort McMurray, Alberta.  (I use the word ‘product’ for politeness; ‘bitumen’ is perhaps more accurate although untreated bitumen does not flow through pipelines, ‘glurp’ is another good descriptor and ‘oil’ is a euphemism designed to pretend that this product really is much the same as the oil that used to flow so freely, but now gets pumped, against its will, from what are called ‘conventional’ wells.)

PM Stephen, being a solidly conservative politician, could not really see government as much more than an entity for delivery of the set of laws, policies, decisions and actions undertaken by the State to clear away anything that might lie in the path of private corporations seeking to maximize profits for their shareholders.  Being an Albertan, he also saw Canada’s economy as pretty much Alberta’s economy, plus a tiny bit of other stuff done in other parts of the country.  Alberta, of course, devotes two weeks a year to cowboy hats and bucking broncos, and the rest of the year to digging up stuff to sell wherever there are buyers (or at least, that is what the movers and shakers in Calgary’s corporate towers would have us believe).  The Right Honorable Stephen bought into the Grand Tar Sands Myth, hook line and sinker, and dragged the rest of us along with him.  A couple of years ago, I called that myth a tar baby, because it seemed exceptionally good at entangling politicians who got anywhere near it, and Stephen was inextricably stuck to that tar baby.

Stephen Harper loved the tar sands, didn’t really understand environment.
Image
© Theo Moudakis/Toronto Star

What is the Grand Tar Sands Myth?  Well, first of all, its adherents refer to it as the Magnificent Future that will be Delivered to All of Canada by the Rapid Expansion of Production and Export of Ethical Oil from the Athabasca Oil Sands.  (True believers really do speak in capital letters.)  One part of the myth was that Canada had a noble responsibility to develop the tar sands fully and as rapidly as possible, making this vital source of energy available to the less fortunate nations of the world, while building the prosperity that Canadians deserved.  Nothing should stand in the way of achieving this noble future.  Another part of the myth was that Canada’s economy was tightly tied to the success of the tar sands, and that any failure to sustain rapid growth in tar sands production and export would be met by near-total economic collapse, loss of jobs, and removal of Canada from the list of advanced nations.  The apocalypse would be Wagnerian in its fulsome comprehensiveness, and it would come very quickly if anything should create so much as a tiny pause in said expansion.  A final part was that all this effort could be undertaken with nary so much as a tiny ding to the pristine, white as snow, state of Alberta’s environment – environmentalists did not know what they were talking about.  Spelt out in august tones by learned men (always men) the Grand Tar Sands Myth is a tale that will keep children from their slumbers and their parents anxious and afraid as they huddle, wringing their hands, waiting for some good news out of Alberta.

In 2015, Stephen Harper was out of office, and Prime Minister Justin Trudeau was ushering in his sunny ways government, setting out to right some of the wrongs put in place by his predecessor.  Being a true liberal, however, PM Justin is a middle of the road kind of guy – not too far to the left to upset those who do not trust government, and not too far to the right to risk losing the support of those who actually believe government has a reason for existence beyond acting as a giant snowplow/bulldozer clearing the way for whatever plans are being implemented by the wealthier members of the private sector.  And as any wise chicken knows, it’s OK to cross the road, but standing in the middle of it for any length of time is a perilous act.

The middle is not always the best place to be!  Image © Greg Perry/Winnipeg Free Press

As well as being a sunny liberal, PM Justin is Pierre Trudeau’s son, and so he felt compelled to work to convince the west, especially Alberta, that though he was his father’s son, he most definitely was not his father.  Soon after being elected Prime Minister, he was assuring voters that his government would be working hard in support of the Grand Tar Sands Myth, while simultaneously addressing Canada’s appalling record on climate change.  He was going to work just as hard as his predecessor to ensure the unfettered growth of tar sands production and export, while also taking actions that would place Canada among the world’s leaders in the battle to reduce the rate of climate change.  He’d do all this while remaining sunny (he was intent on bringing Canada to a new, brighter, happier place than it had been for the decade prior).

When PM Justin spoke about the economy, or the tar sands specifically, he spoke like a true believer in the Great Tar Sands Myth.  Canada’s economy is very strongly dependent on resource exploitation.  We have a moral obligation to extract and export tar sands oil.  Pipelines to tidewater are essential in this less certain world, and with proper consultation and appropriate concern for environmental issues, they can and will be built responsibly.  Alberta can depend on it.

