Simple fix offered for oil sands
Hike price of barrel by $1, study advises
BILL CURRY
Globe and Mail
21 February 2007
OTTAWA -- Adding just one extra dollar to the cost of producing a barrel of oil would raise enough money for energy companies to exploit Alberta's vast tar sands and still comply with Kyoto, a Commons committee was told yesterday.
The simple solution -- too simple, according to Conservative MPs -- was put forward by the Pembina Institute, an Alberta-based environmental policy group that has worked directly with industry on tar sands projects that reduce the emissions of greenhouse gases.
The institute's climate change expert, Matthew Bramley, who has a doctorate in theoretical chemistry from the University of Cambridge, took aim at the Conservative government's assertions that it is too late for Canada to meet its 2012 Kyoto Protocol targets without triggering economic collapse.
Dr. Bramley said the ability of the industry and the Canadian economy to absorb the significant fluctuations in the price of oil in recent years indicates an extra dollar in price would hardly be noticed.
"The very straightforward calculations that I've put forward [show] the oil sands producers can immediately take responsibility for a Kyoto-level target of emissions reductions," Dr. Bramley told MPs.
It currently costs about $25 for industry to produce a barrel of oil from Alberta's oil sands and the market price for oil is more than $50 a barrel. Adding $1 to production costs would raise $750-million annually from industry that could be spent on technology that reduces emissions, he said.
The two other major industrial sectors -- power generation and manufacturing -- could also comply with Kyoto with relatively little pain, the environmentalist argued.
Even if power companies passed on the entire cost of complying with Kyoto, power bills would not increase more than 10 per cent, according to Dr. Bramley's study.
Those estimates contrast dramatically with the 40- to 60-per-cent increases predicted by ex-environment minister Rona Ambrose.
"There's been a lot of scaremongering and misinformation going on," said Dr. Bramley, noting that the government's projections don't account for other ways for companies to comply with Kyoto, such as investments in new technology.
The optimism of environmental groups about industry's ability to comply with Kyoto was not shared by the oil sands representative appearing alongside Dr. Bramley. Announcing short-term hard targets like Kyoto risks scaring away investment in the oil sands, warned Gordon Lambert, a vice-president for Suncor Energy Inc.
The two men were testifying before the Commons committee studying the government's proposed climate-change legislation.
DOWNLOAD REPORT:
http://www.pembina.org/pdf/publications/Blueprint_royalties_150dpi.pdf