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The greenhouse gas emissions from oil flowing through TransCanada Pipelines’ proposed Energy East project would be equivalent to putting seven million new cars a year on Canadian roads, according to a report from an environmental think-tank released today.
The Pembina Institute’s study looked at the potential upstream carbon pollution — that is, from the well to the refinery gate — from oil flowing through the pipeline and found that it could add anywhere from 30 to 32 million tonnes of CO2 a year to the atmosphere.
“For a single piece of infrastructure, that’s huge. It’s more than the emissions of five provinces,” explained Clare Demerse, Pembina’s federal policy director and co-author of the report.
“The single most effective climate policy today [in Canada] is Ontario’s decision to phase out coal [for generating electricity]. The emissions associated with building Energy East could effectively wipe out the gains of our single most effective climate policy by far,” she told CBC News.
Tune in to The National on CBC-TV tonight to hear how pipeline companies and environmentalists are changing their tactics in Canada’s energy infrastructure debate.
Energy East is planned to take both conventional and oilsands oil from Alberta to the deep-water port in Saint John. The project would convert an existing natural gas pipeline that runs to the Ontario-Quebec border to carry oil, then build a new pipeline the rest of the way. When running at full capacity, Energy East would eventually carry 1.1-million barrels of crude a day.
TransCanada has yet to file an application with the National Energy Board, but it is expected to do so in the middle of this year.
Demerse admits that this is a preliminary report and that it is hard to comment accurately on Energy East because so little detail is known about the project. Still, she said, Pembina wanted to start the conversation about it as soon as possible.
TransCanada said it wants to take a closer look at the numbers before it comments on the report. The pipeline company has already held information sessions about the project in communities along the route.
Canada no longer knows how to sell anything to the world except oil and gas.
Okay, that’s an exaggeration, but if things keep going the way they are, it won’t be for long.
StatsCan’s latest numbers on Canada’s trade balance, released Thursday, look positive on the face of it: Exports and imports both grew, and Canada’s trade deficit with the world shrank by more than half, to $435 million.
But dig a little deeper into the data, and what you see is a story of two different export sectors. As BMO chief economist Doug Porter put it in a client note Friday morning, “there is energy (doing just fine) and there is everything else (doing anything but fine).”
While energy exports have seen a $63.6-billion surplus for the past 12 months, everything else has seen a $72.9-billion deficit.
Check out this chart of Canada’s trade balance for energy (blue) and everything else (red).
The gap between energy and everything else is translating into a regional divide in Canada — between the booming, oil-reliant West and the plodding economy of the rest of the country.
“The rapid pace of oilsands development is creating economic risks and regional disparities that need to be addressed,” the left-leaning Pembina Institute said in a report released this week.
The report said the “overwhelming majority” of economic benefits from the oilsands boom “are limited to Alberta. Other provinces will benefit less: even the United States would gain more employment opportunities from the oilsands than the rest of Canada if oilsands development goes ahead as projected.”
Bringing more jobs to the oilsands wouldn’t work as a solution; the oil, gas and mining sector employs 225,000 people, compared to 1.5 million jobs in manufacturing. Booming oil exports simply can’t replace stagnating factory exports. (Incidentally, jobs in oil, gas and mining actually fell by about 0.2 per cent over the past year.)
In a report this week, BMO’s Porter called Canada’s stagnating export sector the country’s biggest economic challenge.
“Since 2000, Canadian exports have suffered through their own version of the lost decade, with volumes essentially unchanged over that spell,” Porter wrote.
“To put that in perspective, the next slowest 13-year stretch for real exports over the past half-century was 42 per cent growth from 1970-83.”
Porter notes that manufacturing employment in Canada — which is heavily dependent on exports — has shrunk by 20 per cent since 2000, even as jobs in the rest of the economy grew by a bit more than 20 per cent.
Nowhere is this more clear than in the auto industry, once one of the major drivers of central Canada’s economy. Vehicle production is down nine per cent this year — and that’s despite a global boom in auto sales
And the worst may be yet to come. Analyst Joe McCabe recently told an auto industry conference he expects car manufacturing to shrink another 28 per cent over the next decade.