When he spoke about climate change, he was equally sunny about Canada’s bright future as a leader in the technologies underlying renewable energy, and he was clear that Canada was going to do its full share to ensure the world transitioned to a far less carbon-intensive economy.  His government, barely into office, was notably active during the COP21 climate conference in Paris in November 2015, leading battles to cement the +2oC target, and install an even better +1.5oC aspirational target for future warming.  This was a pleasant change from past performances, surely an arbiter of great things to come.

So far, things have not worked out as we might have hoped.  A major part of the problem for Justin Trudeau lies in two facts: 1) The Great Tar Sands Myth has always been a fairy tale and more and more Canadians are seeing through it, and 2) Nature does not seek political compromises and Trudeau’s effort to compromise on pipelines and climate has floundered accordingly.  I’ll start by dissecting the myth, endeavoring not to get too stuck to the tar baby in the process.  Then I’ll look at what Canada needs to do if we are serious about doing our fair part of the effort to achieve +2oC.

The Grand Tar Sands Myth

This myth has several parts.  Tar sands bitumen production and export is a major part of Canada’s economy, we have a moral obligation to monetize our mineral resources, pipelines to tidewater are essential for the industry, and all can be done without serious environmental problems.  Let’s look at them one by one.  (In much of what follows, I am drawing on Canada’s Energy Outlook 2018.

How important to Canada’s national economy is the production and export of tar sands product?  Depending who you ask, it’s amazing how different a spin can be put on the answer to this simple question.  The bare facts are generally agreed:  In 2017, according to the National Energy Board, Canada produced 4.3Mb/d crude oil (million barrels per day).  Of this, 2.9Mb/d or about 63% was in bitumen extracted from the Athabasca tar sands, and worth about $ 43.6B to Canada’s GDP for that year according to StatsCan.  The production of conventional oil has been declining slowly since 1999, while tar sands production has increased four-fold from about 0.6 Mb/d.  Most (85%) of Canada’s oil is exported, mostly to US refineries.  There are currently about 400,000 people employed in the oil and gas industry in Canada, half in production and distribution and half in construction – as expected, employment can fluctuate substantially, depending on the oil price, and construction jobs are always short-term.  Tar sands-related jobs were about 75% of total oil and gas related jobs in 2015.

In Canada’s Energy Outlook, 2018, David Hughes uses StatsCan, National Energy Board and other official sources, reporting total revenue from extraction and processing of fossil fuels, plus related construction across Canada, was $137B or 8.3% of Canada’s GDP in 2015.  As a percentage, this is down from 10% in 1997, despite the substantial growth in production (combined gas and oil production up 33%).  More than 2/3 of this occurs in Alberta, where the tar sands represent 63% of total production but only 51% of economic value (tar sands production represents about 3% of Canada’s GDP in 2015).  Other sources put the tar sands annual value as less than 2% or more than 4% of Canada’s GDP (an HIS Cera 2014 report claimed a $91B contribution by tar sands operations to GDP in 2012, presumably by liberal inclusion of flow-on activity).  There are many ways to measure contributions to GDP.

The tar sands are also contributing less to government revenues than they were in past years.  Revenues come principally as royalties and corporate income tax, plus some lease and land sale income.  Hughes points out that StatsCan data reveal a 63% decline Canada-wide in oil and gas royalty revenue since 2000 despite a 27% increase in oil and gas production over that time.  Royalties are down 74% as a proportion of total oil and gas revenues over that time.  In Alberta, the decline in royalty revenue since 1980 has been 90% despite a doubling in production, and now amounts to just over 3% of Alberta revenue.  It seems we Canadians have been selling off our fossil fuel resources for less and less money as time goes by.  Just to rub in some salt, Hughes also documents a decline of 51% from its 2006 peak in corporate tax revenue in the industry.  While some will argue that the income taxes paid by workers in the industry should be included in revenues derived from the industry, most of these people would be working in other construction jobs if we were not employing them to build out the tar sands.

Royalties are way down, while production and corporate revenue are way up.  Does that make economic sense for Canada?  Image © Hughes GSR

I put these numbers together and draw the same conclusion Hughes does.  The tar sands industry is substantial, but it is not so big that Canada would collapse economically without it.  And its contribution to GDP and Government revenues has been falling despite its growth in output.

