Only by taking the lead on the fight against climate change will Canada have the standing to develop the oil sands during the transition to a postcarbon future.
Canada is facing growing national and international condemnation of the oil sands, based on very real concerns about their severe environmental impacts, especially on global warming. This situation, together with the recent sharp drop in oil prices, threatens the viability of the oil and gas sector in Canada. A new approach is required that puts a premium on protecting the environment, ensuring that the oil sands contribute positively to Canadian nation building throughout the 21st century, much as the national railway did in the 19th century and the St. Lawrence Seaway in the 20th.
Although reducing and ultimately eliminating the world’s insatiable consumption of fossil fuels is a worthy goal, it is generally acknowledged that 50 years or more will be needed before alternative energy sources such as biofuels, solar and wind can fully supplant oil, gas and coal. The OECD forecasts global energy demand will increase by 35 percent from 2010 to 2035, with fossil fuels satisfying most of this increase. Canada’s oil sands remain one of the largest and most secure fossil fuel reserves in a very unsettled world.
The lengthy transition period to a fossil-fuel-free world and growing uncertainties around global oil supplies and future oil pricing give Canada a clear window of opportunity to clean up the oil sands. This will also provide the time necessary to properly assess various pipeline proposals currently in play, ensuring that environmental protection is a cornerstone of any further expansion in bitumen production and delivery.
The present production practices in the Alberta oil sands are a national disgrace. The Pembina Institute reports that bitumen production in northern Alberta consumed 3 million barrels of fresh water a day in 2011, the equivalent of the annual residential water use of Calgary and Edmonton combined. In 2022, daily fresh water use is estimated to grow to 4.8 million barrels if current expansion plans are implemented. By that time, enough toxic liquid waste tailings from bitumen extraction would be generated to submerge New York’s Central Park to a depth of 11 feet every month.
Oil sands greenhouse gas (GHG) emissions are the fastest growing source of climate change pollution in Canada, with emissions projected to be the equivalent of adding 22.6 million gas-powered cars to the road in 2022, according to the Pembina Institute. This will make a mockery of Canada’s Copenhagen target to reduce GHG emissions by 17 percent from 2005 levels by 2020. President Barack Obama may be explicitly linking his recent veto on the proposed Keystone XL pipeline to Canada’s uncertain commitment to cut carbon emissions. Concerns about the oil sands’ contribution to global warming can be expected to intensify as pressure for an internationally binding agreement increases in advance of the UN-sponsored Paris climate summit in December 2015.
Canada needs to immediately cap oil sands bitumen production and ensure that government and industry invest and innovate in technologies that will clean up the oil sands. UK researchers Christophe McGlade and Paul Ekins indicate in a widely quoted 2014 Energy Policy article that to help maintain a 2°C limit for global warming, oil sands production would need to be capped at 2012 levels of 1.8 million barrels per day. Capping production at the 2014 level of 1.9 million barrels per day would send a powerful signal that Canada intends to take its Copenhagen commitment seriously and that limiting oil sands emissions is a major part of this.
Reducing oil sands carbon emissions and mitigating the overall environmental impact of the oil sands should be prerequisite to the development of any bitumen pipeline. All the pipelines currently being proposed — Enbridge’s Northern Gateway, Kinder-Morgan’s Trans Mountain Expansion and TransCanada Corporation’s Keystone XL and Energy East projects — have the express purpose of dramatically increasing bitumen production for sale to international markets. None of these pipelines should receive final government regulatory approval until the oil sands are cleaned up. Yet in their assessments of these proposals, the government of Canada and the National Energy Board have completely disregarded the environmental impacts of increased bitumen production that would result from each of these pipeline proposals.
Contingent on effective environmental protection, it makes sense to use pipelines to take the product to new markets. Pipelines are much less threatening than railway transport since they are fixed infrastructure that can be more readily monitored and managed. They can largely be routed to avoid densely populated areas, unlike railways, which pass through the core of most Canadian cities and many smaller communities. Canada’s third crude oil train derailment in less than a month highlights ongoing safety concerns about rail transport of Alberta crude oil.
Intense public scrutiny and concern about pipeline accidents and heavy oil spills have recently led to many technical innovations that -include thicker pipe under water bodies; regular “in-line” corrosion inspection; remotely controlled shut-off valves that can quickly isolate and stem a leak; and real-time monitoring using aircraft, satellites and drones.
Enough toxic liquid waste tailings from bitumen extraction would be generated to submerge New York’s Central Park 11 feet deep every month.
Still, pipelines have the potential to threaten many environmental values. In selecting and building the “right pipeline” companies should avoid or mitigate the impacts on significant environmental components like surface waters, groundwater aquifers, fish and wildlife habitats, cultural sites and traditional resource-use areas. Pipeline routing and management should apply the best available geotechnical and biological data as well as a project life-cycle approach to acquiring new baseline data for adaptive management. As well, community values and traditional knowledge should be reflected in planning, construction and operations. Such an approach will take time — probably five years or more. But it will be worth it, because a vital oil, gas and petrochemical sector can generate immense benefits for Canadians: thousands of enduring jobs and tax and royalty revenues that can help fund the health care system, educational institutions and a renewed national infrastructure.
The right pipeline will also offer the best prospects for achieving a supportive political consensus among federal and provincial governments, creating community socio-economic synergies and providing the opportunity to deliver bitumen to Canadian refineries. If Canada refined its own bitumen, this would reduce imports of foreign oil and avoid putting viscous bitumen on the high seas, where it threatens marine ecosystems. Quebec Premier Philippe Couillard and Ontario Premier Kathleen Wynne recently signed a joint agreement requiring climate change to be addressed in any plan to carry Alberta oil through Ontario and Quebec — an important illustration of the overall approach suggested here.
The sharp drop in oil prices and the suspension of new oil sands projects provide a perfect opportunity for Canada to fix what is wrong in the oil patch and take the time necessary to select, plan and build the best pipeline project. Canada and Alberta need to pause, take a deep breath and get oil sands development right. This would set a leading international example for reducing GHG emissions. Premier Jim Prentice is forecasting a $7-billion-hole in the Alberta budget after the drastic decline in oil prices. Surely this requires a paradigm shift from the current fixation of industry and government on pipelines to support quantum leaps in oil production to a more rigorous and cooperative effort to bring production levels, environmental practices and pipeline planning in line with global realities.
Increased public revenues and innovative funding mechanisms are needed to ensure safer and cleaner oil sands production and environmentally responsible transport to markets. Appropriate fiscal policies can promote reductions in oil sands energy consumption through energy efficiency and at the same time facilitate a more rapid transition to renewable energy alternatives.
The government of Canada, with its constitutional mandate for atmospheric protection, interprovincial transportation, and control of inland and navigable waters, needs to lead the way in implementing carbon pricing. This gap in national policy is all the more puzzling given that several provinces are now taking such initiatives. British Columbia, for example, introduced a carbon tax in 2008 and has shifted tax from income and other sources to achieve a net reduction in taxes for all provincial residents, changing consumer behaviour and reducing fossil fuel consumption across the board. Alberta, as the constitutional authority for the oil sands natural resource, needs to be a full regulatory and carbon-pricing partner with Canada to turn the tide on GHG emissions from the oil sands.
The oil sands represent a nation-building opportunity that no responsible government should turn away from. But this nation-building enterprise will founder and fail if Canada can’t protect the environment and meet our international obligations to fight human-caused global warming. Environmentally responsible oil sands expansion and building the right pipeline offer a way forward out of the current morass of vociferous international opposition and market setbacks for bitumen extraction and export.