The Globe and Mail on fossil fuels and the oil sands

December 7, 2009

in Canada, Economics, Politics, Science, The environment

Construction site, LeBreton Flats, Ottawa

In an editorial that is reasonably good overall, The Globe and Mail is nonetheless too quick to assume that the oil sands are good for Canada: “A vital resource, the oil sands, are an economic advantage to Canada, indeed to North America as a whole. Sixty per cent of our natural gas is exported, and Canada is the U.S.’s largest source of crude oil. The fruits of emissions here are often enjoyed elsewhere” and that fossil fuels “remain vital assets that will serve as reliable sources of energy for the foreseeable future.” They also claim that: “Products from the oil sands are necessary and desirable.”

I have argued before that, when all the associated costs are taken into consideration, the oil sands may be net destroyers of human wealth and welfare. The most important of these costs is the degree to which extracting, processing, and burning fuels produced from the oil sands increases the risk of catastrophic climate change. If we use a very high but possible estimate for how sensitive the climate system is to greenhouse gas emissions (8°C of warming for each doubling of CO2 concentrations), burning the 1.7 trillion barrels of oil estimated to exist in the oil sands would alone be sufficient to increase mean global temperatures by 2°C. Even using the probable estimates of 3.5 – 4.5°C of warming, the oil sands represent a contribution to total cumulative human emissions that is seriously out of proportion to Canada’s population, or even the population of those who ultimately consume the fuels produced.

The oil sands represent the last gasp of a fossil fuel powered economy. Either because of hydrocarbon depletion or because of climatic concerns, we are inevitably going to have to give up fossil fuels anyhow. Given what we now know about the climate system and the potential impact humanity could have on it, we should be working on developing zero-carbon sources of energy – not on extracting the oil that is the hardest to reach, or which requires the most processing to be turned into usable fuels or products. Rather than picking at the bones of the fossil fuel carcass, we should be seeking out new forms of sustenance.

The Globe and Mail has a history of assuming that oil sands development is good for Canada. In fact, the best thing we could do for future generations of Canadians (and others around the world) is to leave that dangerous carbon in the ground, while pursuing the development of sustainable forms of energy.

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{ 27 comments… read them below or add one }

R.K. December 7, 2009 at 11:09 am

I agree that oil sands development is probably against Canada’s long-term interests. How could catastrophic climate change be in anyone’s interests? Also, allowing emissions from there to grow and grow sends a terrible message to the rest of the world.

That being said, is there any way it could be politically possible to slow or stop their expansion?

. December 9, 2009 at 2:45 pm

Oil sands emissions polluting waterways, study finds

Martin Mittelstaedt

From Tuesday’s Globe and Mail Published on Monday, Dec. 07, 2009 4:09PM EST Last updated on Tuesday, Dec. 08, 2009 4:30PM EST

Water pollution levels around the Athabasca River and its tributaries have risen because of emissions from the oil sands, a research paper released Monday says , contradicting a view in the energy industry and the Alberta government that the massive mining of bitumen hasn’t contaminated waterways.

The finding, published in the peer-reviewed Proceedings of the National Academy of Sciences, is likely to add to the environmental headaches of the oil sands industry, which has been in a negative spotlight for its large-scale emissions of greenhouse gases.

The research, conducted mainly by scientists at the University of Alberta, found that concentrations of polycyclic aromatic compounds, or PACs, were far higher at sites near and immediately downstream from mining operations and upgraders than they were upriver from oil sands developments. The paper also estimated airborne emissions of PACs from the industry’s activities as amounting to a major oil spill each year if they were in a single place.

Milan December 9, 2009 at 2:53 pm

That being said, is there any way it could be politically possible to slow or stop their expansion?

A future Canadian government might be less inclined to protect that industry.

Also, additional pressure from the United States could drive action. Something like a carbon tariff at the border, or a low carbon fuel standard…

Tristan December 9, 2009 at 3:28 pm

“That being said, is there any way it could be politically possible to slow or stop their expansion?”

Yes. We could buy them, and shut them down. So long as we build enough golden parachutes into an expropriation, anything is possible.