How about our moral obligation to dig up and ship out every mineral resource in this fair land?  Yes, this can generate jobs, but Canada has a well-educated work force that should be capable of doing far more than hewing wood, drawing water, or digging.  In 2018, we should be seeking to expand the kind of high-value-added, knowledge-based employment opportunities that might be able to provide the employment security that used to characterize heavy industry.  Also, there is something plainly dumb about exporting raw resources so people elsewhere can get the value-added profits – Canada has a long history of this kind of dumbness, ever since we started shipping furs to Europe.

Fur traders in Canada 1777.  Image © Library and Archives Canada

The transition away from a carbon-intensive economy is going to require heavy construction to provide enhanced electrical and data grids, expanded generation capacity in renewable and nuclear energies, modern, high-speed road and rail transport.  Construction skills learned in the tar sands are transferable.  Furthermore, just because we have resources does not mean we are obligated to use them – they don’t have use-by dates, and we can always dig them up later if new opportunities for creative use come along.  And, climbing briefly onto my moral high horse, if we properly understood our relationship to the environment, we’d not get stuck thinking of it as a larder full of stuff for us to use.  In fact, as I show below, we simply cannot afford to fully exploit the tar sands no matter what some tar baby-stuck politicians may think.  The failure to convert natural capital into dollars can become a virtue, as well as a great way to live in harmony with the rest of the biosphere, something we all should reflect upon from time to time.

Pipelines to tidewater – it’s a cry heard repeatedly across this land in recent decades; some shout it out as a business necessity, something that must be ensured by any government worthy of its name in order to sustain the economy, others shout it out as a red line never to be crossed, a sign that Canada has no soul, has not listened to First Nations people or other affected parties, or is dead to the environmental risks that expansion of the tar sands enterprise will bring.  There is a lot of heat on both sides of this argument; is it possible to discover the truth?

The argument from proponents is that the Alberta oil industry suffers from a lack of capacity to ship the products from wells to refineries.  Buried in history, there were sound reasons for not building more refinery capacity within Alberta, I’m told. (How sound, I often wonder.)  At present the great majority of product heads south to the refineries of Texas, Oklahoma and so on, and the process of building additional pipeline capacity has become fraught as environmental restrictions have been tightened, and resistance to pipelines has grown.  The argument includes the word ‘tidewater’ because, as well as a need for additional capacity, there is a need for more flexibility with respect to markets, and an argument that Alberta tar sands bitumen sells at a steep discount relative to world oil prices because it goes to one, well-supplied market.  People who support this argument look askance at anyone who questions it – the economic logic seems so compelling.  But is it true?

Firstly, nobody claims that bitumen is piling up across the Alberta high prairie because there is no way to ship it out.  The claim is that the extra capacity is needed very soon to cope with the expansion of production that is going to occur.  And it is needed as soon as possible so we can capture the rich Asian market before other suppliers fill that demand and shut Canada out.  (Perhaps worth reflecting here that oil arriving on the west coast via the existing Trans-Mountain pipeline goes almost entirely to Washington and California; Asia does not seem to be clamoring for a piece of the action.)

I have reported before on David Hughes masterful documentation of the flaw in this pipeline capacity argument.  He repeats the argument in Canada’s Energy Outlook 2018, and I have yet to see anybody refute it.  (It’s uncanny how the proponents of pipeline building continue to make the argument, but don’t bother to shut down Hughes’s traitorous claims.  If he is incorrect, surely one or another oil tycoon could take the time to point that fact out?)

Fig. 81 Canada’s Energy Outlook 2018, showing how existing pipeline capacity is sufficient for need well past 2030, and with a tiny use of rail through 2040 so long as Alberta’s cap on tar sands production is complied with.  Both Keystone XL and Trans-Mountain expansion are surplus to need.  Why are they being built?  Image © CCPA.

This chart contains the germ of Hughes’s debunking claim.  Using data from CAPP and National Energy Board and updating his presentation to take account of recent decisions on pipelines, the figure shows that there is ample capacity into the future at least to 2040 for any realistic expansion in production.  True, most of the capacity shunts the bitumen south to Texas and Louisiana the way it has always been, but separately Hughes reveals that the price discount that requires pipelines to tidewater was a transitory thing that has now disappeared again, apart from a residual amount that has to do with the lack of desirability of this product relative to oils from other places.  Like it or not, Canada’s Ethical Oil is nasty stuff to handle, and refining it costs more than is the case for other crude.  It will always command a lower price.