So what’s to blame for this? Porter notes that the last 13 years of stagnation coincide with “the long upward march of the loonie,” which bottomed out around 62 cents U.S. in 2002 and steadily climbed to parity by 2008. The rising dollar has made Canadian exports more expensive on the global market.
That “played a key role in undercutting the manufacturing sector in particular,” Porter writes, though he’s cautious not to blame the rising loonie on oil exports — the old “Dutch Disease” debate.
But the Pembina Institute has little doubt Dutch Disease is Canada’s diagnosis.
“Recent analysis suggests that surging commodity prices explain as much as 40 to 75 per cent of the dollar’s rise,” the Pembina Institute said, referring to the loonie’s reputation as a “petro-currency.”
The report urges the government to launch a federal committee to look at the problem and recommend solutions “to ensure a robust, diverse economy that supports economic growth and competitiveness across Canada.”
Documents raise concern over industry influence on delayed oilsands emissions regulations | Pembina Institute
Simon Dyer — Nov. 8, 2013
This week, the Pembina Institute reviewed a package of documents obtained under Alberta’s Freedom of Information legislation about future Alberta and federal greenhouse gas regulations.
The documents cover correspondence between the oil and gas industry association — the Canadian Association of Petroleum Producers (CAPP) — and Alberta’s environment ministry from January to May of this year. Obtained by Greenpeace’s Keith Stewart, the documents formed the basis of a report from the CBC.
First off, their contents raise real concerns about the potential weakness of the future federal emissions regulations for the oil and gas sector. CAPP’s proposal is very weak, offering little more than a token increase from Alberta’s current regulations. Today, heavy industry facilities in Alberta face a 12 per cent emissions intensity target and a maximum price of $15 a tonne. Alberta’s regulations sunset next year and must be renewed; CAPP would like to see the next set of regulations moved to a 20 per cent target and a $20 a tonne price in 2020. (If Alberta had indexed its $15 a tonne price to inflation when it went into effect in 2007, it would likely reach $19 a tonne by 2020 — so a $20 price in 2020 is a token increase at best.)CAPP’s negotiating position has been reported before, so that’s not new. What these documents add is economic modelling of the impacts of that proposal, which would see oilsands emissions grow from 55 million tonnes (Mt) today to between 95 and 98 Mt in 2020. The cost to companies would grow from 10 cents a barrel today to a maximum of 23 cents a barrel. Overall, the proposal would fail even to achieve Alberta’s 2020 target — a goal that’s far weaker than the 2020 target Ottawa has adopted.
The industry’s briefing notes also stake out new positions in a couple of important areas: social license and the role of technology in improving the oilsands industry’s environmental performance.
- On “social license,” meaning public support for their operations: In these documents, CAPP says that stronger rules are “unlikely” to improve the public’s perception of their industry. “The objection to the oilsands is ideological,” they write, so even if the strongest proposal on the table went into effect, “oilsands opponents would claim that they too were insufficient.”
For the record, we should note that when news of Alberta’s 40/40 proposal broke in April, we wrote that it “is encouraging, and it shows leadership.” The standard we used to assess that proposal, and any other proposal on the table, is whether it’s strong enough to help get Canada on track for its 2020 climate target. Since the federal government says it remains committed to that target, we think it’s an entirely appropriate way to assess the effectiveness of potential regulations for the sector. We also think that most Canadians would be supportive of the oilsands industry doing their fair share to reduce emissions.
- On technology: Throughout its memo, CAPP objected to the proposals that would see a higher technology fund price — and thus leverage more technology deployment and innovation, two things they say publicly they want to support. Instead, CAPP’s private briefing note told the Government of Alberta that technology development is a cost to industry that affects the sector’s “near term competitiveness.”
Traffic near the Syncrude production site outside Fort McMurray. Photo: Julia Kilpatrick, Pembina Institute.