Milan December 9, 2009 at 3:39 pm

The employment consequences of that plan would be politically unacceptable, even if you bailed out the oil sands executives.

Tristan December 9, 2009 at 3:54 pm

Ok, I should have been clearer. It is politically possible only if both lots of golden parachutes and the complete re-deployment of the workforce in new green industry.

This could happen. Canada could buy Shell, and over a period of 5 years re-deploy all of Shell’s workers in green energy. They would never have to be fired – they would just become employees of a crown corporation, and that corporation would shut down its carbon intensive operations and shift workers to green operations.

Why is that not feasible?

Milan December 9, 2009 at 4:12 pm

I think we can agree that this is an approach that neither this government nor a plausible Liberal replacement would support.

The top members of this administration are all personally and ideologically opposed to restrictions on oil sands expansion. Supposedly, Stephen Harper switched from being a Young Liberal to being a Young Conservative due to his opposition to the National Energy Program. As for the Liberals, Ignatieff is doing all he can to distance himself from carbon taxes, and to stress his support for the oil sands. Even The Globe and Mail went out of their way to argue that the oil sands are good for Canada.

There is also the matter of public support. If people can’t be sold on basic ideas like putting a price on carbon, it seems dubious that they could be brought around to supporting the wholesale governmental redefinition of an industry.

Another factor is federalism. The federal government is restricted in how it can affect natural resource policies. If the current federal government is opposed to effective action on cutting emissions, you can be sure that the Alberta government is five times more determined.

Nationalisation and similar approaches just aren’t in the cards right now, and we really need to get started.

Milan December 9, 2009 at 4:16 pm

There are lots of cheap and even negative-cost options out there for climate change mitigation. Government just needs to overcome the barriers to adoption that exist.

Key among those are the absence of a price on carbon, and the absence of mechanisms to encourage efficiency investments. The latter are especially necessary in situations where people think more about initial purchase price than about total cost of ownership.

Milan December 9, 2009 at 4:30 pm

Also, the genuine ethical and political case (as well as economic logic on a least-cost approach) runs against special punishment for the oil sands.

They should be subjected to the same rules as everyone else – not looser ones.

When they are, you can point to the very strong arguments about not having a right to harm others, about polluters paying for the consequences of their actions, etc.

. December 9, 2009 at 5:03 pm

Cost of the Clean Transition? “Barely Noticeable”
by Tzeporah Berman

New Scientist has run the numbers on what it’s going to cost consumers to have a clean energy transition and the results are “barely noticeable” for folks in the UK. Coincides with similar studies in the US. No easy solution yet for flying but in almost all other areas the data shows that fears about destroying the economy are wild fearmongering:

“a new modelling exercise conducted exclusively for this magazine suggests that these fears are largely unfounded. It projects that radical cuts to the UK’s emissions will cause barely noticeable increases in the price of food, drink and most other goods by 2050 (see the figures). Electricity and petrol costs will rise significantly, but with the right policies in place, say the modellers, this need not lead to big changes in our lifestyle.”

R.K. December 9, 2009 at 5:10 pm

It is worth remembering that greenhouse gas emissions are only one major externality associated with the oil sands. Look at the study linked above:

“that concentrations of polycyclic aromatic compounds, or PACs, were far higher at sites near and immediately downstream from mining operations and upgraders than they were upriver from oil sands developments. The paper also estimated airborne emissions of PACs from the industry’s activities as amounting to a major oil spill each year if they were in a single place.

PAC are a component of oil and a major concern to public health authorities and environmentalists because they can be toxic to fish embryos, even at vanishingly small concentrations, and are linked to cancer.”

How many human cancer cases are the oil sands causing?

Milan December 9, 2009 at 5:31 pm

By all means, regulations on other pollutants should also be applied to the oil sands.

The health costs, ecosystem costs, water costs, and others should all be borne in mind when making policy that will affect the oil sands.

Tristan December 10, 2009 at 3:10 am

“If people can’t be sold on basic ideas like putting a price on carbon, it seems dubious that they could be brought around to supporting the wholesale governmental redefinition of an industry.”