True, back in the heady days when everyone ‘knew’ that tar sands production was going to triple by 2030, the need for additional pipeline capacity in the near future was a strong argument in favor of building more of them.  But that scenario is long gone, and there now exists a cap on tar sands production put in place by the Alberta government as part of its own program for responding to climate change.  Hughes’s argument against additional pipelines is simply that if the cap is going to be complied with, and if Canada is going to at least try to meet its self-imposed obligations under the 2015 Paris Agreement, then production capacity in the tar sands is not going to expand to the point where additional pipeline capacity will be necessary.  Why build them if they are not needed?

The final part of the Myth is that a rapid expansion of tar sands production is not only necessary and desirable, it is compatible with sound, sustainable environmental management including mitigation of climate change.  To deal with this we must look at emissions due to extraction and processing (to the point of export) and Canada’s permissible total cumulative emissions if we are going to meet our Paris Agreement targets.

While some may call it ethical, tar sands ‘oil’ is definitely dirty and hard to handle.  Because it is a semisolid, it does not flow readily in wells or in pipelines.  Some of it is extracted from vast open pit mines requiring heavy equipment and the energy such equipment consumes.  Mostly it is too deep to be dug up and is mined by injecting steam deep underground to warm up the bitumen and make it more fluid.  Producing and pumping all that steam adds to the cost, and to the energy cost, of bitumen mining.  Either way, bitumen extraction is an energy-intensive operation.

Once at the surface, the product must be modified to make it possible to ship it through pipelines.  Some of the peanut butter-like bitumen is upgraded to produce synthetic crude oil; most is mixed with diluents to make it more liquid, either before upgrading, or before shipping as dilbit (diluted bitumen – the stuff that will flow through the Trans-Mountain expansion).  Upgrading is a set of energy-intensive fractionation and chemical processes that strip out much of the sulfur and heavy metals.  Adding diluent is a simpler, physical mixing process that dilutes the bitumen with other hydrocarbon thinning agents.  These diluents are mostly natural gas condensate, a widely available byproduct of oil and gas mining, but refined naptha or synthetic crude (from upgrading) may also be used.  The industry even builds pipelines for shipping diluent to points where it will be combined with the bitumen (the existing Trans-Mountain line ships condensate from the west coast to Alberta, and then ships dilbit back to the coast).  All of these steps add cost and consume energy.

Getting tar sands product from the ground to the foreign refinery, whether in the US or elsewhere, is thus an expensive, and an energy intensive operation.  The energy cost or EROI (energy return on investment) averages about 4:1 for in situ operations and about 8:1 for surface mining and upgrading.  Conventional oil mining has an EROI in the 11:1 to 17:1 range (the ratio refers to units of energy obtained vs units of energy consumed in extraction and processing).  When you are using the equivalent of one barrel of oil for every four barrels you obtain, profit margins are thin.

From an environmental perspective, emissions of CO2 per barrel are an important characteristic, and as expected, tar sands bitumen compares unfavorably with other sources of fuel.  Total emissions resulting from getting tar sands bitumen out of the ground and to refineries range from 189.1 to 254.6 kg CO2 per barrel, compared to 97.6 kg CO2 per barrel for typical conventional Canadian oil, and 55.1 kg CO2 per barrel for Hibernia oil (Newfoundland), a high-quality, light, sweet oil.

These high emissions per barrel produced make operation of the tar sands projects now the most important source of greenhouse gas emissions in Canada.  Total emissions in 2015 from this source were 71Mt CO2e (million tonnes of CO2 equivalent) and Alberta has legislated a 100 Mt CO2e per year cap on total tar sands emissions as part of its climate change policy.  On current growth projections, the industry will reach this cap in about 2024.  The tar sands currently contribute about 10% of Canada’s total emissions.  By 2024, the cap limits production, although improved technology permits continued slow growth in output so that tar sands production reaches about 4.5 Mb/d at an emissions cost of 100 Mt CO2e per year by 2040.  And this is where the real crunch comes; tar sands production creates too much CO2 pollution to be compatible with Canada doing its part on climate change.