CAPP also makes the claim that the oilsands won’t reduce its emissions more quickly no matter which policy the government chooses, because “current technology is not yet available for deployment to a significant degree.” Thus, its own modelling concludes that the oilsands would reduce its emissions just 2 Mt below business as usual — in absolute terms, that means growing 100Mt rather than 102 Mt in 2020, a huge increase from 55 Mt today — under any of the scenarios for oil and gas sector regulations described in these documents.Pembina’s primary concern with regards to the oilsands has always been the cumulative impact of the oilsands which is driven by the pace and scale of development. While technology can help to drive down the carbon intensity of a barrel of oilsands crude over time, as CAPP itself shows it’s no panacea. The best way to control absolute greenhouse gas emissions is to manage the pace and scale of development — something governments and companies are reluctant to discuss.
Unhelpful to the case for the Keystone XL pipeline?
Interestingly, the industry’s briefing note also seems to undercut one of the key arguments for the Keystone XL pipeline.
This one takes a bit of explanation. The context is that President Obama said in June that he would only approve Keystone XL if it won’t significantly increase greenhouse gas emissions. Right now, the U.S. State Department’s draft environmental assessment says the pipeline would have virtually no impact on greenhouse gas emissions because oilsands crude will find a way to market with or without Keystone XL. State’s analysis assumes that rail adds about $5 a barrel in extra costs to oilsands producers, relative to moving oil in a pipeline. In public, oilsands companies have been saying that rail is a viable option for them, one that allows the oilsands to keep expanding production.
In its private briefing note, CAPP says that a stronger environmental regulation would increase costs, “possibly lowering investments and reducing production.” Elsewhere in the briefing note, CAPP writes that under stronger regulations, “projects on the margin will be cancelled. Investments will go elsewhere.” CAPP concludes with a rhetorical question: “Will higher stringency requirements impact production and revenue? Very likely.”
But the most stringent proposal in these documents — Alberta’s 40 per cent target and $40 a tonne technology fund price — would add less than a dollar a barrel in new costs to oilsands companies.The most stringent proposal in these documents — Alberta’s 40 per cent target and $40 a tonne technology fund price — would add less than a dollar a barrel in new costs to oilsands companies.
There is no way to square those two perspectives. How does a dollar-a-barrel increase to address pollution curb oilsands production, while a five-dollar-a-barrel increase to ship oilsands by rail represents an insignificant cost that allows production to grow?
Industry can’t have it both ways.
To us, it seems clear that building a pipeline like Keystone — which provides oilsands companies lower-cost access to desirable markets — would create favourable conditions for oilsands expansion and the associated greenhouse gas emissions.
None of the proposals on the table is likely to be strong enough to get Canada on track for its 2020 target.
Oilsands emissions grow significantly in all the scenarios on the table. The most stringent proposal would see at least a 60 per cent increase in emissions, reaching 88Mt in 2020 from today’s level of 55Mt.
But the Government of Alberta also looks at the total effect of these policy options on the province’s emissions and compares that to Alberta’s 2020 and 2050 climate targets. While none of the proposals would get Alberta on track for its 2050 target, both the federal and provincial proposals (as opposed to CAPP’s) could be strong enough to hit Alberta’s 2020 target.
We think these regulations should be designed to achieve our climate targets, so it’s heartening to see Alberta asking the right questions in the documents. Unfortunately, Alberta’s target is much weaker than Ottawa’s: Alberta allows provincial emissions to grow by over 25 Mt from the 2005 level, while Ottawa’s target requires national emissions to drop by 125 Mt from the 2005 level. So it’s safe to say that a regulation that only just achieves Alberta’s target is likely too weak to achieve Ottawa’s target.
Overall, what we read in these documents gives us real concern about the way these negotiations are heading. Getting the rules for oil and gas right is a make-or-break moment for Canada’s climate credibility. We need tough, effective rules to have any chance of hitting our national climate target in 2020.
In our view, strong rules are in the oilsands industry’s own best interests: as it stands today, the sector is facing tough questions about its environmental track record and doesn’t have good enough answers to give.