Do you think its right to think a carbon tax is just a smaller version of nationalization? Don’t they go in entirely different directions? Doesn’t it appeal to completely different political sensibilities?

The assumption here seems to be people are scared of big government, opposed to various degrees of government intervention. Is that right? Or is there a qualitative difference between intervention like carbon taxes which assumes the market is the solution to everything, and nationalization which assumes that intentional re-organization could produce better results? How can we know from opposition to one, that there is opposition to the other? And what counts as opposition – editorial pieces in the Globe and National Post? Phone polls?

Doesn’t there need to be discussion before there can even be opposition?

Milan December 10, 2009 at 8:22 am

Do you think its right to think a carbon tax is just a smaller version of nationalization? Don’t they go in entirely different directions? Doesn’t it appeal to completely different political sensibilities?

Nationalization isn’t something I consider to be a serious option. I don’t think it is feasible (no matter how much discussion you initiate). Furthermore, there is no guarantee that it would even lead to emissions reductions. If the government owned the oil sands, it might feel even more encouraged to keep the revenues flowing in, especially given our current fiscal position.

Quite possibly, it would make Canada even more of a rentier petro-state than it is already.

. December 10, 2009 at 8:51 am

National unity at stake in climate strategy, think tank says

Making Alberta, Sask., meet same greenhouse-gas emissions targets as eastern provinces is recipe for conflict, group contends

Shawn McCarthy

Ottawa — Published on Thursday, Dec. 10, 2009 8:00AM EST Last updated on Thursday, Dec. 10, 2009 8:13AM EST

Ottawa’s plan to impose national greenhouse-gas emissions targets will spark a fierce political battle among the provinces if it puts too much of the burden on oil-producing provinces, a Calgary-based think tank is warning.

In a report to be released Thursday, the Calgary West Foundation slams proposals that would require Alberta and Saskatchewan to match emission reduction targets of provinces that are less dependent on fossil fuel production.

The two prairie provinces also say that any national climate-change plan must “acknowledge and accommodate regional differences.”

Failure to do so could be lead to national unity problems.

“If we don’t, the residents of Alberta and Saskatchewan will suffer unduly and the federation will be severely strained,” it concluded.

Foundation president Roger Gibbins said the federal Conservatives are planning to impose national caps on emissions that would pummel producers of energy and leave consumers largely off the hook.

Tristan December 10, 2009 at 1:55 pm

According to a recent CBC report on paying for climate change, Aldyn Donelly suggests that expropriation and compensation of Canada’s top 25 polluters (who produce 80% of the greenhouse gas), even when you factor in the cost of replacing dirty with clean energy, is half the 45 billion dollar cost of reducing CO2 through carbon taxation.

http://www.cbc.ca/video/#/News/TV_Shows/The_National/Environment/ID=1354345177

Here’s an example of Donelly’s analysis which concludes expropriation is part of the solution: http://www.energy.probeinternational.org/dr-jaccards-carbon-plan-has-it-all-wrong

Milan December 10, 2009 at 2:27 pm

The author of the second linked piece seems to think expropriation is undesirable, but that it should be used as a baseline option against which others can be compared:

I am NOT arguing that government should simply expropriate TransAlta’s and other corporations’ coal-fired assets, compensate the shareholders at the current market value for their assets and then set up Crown corporations to build and operate the new gas-fired combined heat and power generation capacity. But I do argue that the asset expropriation and replacement option should represent our reference GHG reduction cost case.

Obviously any package of policies and measures that will cost more than the expropriation/compensation option is an inefficient policy package.

None of this addresses the point about the government becoming an operator of coal-fired power stations or oil sands operations. What assurance do we have that they would then wind these operations down?

Given that there is no chance whatsoever of expropriation happening, anyhow, we should focus on policy options that could conceivably be put into effect.

Tristan December 10, 2009 at 2:51 pm

“Given that there is no chance whatsoever of expropriation happening, ”

If we’re rational economic actors, we’ll pick the cheapest option. Simply asserting that there is no chance of the expropriation happening, even though it might be the cheapest options, just proves we’re capitalist hacks rather than serious policy analysts.

