What Canada’s environment and climate policies will look like under a Liberal minority government
From eliminating fossil fuel subsidies to support for nature-based climate solutions and protected areas, here...
You certainly won’t hear it from many politicians and pundits, but the Alberta oilsands produced exactly one billion barrels of oil in 2017. That’s the most the oilsands have ever produced.
If all goes as planned, that number is only going to keep growing, with the National Energy Board forecasting annual production of 1.6 billion barrels of oil in 2040.
The expansion of the Trans Mountain Pipeline, which Canada just purchased for $4.5 billion and will spend another $7.4 billion to build, is a key part of that increase. Even if only a quarter of the new pipeline ships “incremental” production — that is, oil that wouldn’t have been extracted otherwise — that’s an extra 50 million barrels every year.
Peter Erickson, senior scientist at the Stockholm Environment Institute’s Seattle office, is concerned by this prospect.
In fact, only five days before Canada bought the pipeline, Erickson published a highly readable report called “Confronting carbon lock-in: Canada’s oil sands,” which made a bold argument: expanded oilsands production not only cripples the ability to meet domestic emissions targets but also compromises global attempts due to the continued flooding of the market with cheap oil (which further slows the transition to a low-carbon society), he argues.
Of course, if Canada doesn’t supply the global market with oil some of that supply will be replaced by other countries. But Erickson calculates that some of it won’t, decreasing global oil consumption by between 0.2 to 0.6 barrels for each barrel of Canadian oil left in the ground.
Erickson recommends that Canada restrict its oil production to current levels, echoing recent calls from the likes of Mark Jaccard and Fergus Green that countries must address both supply and demand of fossil fuels.
On Wednesday, The Narwhal chatted with Erickson about his thoughts on the pipeline purchase, his recent report and why climate action begins at home.
I mean, it’s just crazy, right? Why Trudeau would want to basically go all in on the fossil fuel industry and oil when all the goals that they have committed to in the Paris Agreement require a rapid phase-out of oil demand and supply. That’s really what it comes down to. Canada is hoping in its goals that the world phases off oil and therefore they’re counting on the world to stop buying oilsands but they’re not willing to plan for that in Alberta or Canada.
It’s really putting those workers in Alberta at risk in the long term, to be hoping that the world stops using oil but to keep hitching Alberta to that future.
Well not really. It’s taking on the risk at this most vulnerable time.
To meet climate goals, we need an orderly phasedown of oil consumption and production. You could take a very charitable and contrarian view and say “OK, Canada could take over the pipeline as a means of more predictably phasing out oil supply.” It would still be a terrible investment but that’s the only way to look at this from an upside.
I don’t think that’s what they’re doing though.
Those are incremental dynamics in terms of what oil gets replaced by what. To be honest, I haven’t looked at that closely — I’m trying to look at this bigger, more fundamental question about supplying oil to the market at all, or expanding oil production at all.
That’s a question that, at least in my read of the discussion in Canada, hasn’t got as much play. Lots of discussion has been around “is it three or four megatones from this pipeline or that, or rail versus pipeline, or from ‘x’ versus ‘y.’” But what about the fundamental question about providing a lot of oil to market at a time when we need to be getting off oil? That’s what we ran the numbers on, and hadn’t really seen other folks do that.
We have this simple economic model, but it matches with what much more complicated economic models find.
We ran some real simple scenarios: if you held oil production at 1.5 billion barrels annually instead of increasing it to 2.1 billion barrels, which is what the National Energy Board is estimating, that’s a little over half a billion barrels of oil not supplied to global oil markets.
That would mean somewhat less than that oil would not be consumed globally. And that would be 50 to 150 million tonnes of CO2 annually, not even counting the reduced emissions in Alberta. That’s just in global fuel markets.
The whole Pan-Canadian Climate Framework is planning on 175 million tonnes. The goal is to reduce emissions by 30 per cent from 2005 levels by 2030. If Canada took even a modest goal of saying “hey, we’re a resource-based economy, we’re going to hold fossil fuel production just constant from 2005 levels and not even reduce it” then the emissions reductions you could count on would be between 94 million tonnes to 280 million tonnes, depending on how the global oil market responds.
Bottom line: how Canada manages the oilsands is as important to global climate as what it does on its own emissions. Full stop.
Carbon accounting in the UNFCCC happens by each country tallying up their own emissions. But the Paris Agreement starts to get away from that. Every country makes their own contribution about how to solve the climate problem. There are all kinds of provisions for trading credits between countries.
Let’s get away from this illusion that your responsibility as a climate leader is only what happens within your country. Climate change is a global problem. Everyone needs to do what they can to solve the problem. For major oil producers like Canada, that is going to have to mean phasing out supply.
It’s either going to happen in a chaotic, risky way where Canada plans through negligence on the rest of the countries reducing their car driving and leaving Alberta stranded. Or it can do it in a planned way that ultimately protects Alberta and plans for its future and has a tangible, quantifiable emissions benefit. They should do it.
What a textbook case of carbon lock-in, right? The oilsands should be, as some models still assume they are, pretty expensive to go through all this processing and digging and shovelling and upgrading, relative to some other deposits in the world where you just put in a well and pump. But there have been so many investments by Alberta and Canada over the years in reducing that risk and subsidies by name and otherwise.
Risk reduction relative to free market conditions is a subsidy by most definitions. Canada is now in the position where it’s entangled with the oil industry. The production is locked in. And it may not be going anywhere.
That’s a problem for the climate and one that Canada ultimately should wrestle with — to undo some of that support. There are plenty of other economic opportunities for it to take advantage of.
Sure. I’m no expert in Alberta and there are real concerns about what the labour force can do there. But the oil industry is not looking out for those people. Canada’s government could be and should be.
Investment in upstream oil and gas is down globally. Canada is not necessarily that unique in that respect. Energy investment is way up in electricity networks, electric vehicles, energy efficiency: all of those are major global trends that Canada could be investing in and profiting from instead.
Within Alberta, there’s $100 billion or more worth of clean-up liabilities. You need skilled people to do that. Who better than oil industry workers already? There could be a decade of work or more for everyone already in the oil industry to do that kind of work as it is. Think of the benefits that would have.
It’s not clear that there are going to be any offset markets. The problems with offsets are so numerous.
In a Paris-type agreement, with everyone voluntarily taking on these pledges to reduce, if everyone’s pledging to reduce then there’s no country left to buy offsets from. Or at least, it’s very difficult to determine how you would even define an offset because if an offset is relative to business-as-usual, what is business-as-usual when countries are planning to reduce? The simple answer to the question is that offsets are a mirage, they’re not something that countries should be counting on if they’re serious about climate action. Even if they worked perfectly, I’m not sure there’s going to be any offsets out there to buy.
Furthermore, in relying on offsets, you’re missing the chance to develop your own low-carbon economy and develop the profits and other benefits you get from reducing your own emissions and getting off no longer being an oil producer.
When I set out to write this report, the unique contribution that I wanted to make was the fact that expanding oil supply does expand global oil consumption. The idea that if we don’t produce it someone else will just doesn’t hold up. Nobody should be saying that anymore. Yes, if we don’t produce it someone else will produce a little bit of it, but really none of us need to be producing this in the long term.
Our study quantifies in a transparent, simple way how those numbers all stack up. When they stack up, it shows that Canada and Trudeau really should think about enhancing the country’s ambition and extending its leadership by making a plan to purposely limit oil production.
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