Greenhouse gas reduction called threat
Alberta’s proposed oil and gas regulations are too ambitious and will hobble the Canadian industry’s ability to compete, says the industry association in Alberta government documents obtained through provincial freedom of information laws.
The industry group says the proposed regulations won’t buy any goodwill and the government should delay their introduction.
The 200-page trove of memos, correspondence and reports offers a rare glimpse behind boardroom doors at the negotiations between industry and government to craft rules to reduce greenhouse gas emissions.
The Canadian Association of Petroleum Producers offers blunt assessments of Alberta’s plan to introduce rules that would demand industry reduce greenhouse gases by 40 per cent per barrel and charge $40 per tonne of CO2 above that level.
Alberta already has a carbon pricing scheme that costs CAPP members about 10 cents per barrel of oil. The new plan could cost industry up to 94 cents per barrel.
“Proposed 40/40 is 9 fold increase over current. Why such a dramatic step?” writes David Daly, CAPP’s manager of fiscal policy. The average price that a barrel of western Canadian bitumen fetched in 2013 was about $75, so the carbon-pricing increase would represent about a one per cent increase in the cost of a barrel oil.
That is just one quote from a file titled, CAPP Concerns and Questions for Alberta and Consultants. It tells the tale of an industry afraid that strong oil and gas regulations will rob it of what little competitive edge it has.
Strikingly candid comments
The candour is striking:
- “Will higher stringency requirements impact production and revenue? Very likely.”
- “GHG policies should be done in concert with other jurisdictions. US has no carbon tax. Why be so far out in front of them? What is that based on?”
- “Will higher stringency requirements [oil and gas regulations] deliver greater GHG reductions? Unlikely. The challenge with the oil sands is that current technology is not yet available for deployment.”
In the end, the industry’s prescription is to delay putting the regulations into effect.
“Major policies like this one should not be fast-tracked. Adequate time is required for study analysis and consultation,” writes Daly.
That suggestion irks environmentalists, who point out that negotiations over oil and gas regulations between industry and the federal and provincial governments have been going on for over two years.
“This is not a case where we need more research. We need more action and that’s what hasn’t been happening,” argued Clare Demerse of the Pembina Institute, an environmental think-tank.
The industry defends itself by pointing out that the documents provide just a snapshot in the middle of negotiations and that nothing is final yet.
“What we want to ensure is that we’ve got a competitive industry in Canada that can continue to grow, but also, very importantly, can continue to invest in the technologies that are going to be extremely important in driving down greenhouse gas emissions,” said David Collyer, CAPP’s president, in an interview with CBC News.
In the documents, the CAPP plan calls for a 20 per cent intensity reduction and $20 per tonne of CO2.
That is half of what the Alberta government’s plan is and only marginally stronger than the regulations now — 12 per cent and $15, said Demerse.
But the CAPP document explains the association’s approach.
“Will higher stringency requirements ‘secure’ social license [public support] and forestall negative policy action elsewhere? Unlikely,” writes Daly.
Demerse, on the other hand, believes that weak regulations are just going to make doing business harder for the oil and gas industry.
“The customers of the oilsands are asking very tough questions. Right now, the sector does not have good answers to give. When they continue to ask for what is essentially the weakest possible regulation, I don’t think that is working for their real best interest.”
Trending Bad: What Environment Canada’s latest climate report says about Canada’s carbon pollution | Pembina Institute
P.J. Partington — Oct. 29, 2013
Last week, Environment Canada released its annual Emissions Trends report, projecting the path of Canada’s climate-warming greenhouse gas emissions. This blog looks at what the report says and why it matters.
What is Emissions Trends and why is it important?
Canada’s Emissions Trends is an indispensible report from Environment Canada and a welcome example of government transparency. Carefully put together by a top-notch team of analysts, the report lays out Environment Canada’s best guess about the future path of Canada’s greenhouse gas emissions under current policy. It tells us where our emissions are headed in each sector and in each province, as well as nationally, and allows us to compare this to a hypothetical scenario in which no action was taken.