Milan December 10, 2009 at 2:54 pm

I am not simply asserting it, I gave reasons above.

Tristan December 10, 2009 at 3:13 pm

Sure,

When I say “we” I don’t mean only you, or me, or the readers of this blog. “We” also includes “The top members of this administration”, “Stephen Harper”, “Ignatieff”, “The Globe and Mail”, “Alberta”. All of these actors are capitalist hacks insofar as the write off nationalization without proving it’s not the cheapest option. (I’ll reserve judgment on “the public”, as I’m not sure if it makes sense to make generalizations about “public opinion” abstracted from the particular story the public gets through the hack media).

These are all “our” politicians. As “the public” we should demand our politicians act rationally, which means consider all available policy options to find the right one – including potentially expropriation and compensation.

Donelly, while she opposes expropriation, isn’t a hack because her opposition to nationalization isn’t categorical – it’s contingent on the belief, based on evidence and therefore falsifiable, that we can actually get a policy and regulatory package that would cost less than the baseline expropriation/compensation option:

“I repeat, I don’t proposed that we consider asset expropriation, because I think that our own history demonstrates that there are more robust policy and regulatory packages that would cost even less than the expropriation/compensation option.”
-Donelly

Milan December 10, 2009 at 3:18 pm

Cost is only one issue here.

Another is fairness/the rule of law.

The cheapest way to solve a problem is not the most desirable one, if choosing that option involves substantial non-financial costs and risks. Indeed, the only way it may ever be politically possible to constrain the oil sands is by subjecting them to rules that apply equally to all other economic activity in Canada.

Milan December 10, 2009 at 3:20 pm

As for options that are cheaper than nationalization, take a look at this comment and this one.

Tristan December 10, 2009 at 6:40 pm

“Also, the genuine ethical and political case (as well as economic logic on a least-cost approach) runs against special punishment for the oil sands.”

Well, what is the case? If the case is “it’s immoral to treat different parties differently”, this seems to be based on a fairly simplistic understanding of “rule of law”. Rule of law means everyone is equal before the law. It does not mean the law is the same for everyone (for instance, in America the President as President cannot be tried with crimes before being impeached).. It does not mean everyone is treated equally by the law. We have different laws for first nations, women and men, teachers, different industries etc… Different laws for different groups is not a violation of the rule of law. Slavery is not even a violation of the rule of law.

So, the question is do the 25 worst CO2 emitters fall in a different group to the rest? The only difference is the quantity of Co2 they emit – so isn’t it unfair to nationalize them while you simply tax the others?

The fallacy here is to assume a quantitative difference can not also be qualitative. As a city grows, it becomes not simply quantitatively different (more people) but also qualitatively different (different industries, transit options, cultural groups emerge ect…). So, it isn’t a contradiction of the rule of law to invite reps from the major Canadian cities (i.e. Vancouver, Toronto, Montreal) to a federal meeting with the prime minister, while ignoring Red Deer and Thunder Bay. It wouldn’t be a violation of the rule of law either to give Toronto more power than Barrie in terms of ability to impose taxes. It would simply be a reflection that different cities can actually be qualitatively different kinds of entities, needing different kinds of powers.

This is the same for energy firms. There is a qualitative difference between Shell oil and some two bit industrial firm which produces 1/100,000th the CO2 of Shell. It is not a contravention of the rule of law to impose a law which applies specifically to a small group of highly damaging firms, while leaving out a huge group of marginally damaging firms. Of course drawing the line is difficult – but it is also difficult to know whether Regina should be invited to a major Canadian cities summit – difficulty doesn’t make a reason not to hold the summit!

In the end, every different city, or firm, is different – “equity” is the name for the legal principle that the law must be applied with respect for the particular situation. Equity is not in contradiction with the rule of law because “the law” never meant just a set of rules, but set of fair procedures to allow appropriate rules to be applied appropriately in appropriate circumstances.

. December 11, 2009 at 4:18 pm

Alberta’s oilsands: well-managed necessity or ecological disaster?

By: Bob Weber, THE CANADIAN PRESS

EDMONTON – Rightly or wrongly, Alberta’s oilsands are creating a black, tarry bull’s-eye on the back of Canada’s negotiating team at the international summit on climate change in Copenhagen.

