Canada is pursuing two contradictory policies:
– To increase oil production from Alberta’s oil sands;
– To cut Canada’s greenhouse emissions by 30% by 2030.
Can Canada do both?
Oil sands unCAPPed
The Canadian Association of Petroleum Producers (CAPP) foresees an increase in Western Canada crude oil from 3.9 to 5.4 million barrels a day (Mbbl/d) between 2016 and 2030. Output from the oil sands accounts for most of this increase – 95% according to the CAPP .
To move all this oil to market, the CAPP needs new pipelines. The existing pipeline network can handle 4.0 Mbbl/d—just slightly more than current production. For the CAPP, connecting Western Canada’s growing crude oil supplies to global markets is a priority. The Petroleum Producer’s Association envisages four new pipelines:
- Trans Mountain Expansion Project (Kinder Morgan): capacity 590,000 bbl/d
- TransCanada Energy East: capacity 1,100,000 bbl/d
- Enbridge Line 3 Replacement: capacity 370,000 bbl/d
- TransCanada keystone XL: capacity 830,000 bbl/d
If all four pipelines go forward, Canada would have more than enough pipeline capacity to handle the growth in petroleum production from Western Canada through to at least 2040.
There is no doubt that a great deal of money can be made from getting Canada’s petroleum products to Asian markets—particularly when the demand for oil in China and India, according to the CAPP, will ramp up by over 10 Mbbl/d by 2040.
Why shouldn’t Canada –with the 3rd largest proven oil reserves in the world, profit handsomely from this international demand for its fossil fuel resources?
A cooler greenhouse?
However, Canada has signed up to Paris Agreement under which the emissions of greenhouse gases need to fall from 722 million tonnes of carbon dioxide equivalent (MtCO2e)–about where they are now– to 523 MtCO2e in 2030. So in round numbers, emissions need to be reduced by about 200 MtCO2e over the next 12 years.
Extracting and processing bitumen from the oil sands takes considerable amounts of energy. Because of the difficulty of working with bitumen—an almost solid material, it takes energy to process it into either synthetic crude oil, or into a less viscous mixture with a diluent to enable the bitumen mixture (now called dilbit) to be pumped through a pipeline.
The amount of greenhouse gases released during the extraction and processing of the bitumen is estimated at 0.174 MtCO2e for a million barrels of oil produced.
So increasing oil sands production by an additional 1.5 million barrels a day results in the emission of 1.5 x 0.174 = 0.261 MtCO2e/day. Multiplying this by 365 days in a year, and we estimate that the additional emissions from the oil sands in 2030 is about 95 MtCO2e/yr—assuming that the increased production is enabled by the additional capacity of the new pipelines.
Alberta has an ambitious plan to reduce its emissions. The Climate Leadership Plan (CLP) proposes to phase out pollution from coal-generated electricity and triple renewable energy use by 2030. The province will also reduce methane emissions by 45% from 2014 levels by 2025. As for the oil sands, the CLP proposes to cap emissions at 100 MtCO2e in any year—but no date is specified for the imposition of this limit .
This seems odd–because in the same report emissions from the sector : oil sands and other oil and gas are forecast to rise from 132 MtCO2e in 2015 to 145 MtCO2e in 2030.
For Alberta as a whole, factoring in the other economic sectors and including the potential reduction from innovations, the CLP forecast is for a decrease in total emissions. Alberta emissions fall from 274 to 222 MtCO2e over the period 2015 to 2030–a reduction of 52 MtCO2e .
But it seems clear that these numbers were estimated before the increased production made possible by the new pipelines was factored into the analysis.
So let’s recap. Over the period 2015 to 2030
- With the CLP fully implemented Alberta’s emissions are expected to decrease by 52 MtCO2e –from 274 to 222 MtCO2e/yr;
- However, with additional pipeline capacity, oil sands production will rise from 2.4 to 3.9 Mbbl/day and this increase will generate additional emissions of about 95 MtCO2e/yr in 2030.
Can Alberta reduce its emissions from the current level of 274 MtCO2e /yr if the province increases the production of oil sands from 2.4 to 3.9 Mbbl/d?.
It seems unlikely. The maximum reduction between 2015 and 2030 that the province envisaged under the CLP is 52 MtCO2e. Increasing the oil sands production by 1.5 Mbbl/d results in emissions that more than offset this intended reduction. Alberta’s emissions will almost certainly increase between now and 2030–even if all the actions proposed in the CLP are implemented as planned and the ‘potential reductions from innovation’ actually happen.
There is no way that Canada can meet its Paris Agreement targets if Alberta’s emissions continue to rise. The other provinces cannot possible make up the slack.
Missing the target
Over the last 25 years, the international community has produced several UN agreements aimed at reducing global greenhouse emissions. As a signatory to these agreements, Canada has committed to four separate targets for reducing greenhouse gas emissions.
Canada has already failed to meet the first two: the 2000 Rio target and the 2008-2012 Kyoto target. Moreover, Environment and Climate Change Canada has predicted that the country will also fail to meet its 2020 Copenhagen target .
If Canada now fails to meet its obligations under the Paris Agreement, the message to the rest of the world is clear: Canada cares more about mining its oil sands and profiting from their exploitation than meeting its obligations under the Paris Agreement.
The emphatic takeaway from this analysis is that Alberta should keep its oil sands production at current levels, and fully implement its Climate Leadership Plan.
With production held to present levels, no additional pipeline capacity is needed.
Proponents of the Kinder Morgan pipeline (the Trans Mountain Expansion project) have asserted that the construction delays will deter investors from investing in Canada—causing irreparable harm to Canada’s economy.
Yes—the cancellation of the Kinder Morgan pipeline might deter some companies that are considering investing in the oil and gas sector. And in the long run that is a very good thing for Canada.
On the other hand, companies that want to invest in the development of Canada’s other plentiful natural resources will always be welcome. That’s the kind of investment that the Government of Canada should encourage, facilitate, and support.
The NEB review of the Trans Mountain Expansion pipeline estimates that the new pipeline and associated infrastructure, once constructed, will add a meagre 443 full-time jobs—most of them in British Columbia .
Canada is at a crossroads. It can demonstrate that it’s a world-class leader in bringing the warming climate under control; or it can abandon any pretense that it cares about the global climate and show that for the Government of Canada, it’s money that drives the agenda.
For further reading and more detail on the numbers, check out:
1 CAPP: crude oil forecast, markets and transportation: https://www.capp.ca/publications-and-statistics/publications/303440
2 See the report from the Pembina Institute: The real GHG trend: Oilsands among the most carbon intensive crudes in North America. Accessed at : http://www.pembina.org/blog/real-ghg-trend-oilsands
3 Alberta Climate Leadership Plan : Progress report, page 3. https://www.alberta.ca/assets/documents/CLP-progress-report-2016-17.pdf
4 CLP progress report Table 2
5 CLP Progress report Table 1
6 Collaborative report from Auditors General http://www.oag-bvg.gc.ca/internet/English/parl_otp_201803_e_42883.html
7 National Energy Board Report: Trans Mountain Expansion Project May 2016. https://apps.neb-one.gc.ca/REGDOCS/Item/Filing/A77045 Table 2 Summary of benefits