Credible, timely and publicly accessible emissions projections like this are essential to creating a shared basis for constructive policy discussions about energy and greenhouse gas emissions in Canada. Working from a common set of facts helps focus debates on the important stuff, like our country’s energy future, rather than on whose numbers are more credible.
Projections like this allow analysts to compare expected performance against the commitments Canada has made. The Harper government has promised to reduce the harmful emissions that are driving climate change — and if this is not happening we need to understand why.
What are the key findings of this year’s report?
The main message is very clear: Canada’s emissions are headed in the wrong direction. They are headed up, not down, and by the end of this decade are projected to be 20 per cent higher than the level to which Canada has committed. Last year’s report also warned of this yawning gap — a gap much bigger than the emissions from every power plant in the country, put together.
And this year’s edition shows that Ottawa has done nothing over the past year to change this trajectory: there is not a single new policy on the list of federal initiatives to reduce emissions in Canada. So it’s little surprise that the country is no closer to reaching its emissions target. In fact, the gap between where we are headed and where we should be headed has grown slightly in the past year.
The central conclusion of this year’s report is inescapable: without a serious ramp up of effort from our government, Canada is headed for another major broken promise on climate change. This is bad news for a lot of reasons, not least for our credibility.
We share the same emissions reduction commitment as the United States. Thanks to the climate policies President Obama has put in place, and the additional ones he has committed to adopting, U.S. government projections can now assert that they are on track to meet their target. We cannot. Each day that Canada lacks a credible plan to meet our commitments, our claims to climate leadership and responsible resource development ring increasingly hollow.
Projected GHG emissions for Canada and the United States
What can we do?
When jurisdictions take strong action to curtail emissions they get results.
The best example arguably comes from Ontario. Between 2005 and 2020, emissions from electricity in Canada are projected to fall by 39 million tonnes, the biggest decrease in any of Canada’s sectors. A lot of the credit for that decrease in emissions is due to provincial action like Ontario’s coal phase-out, which the province accompanied with support for clean energy and conservation.
Provinces like B.C., Ontario, Quebec and Nova Scotia are mustering significant effort to cut emissions and have seen their per-capita pollution fall. The emissions curve is also bending down in the transportation sector, where federal efficiency standards are expected to improve the fuel economy of new cars and trucks.
Projected change in GHG emissions by province, 2005-2020
So policies previously put in place by governments at both the provincial and federal level is making an impact. Emissions Trends estimates that Canada’s emissions are 128 Mt lower now than they would be if the provinces and Ottawa hadn’t taken any action to date. That’s nothing to sneeze at.
But it’s also just a start. Despite these past actions, Canada’s emissions are still projected to increase over the remainder of this decade. Closing the gap to Canada’s 2020 target is still going to be a huge job, one that will require far stronger action from Ottawa and the provinces than we’ve seen to date, particularly over the last year.
Sectors that have not yet been regulated need to be addressed quickly. The oil and gas sector — a rapidly growing emissions source that accounts for nearly a quarter of Canada’s carbon pollution — still has no federal greenhouse gas constraints of any kind. Without new rules, oilsands emissions are projected to triple between 2005 and 2020, in the process wiping out all the reductions that all other sectors in the country are projected to make. By the end of the decade, oilsands emissions are expected to emit more greenhouse gas pollution than any province, save Ontario and Alberta.
This rapid and uncontrolled growth in future oilsands emissions is the biggest barrier to getting Canada’s emissions on a downward track.
Projected change in GHG emissions by sector, 2005-2020
Unfortunately, the federal government is currently not considering an economy-wide price on carbon, which would be a huge boost to climate action across Canada and a valuable complement to the rules they have enacted. But there’s no reason at all why they couldn’t be doing much more to develop strong sectoral regulations, reinvesting in smart programs to boost clean energy and energy efficiency, and working with provinces and municipalities on important priorities for sustainable transportation.
This year’s Emissions Trends paints a disappointing picture. But Canada’s government has the power to change it with ambitious and effective policy.