Oil companies and the provincial government maintain that the development is needed and widely beneficial, and that its impacts are well-managed and wildly exaggerated. Environmental groups and many independent scientists suggest otherwise, with some going so far as to say the oilsands have turned Canada into a “corrupt petro-state.”

In an attempt to cut through the emissions, The Canadian Press has tried to answer some basic questions about the industry with the latest research from both sides.

How much land is affected?

Oilsands deposits underlie three main areas in northeastern Alberta, totalling about 140,000 square kilometres.

That’s about the size of the state of Florida, a comparison often used by U.S. environmentalists to suggest how much boreal forest would be ripped up. But not quite. About 80 per cent of the oilsands will be mined in-situ, a technique that uses injected steam to soften the bitumen underground and pump it out. The gaping, smoky open pits often equated with oilsands mines will sprawl across about 500 square kilometres.

That doesn’t mean the rest of the region will remain pristine. Even in-situ mines require roads, pipelines and other facilities that will chop the forest into smaller and smaller blocks and destroy habitat for animals that require large undisturbed areas. One U.S. scientist has estimated that those effects will reduce songbird populations by 166 million birds over the next 30 to 50 years.

. December 11, 2009 at 4:22 pm

“Who benefits from the oilsands?

Albertans, mostly, but economic spinoffs and jobs flow throughout the country. One study by the Canadian Energy Research Institute suggested that 12 per cent of the economic activity and 16 per cent of the jobs created by the oilsands industry go to Ontario, with the rest of Canada getting six per cent of the activity and 11 per cent of the jobs. Foreign jurisdictions get 11 per cent of the activity and 17 per cent of the jobs and Alberta gets the rest.

Those jobs generate taxes for other governments. The same study calculated that between 2000 and 2020, the oilsands will have generated $120 billion in government revenue. Of that, 41 per cent will go to Ottawa, 36 per cent to Alberta and 23 per cent to other Canadian governments.”

. December 12, 2009 at 2:42 pm

National unity at stake in climate strategy, think tank says

Making Alberta, Sask., meet same greenhouse-gas emissions targets as eastern provinces is recipe for conflict, group contends

Shawn McCarthy

Ottawa — Globe and Mail Update Published on Thursday, Dec. 10, 2009 8:00AM EST Last updated on Friday, Dec. 11, 2009 2:39AM EST

Ottawa’s plan to impose national greenhouse-gas emissions targets will spark a fierce political battle among the provinces if it puts too much of the burden on oil-producing provinces, a Calgary-based think tank is warning.

In a report to be released Thursday, the Canada West Foundation slams proposals that would require Alberta and Saskatchewan to match emission reduction targets of provinces that are less dependent on fossil fuel production.

The two prairie provinces also say that any national climate-change plan must “acknowledge and accommodate regional differences.”

Failure to do so could be lead to national unity problems.

“If we don’t, the residents of Alberta and Saskatchewan will suffer unduly and the federation will be severely strained,” it concluded.

Foundation president Roger Gibbins said the federal Conservatives are planning to impose national caps on emissions that would pummel producers of energy and leave consumers largely off the hook.

. December 15, 2009 at 11:12 am

“For all their earnest self-restraint, the negotiators in the plastic city are still not serious, even about climate change. There’s another great unmentionable here: supply. Most of the nation states tussling at Copenhagen have two fossil fuel policies. One is to minimise demand, by encouraging us to reduce our consumption. The other is to maximise supply, by encouraging companies to extract as much from the ground as they can.

We know, from the papers published in Nature in April, that we can use a maximum of 60% of current reserves of coal, oil and gas if the average global temperature is not to rise by more than two degrees. We can burn much less if, as many poorer countries now insist, we seek to prevent the temperature from rising by more than 1.5C. We know that capture and storage will dispose of just a small fraction of the carbon in these fuels. There are two obvious conclusions: governments must decide which existing reserves of fossil fuel are to be left in the ground, and they must introduce a global moratorium on prospecting for new reserves. Neither of these proposals has even been mooted for discussion.”

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