|
Assessment puts squeeze on oil sands Opposition-dominated committee calls for carbon neutral by 2020 through carbon capture, credits trading; wants water, gas limits Gary Park For Petroleum News
The political pressures on Canada’s oil sands sector to “adequately” tackle the social, environmental and economic problems it poses have intensified with the release of a 92-page assessment by the House of Commons Standing Committee on Natural Resources.
The largely ignored findings again hammer home the growing belief that the industry is not doing enough to clean up its act.
The committee, dominated by non-government Members of Parliament, was emphatic that regardless of the “enormous economic and strategic advantage” the oil sands represent to Canada, there is an equal responsibility to “find even better ways to maximize the value of this resource while minimizing the social and environmental costs of oil sands activities.”
How development is managed will have “long-lasting repercussions on Canada’s economy, society, environment and international reputation and will serve as a litmus test for Canada’s commitment to sustainable development,” the committee said. Although the conclusions do not translate into legislation, they are part of an environmental debate that is narrowing down to the environmental impact of the oil sands and are sure to become part of the core debate in the next federal election campaign.
The rhetoric was contained in the introduction to the report, with the committee referring to the comments of a witness from the Pembina Institute for Appropriate Development who said the oil sands risk giving Canada a reputation “not as an energy superpower but as a superpolluter.”
Report says right policy framework critical With more than C$100 billion worth of projects on the drawing boards, the committee said it is critical, given the long life of oil sands projects, to put the right policy framework in place, forcing industry to make the necessary investment in innovative technologies to “reduce the environmental and social footprint of oil sands activities and help transform Canada into a true clean energy superpower.”
The report argued that concerns about capital costs increases, water use, cumulative environmental impacts and social impacts have yet to be “adequately addressed by the relevant levels of government.”
The committee recommends a list of 21 items:
• The Canadian government base all of its actions on oil sands development on sustainable development and polluter-pays principles.
• The federal government recognize the jurisdiction of the provincial governments over the pace of development and reject any suggestion of nationalizing the oil sands.
• The Department of Natural Resources and its various partners step up research and development efforts to find innovative ways to replace the use of natural gas in the extraction and processing of the oil sands with clean sources that do not contribute to greenhouse gas emissions.
• The government create a joint public/private task force to reduce the use of natural gas in oil sands production, thus conserving the resource for more valuable uses.
• No decision be made on using nuclear energy in oil sands extraction and processing “until the repercussions of this process are fully known and understood.”
• Industry increase its commitment to R&D to the level of the Canadian industrial average, while the federal government shifts its research focus to emerging renewable and sustainable technologies.
• Priorities be given to developing gasification technologies and carbon dioxide capture and storage technologies.
Report says oil sands should be ‘carbon neutral’ by 2020 But it is only when the committee moves into high gear on the environmental front that the major thrust of its report emerges.
It “strongly endorses” the goal of the Pembina Institute that the oil sands should become “carbon neutral by 2020 through the adoption of new technologies” such as CO2 capture and sequestration and/or through the purchase of offsetting carbon credits — a far tougher stance than any yet proposed by the government of Prime Minister Stephen Harper.
The committee argued that selling “carbon neutral” barrels of oil would help the industry maintain access to markets where there is concern about GHGs.
It also urges federal action to impose regulations requiring the industry to introduce technologies to “drastically reduce” GHGs, along with mechanisms such as emission credits trading as means of financing these technologies.
The committee finally called on the government to introduce absolute emissions caps on the oil sands for 2008-12 to meet Canada’s Kyoto obligations, 2020 and 2050. It rejects the notion of “intensity-based” cuts that apply only to units of production and not across-the-board limits.
For politicians at all levels it is a race against time, as the pace of oil sands expansion accelerates.
The committee itself noted that oil sands output reached 1 million barrels per day in 2004, 16 years ahead of projections made in the mid-1990s by the National Oil Sands Task Force.
Now the forecasts for 2015 are 3 million bpd by the National Energy Board and 3.5 million bpd by the Canadian Association of Petroleum Producers, all contingent on the necessary upgraders and pipelines being available.
Natural Resources Canada has added to that sense of urgency by forecasting up to 5 million bpd could be extracted from the oil sands by 2030.
But underlying those numbers are the costs of extracting and upgrading bitumen, which are affected by the rising materials, labor and natural gas costs.
The NEB, the committee observed, estimated it could cost as much as C$40 per barrel to supply synthetic crude from the oil sands without even factoring in environmental costs associated with GHG and other emissions.
The NEB told the committee that should oil prices tumble to US$35-$40 per barrel “it’ll result in a significant slowdown” in oil sands development.
Pembina Institute officials surprised Officials with the Pembina Institute were surprised by the strong language used in the report along with the emphasis on taking action.
Separately, the institute called earlier in April for a moratorium on oil sands development as part of the Alberta government’s consultations on the sector until the cumulative impacts are addressed.
Weakening the committee’s work are the dissenting opinions of the Conservative government members, along with the Bloc Quebecois and the New Democratic Party, leaving only the Liberals to defend the recommendations.
The Conservatives’ dissenting report said the call for carbon-neutral emissions could see the national economy “crippled by poorly thought-out policies.”
It attacked the committee for failing to calculate the economic costs of a carbon-neutral status. The Pembina Institute estimated the cost of offsetting emissions or reducing them by investing in technologies such as carbon capture could add C$1.76-$13.54 per barrel to operating costs.
But, whatever else it accomplishes, the committee’s message builds on the uncertainty over how far Canadian governments of the future might go in stifling the oil sands.
| 