How much has been put into the bitumen sands?


in Canada, Economics, Politics, The environment

Canadians (and especially Canadian politicians) seem to often work from the assumption that so much has been spent on developing Alberta’s oil sands that Canada is now committed to continuing with the project.

There are many problems with the argument. Particularly when it comes to new investments, it could be seen as a case of the sunk cost fallacy at work. When you have an investment which may already be unproductive it can be psychologically appealing but not actually strategically smart to invest more instead of working away from the danger you have set for yourself.

One article estimates that $200 billion has been invested since 1999. For comparison, Canada’s GDP is about US$1.53 trillion. That makes all the investment in nearly 20 years equivalent to 13% of one year of all Canadian economic activity. The Economist recently reported that Americans spent $498 billion per year on cars and car parts. That shows how the bitumen sands investment is really pretty small in global terms (and also how much could be gained from discouraging American car use, breaking up the cycle of cosmetic annual vehicle replacements, and discouraging new automobile infrastructure).

Since climate change literally threatens the economic prosperity of the entire planet, there’s no comparison between the losses associated with shutting down the bitumen sands versus the losses associated with unchecked climate change. Of course, the bitumen sands aren’t the only source of climate change. What they represent, however, is the self-destructive determination of the richest, dirtiest states to keep investing themselves in the most destructive forms of energy. That worsens the collective action problem which we all face and suggests to all other states that there is no point on holding back from realizing short-term profits from fossil fuels for the sake of averting global catastrophe.

We can afford to stop new bitumen sands development, and then to go on to gradually close down existing production, making it possible for Canada to follow an emission reduction pathway that represents a fair share of what the world needs to do to keep below 2 ˚C or 1.5 ˚C of warming. We can afford to help the workers who will need new careers.

Unfortunately, politicians, the banks, and the corporate media are terrified about any future where bitumen sands development and pollution do not continue to rise, making the idea politically impossible in Canada for now. Hence the need to change our politics, media, and perhaps our economic system.

{ 2 comments… read them below or add one }

. October 28, 2018 at 10:59 pm

“If everything else remained constant, eliminating 1.3bn tonnes of food waste could mean $750bn less in sales for farmers—the value which the UN’s Food and Agriculture Organisation ascribes to all the food spoiled or lost annually between farm and fridge.”

. November 1, 2018 at 6:17 pm

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