To summarize at this point, every part of the Grand Tar Sands Myth is debunked.  This is an important but small portion of Canada’s economy – a fact revealed when tar sands activity collapsed during and following the 2008 recession, while Canada, overall, did better than many G8 nations.  We do not have some moral obligation to fully exploit Alberta’s tar sands, and certainly no obligation to dig them up and export them quickly.  We have sufficient pipeline capacity already, and the tidewater argument (the price differential for Canadian oil) is invalid.  And the GHG emissions that result from tar sands exploitation are so massive that continued mining at current or expanded rates is incompatible with any reasonable response by Canada to climate change.  (Note I have not bothered to comment on the other environmental impacts – consumption of water in a semi-arid environment with a drying climate, heavy metal and PAH contamination of the land and water, low altitude NO, SO2 and particulate air pollution, vast, toxic tailings ponds and no known processes for eventual environmental restoration – I’ve commented on them in the past.)

Canada’s commitment under the 2015 Paris agreement

Every signatory country to the Paris Agreement is required to provide a voluntary commitment on reduction of greenhouse gas emissions.  Canada has done this and had made earlier commitments with reference to the Kyoto Agreement, and the Copenhagen Accord.  For Kyoto, Canada pledged to reduce emissions to 6% below levels in 1990 by 2012.  For Copenhagen, Canada pledged to reduce emissions to 17% below 2005 levels by 2020.  For Paris, Canada pledged to reduce emissions by 30% below 2005 levels by 2030, and ultimately by 80% below 2005 levels by 2050.  These commitments have all been judged insufficient by independent bodies, given Canada’s capacity to do more.

So much for promises.  The trend in emissions in Canada had been upward since 1990 until a slight dip during the 2008-9 recession, followed by a more gradual increase since.  Throughout the Harper years, government obfuscated, including the memorable phrase “half-way to our 2020 target” when emissions were actually increasing instead of decreasing.  With the arrival of PM Justin’s sunny ways government, there was a sense that things would be different, but the pledge made in Paris, was the one prepared by the Harper government before they lost power (woefully inadequate), and it has yet to be strengthened.  Meanwhile targets are failing to be met.

Environment and Natural Resources Canada reports Canadian GHG emissions in 1990 were 603 Mt CO2e (these data do not include any contribution from land use changes such as timber harvest or reforestation).  In 2005, they had risen to 732 Mt CO2e, and they reached 745 Mt CO2e in 2007.  In 2012 (the Kyoto target date) they had declined slightly to 707 Mt CO2e, or 17% above 1990 levels – 23% higher than the Kyoto target!  In 2020, current trends suggest emissions will be in the range 693 to 725 Mt CO2e, well above the 607 Mt CO2e target!  In 2030, the expectation is 636 – 775 Mt CO2e, again well above the 512 Mt CO2e target.  Canada is doing a deplorable job of meeting its own targets, and growth in tar sands production is one of the main roadblocks standing in the way.  In fact, as this graph shows, if Canada were somehow able to get onto a path towards meeting the 2030 and 2050 targets (the dotted line), the planned growth in tar sands production – fully supported as part of our sunny ways – requires that all non-gas and oil emissions in our economy must be cut in half by 2030, and must be pinched off almost completely by 2040.  The likelihood of that happening is sort of like the sky outside my house filling up with a flotilla of winged pigs.

The inadequacy of Canada’s targets also needs reflection.  If the world behaves as Canada is behaving in setting too timid emissions reduction targets (and many countries are doing as poor a job in this respect as Canada), the world is heading for a +4oC warming by the end of this century and further warming in the century following.  Kiss 2oC goodbye, maybe?  Or maybe recognize that sometime soon, enough people will realize that we really do not want a 4oC world, and countries will step up to do a better job of wrestling climate change to the ground.  That means substantially stronger commitments to reduce emissions, and actions to achieve those commitments.  Where does that leave Canada’s tar sands?  Or, more particularly, where does that leave Canada?  It leaves us recognizing that, barring some amazing new technology that permits continued use of oil and gas, with the CO2 somehow captured and stored away from the atmosphere, most of the tar sands bitumen that we plan to extract and process between now and 2040 is going to stay in the ground.  We cannot afford to unpack it.  Furthermore, as well as keeping the tar sands in the ground, we will be rapidly transitioning away from use of all fossil fuels by mid-century – just 32 years from now.  Now that is a task that will provide ample employment, government revenue, and GDP value to replace the tar sands industry – an interesting form of mining for a strange product during its relatively short history in Canada.

