Neutralizing the oil sands' carbon emissions

JEFFREY SIMPSON
Globe and Mail
Saturday, September 23, 2006

FORT McMURRAY, ALTA. -- Oil and gas companies, when asked about greenhouse-gas emissions, quickly say: Speak to consumers.

Energy consumption emits more carbon dioxide than energy production. Very true. About 70 per cent of total emissions come from consumption: car and truck drivers, buildings, home heating and electricity.

No serious plan to reduce greenhouse-gas emissions can possibly succeed without changing patterns of consumption. But none can succeed either without large emitters, foremost among which are oil-sands producers, doing -- or being forced to do -- much, much better.

The companies and the Alberta government like to talk about energy "intensity"; how much energy is used to produce energy. An Alberta law requires a 50 per cent improvement over 1990 levels in energy "intensity" by 2020.

The law sounds better than it is.

Consider that Alberta's oil sands produce about a million barrels of oil a day. If all the new planned projects proceeded, production would rise to four million a day in 2020. If, as expected, even more projects came on stream, production might be five million a day. And oil-sands extraction has energy "intensity" two to three times higher than conventional oil.

The bottom line is clear: Improvements in energy "intensity" will be overwhelmed by sharply higher production. If this is all Alberta and its industry does -- improve energy "intensity" -- greenhouse-gas emissions will shoot up, whereas ideally they should be declining.

Kyoto or not, a "made-in-Canada" plan or something else, greenhouse-gas emissions represent a genuine, observable threat to Canada and the world. Doubters about climate change remain, but they are quite marginal now. The overwhelming body of international evidence suggests climate change is a real and pressing problem, here and abroad.

The evidence also suggests, based on United Nations data, that Canada has the poorest record of any country that signed the Kyoto Protocol.

Canada's record, put simply, is a national disgrace for a country that loves to bathe in moral superiority about its wonderful international reputation. Even the Americans have done slightly better.

Big changes in consumption patterns are needed, agreed. But these large emitters of carbon, especially the oil, gas and coal industries, need to make much larger contributions.

The key is to capture carbon before it enters the atmosphere. Various pilot projects are already doing this. Research is intensifying.

Alberta Energy Minister Guy Boutilier, who happens to be the provincial MLA for Fort McMurray, is keen on a carbon pipeline from northern to southern Alberta.

Such a pipeline would allow carbon to be used for enhanced oil recovery in abandoned wells. Carbon would therefore have a price. It could be bought because its use would produce oil that, in turn, would produce profits. A virtuous free market circle.

Alas, a carbon pipeline alone won't take all the carbon generated by the oil sands and existing oil and gas production. Somehow, the remaining carbon has to be buried, or sequestered, in the ground. Technology exists to do this now, but better technology is likely needed.

As the National Round Table on the Environment and the Economy said in a recent report outlining how to reduce carbon emissions by 60 per cent by 2050: "The development and use of this [carbon capture and sequestration] and other emissions-reducing technology is possibly the single greatest issue determining whether or not Canada can significantly reduce greenhouse-gas emissions." If industry takes its own time about becoming carbon-neutral, it likely won't happen. That's why governments are likely to have to impose medium-term standards such as requiring all existing and new oil-sands operations to be carbon-neutral by 2020, or maybe 2025.

Yes, this will add to their costs of production, for which we consumers will eventually pay. But there is no such thing as a free lunch in reducing carbon emissions, despite what the Chrétien and Martin governments used to pretend in their failed attempts to grapple with the issue.

Don't like government-imposed standards? Try this, an idea from Simon Fraser University expert Mark Jaccard: a carbon-capture and storage standard. The government sets standards for storage and sequestration, and a market is created among companies (oil, gas and coal) to buy credits where they cannot or will not comply.

Meanwhile, high labour costs or skills shortages might delay or even cause cancellation of some oil-sands projects. There is already a slight market reaction as higher prices for labour and materials cause companies to slow down.

But the insatiable demand for oil, especially in the United States, means the oil sands are going to be developed. If they are, under current laws and ways of operating, the country can forget about stabilizing, let alone reducing, greenhouse-gas emissions, even if consumption patterns change somewhat.

In Fort McMurray itself, epicentre for the oil sands, almost nobody talks about greenhouse gases, climate change and planetary threats.

People are just busy getting ahead, making money, worrying properly about other emissions that put pollution into the air.

It's going to take energetic governments of the kind not found for the moment in Edmonton and Ottawa, plus dynamic business leaders who take a cue from what Virgin's Richard Branson did this week -- pledging $3-billion for climate change over the next decade -- to reverse dangerous trends.

jsimpson@globeandmail.com

Tuesday, September 26, 2006 CORRECTION Guy Boutilier is Alberta's Environment Minister, not its Energy Minister as appeared in Saturday's Comment section.