Politics, Logic, and Pipelines

Back to the present and the Trans-Mountain expansion.  One of the most difficult lessons for politicians and businessmen is that Nature does not compromise.  Nature just is.  Nature operates by various natural laws, and these laws are immutable.

The world is currently starting to grasp the fact that climate change is real, that it is happening, and that its consequences for our happy little lives are every bit as challenging as scientists warned they would be.  North Carolina is just now grappling with a relatively weak hurricane Florence – only a category 1 when it finally reached land, and rapidly downgraded to tropical storm status.  But climate change has ensured a) that Florence would move slowly (weather across North America has been moving slowly for months now because a warm Arctic is causing the jet stream to meander more), and b) would carry immense amounts of water to be dropped on the land as torrential rains.  North Carolina famously legislated sea level rise out of existence in 2012; a pity they did not do the same for hurricanes.

Preparing for Florence at North Topsail Beach, North Carolina.  How long will we keep pretending this is land rather than a shallow sand bar?  Image © Chuck Burton/Associated Press

Justin Trudeau figured he could compromise on climate and oil, achieving a classic win-win, while boosting his popularity with environmentalists wanting a serious commitment to climate change, and Albertans wanting the son of Pierre Trudeau to support their oil industry against those who would shut it down.  If anything, climate is changing more rapidly than expected, and the absolute inadequacy of what Canada has committed to so far in terms of mitigation is becoming more and more obvious.  Never mind the fact that actions have been far less committed than words.  Environmentalists have become tired of the Liberal government going gently, gently on climate, rather than supportive of a government that claims it is trying to do the right thing.  Poor Environment Minister McKenna, hosting a meeting of G8 Environment Ministers in Halifax this week, finds herself forced to talk up the issue of plastic pollution in the oceans because it is a relatively straightforward issue that might get a measurable nudge forward at this conference, in contrast to climate change (also on the agenda).  McKenna needs the occasional win, and nothing is happening in Canada on climate except for a growing noise from unenlightened provincial Premiers who want to challenge the planned federal carbon tax in the courts.

Nor has the task of appeasing the oil industry gone well.  The environmental opposition to expansion of the Trans-Mountain pipeline is as strong as ever.  Kinder-Morgan, the previous owner of the pipeline, eventually decided the battle was not worth it, and Justin Trudeau, in desperation, announced Canada would buy it and complete it.  Kinder-Morgan’s decision, made on an evaluation of the business case, provided a glorious opportunity to stop his impossible straddle between the tar-baby and the climate, but PM Justin decided he could not afford the political cost of ‘abandoning Alberta’.  Now Canada owns the pipeline, and the intention to get it expanded is as strong as ever.

And so, government funds will be spent to employ some construction workers and buy some pipe and whatever else is needed to build a pipeline we do not need.  Justin knows in his heart that the days of the tar sands are numbered even if he mostly avoids saying so.  He did let it slip out once early last year, referring to a ‘managed phase-out’ of the tar sands, but apologized quickly for ‘mis-speaking’.

So here we are, proud Canadian owners of a pipeline for an industry that shows plenty of evidence that its glory days are behind it.  Major overseas investors are walking away or announcing intentions to divest from the oil industry.  Capital investment in the tar sands has dropped to about $12B in 2018 from $25B three years earlier.  Jeff Lewis, writing in the Globe & Mail this April, said, “Here we have oil [globally] almost back to a 4.5 year high and Canadian names are languishing” – his meaning – that the lack of value in the tar sands was recognized within the industry.  Jeffrey Sachs, also in the Globe & Mail in April, in an article titled “Forget Trans Mountain” pointed to the fact that the world must substantially decarbonize by 2050, and that higher-cost, higher-polluting sources of oil will be the first to go.  In his view, Canada should be investing in a strengthened, North American, electricity grid, and selling low-carbon hydroelectric power to the USA which wants low-carbon sources of power.  This would be a far more profitable, and a far more environmentally responsible action than paying for the Trans Mountain pipeline for nothing to nowhere.  Of course, Sachs is just a US academic (Columbia University) who does not understand the need to support Alberta’s oil industry.   We Canadians know better.  Or do we?

The Trans Mountain pipeline – will it become the pipeline to nowhere?  Image © Kinder-Morgan

Categories: Canada's environmental policies, Climate change, Economics, In the News, Politics, Tar Sands | 2 Comments