A new report from Pembina Institute says that the proposed TransCanada Energy East pipeline could generate up to 32 million tonnes (Mt) of additional greenhouse gas (GHG) emissions from the crude oil production required to fill it. Thirty-two million tonnes of carbon emissions is the equivalent of adding 7 million cars to Canada's roads, exceeding the projected emissions of the Keystone XL pipeline proposal.

The Keystone XL pipeline, in comparison, would generate 22 Mt of additional GHG emissions through oilsands production, according to a previous report by Pembina. The estimated emissions impact of Energy East is "higher than the total current provincial emissions of five provinces."

The $12 million Energy East pipeline, proposed by TransCanada in August 2013, would have the capacity to transport 1.1 million barrels per day (bpd) of oilsands and conventional crude oil from Alberta to New Brunswick. According to the report, the volume of new oilsands production associated with Energy East would represent up to a 39 per cent increase from 2012 oilsands production levels.

Figure 1: Greenhouse gas emissions associated with Energy East compared to those of selected provinces. Climate Implications of the Proposed Energy East Pipeline: A Preliminary Assessment. The Pembina Institute, 2014.

Oilsands production is currently Canada's fastest growing source of GHG emissions, and is set to nearly triple between now and 2030, according to Environment Canada. Report authors Clare Demerse and Erin Flanagan told DeSmog Canada that this growth is "the single largest barrier to achieving [Canada's] 2020 climate target."

Given that Canada is set to miss its 2020 emissions reduction target by 122 Mt with current measures, Demerse and Flanagan see the Energy East proposal's potential to add a new source of GHGs from the oilsands as "significant and troubling."

The authors stress that the report, titled Climate Implications of the Proposed Energy East Pipeline, only assesses the pipeline's upstream, "Well-to-Refinery Gate" emissions impact, rather than the downstream, "Well-to-Wheel" emissions of the crude oil being transported, which would include emissions released by its combustion in vehicle engines. The actual climate impact of Energy East would therefore be even greater than figures in the report.

"The oilsands are already Canada's fastest-growing source of carbon pollution and the Energy East pipeline would help to accelerate production. Any regulatory review should include not only the impact of the pipeline itself, but also the impact of producing the crude that would flow through it," said Demerse, Federal Policy Director at Pembina.

Figure 2: Change in GHG emissions by economic sector, 2005-2020. Climate Implications of the Proposed Energy East Pipeline: A Preliminary Assessment. The Pembina Institute, 2014.

Demerse and Flanagan hope that the report will urge the National Energy Board (NEB) to undertake a more thorough appraisal of Energy East's environmental impact than its review of Enbridge's Northern Gateway proposal, saying that they wanted to submit their findings "before the National Energy Board decides on the format of its review."

The authors note that "many Canadians asked for consideration of the impacts of oilsands production in the Northern Gateway hearings," so if the NEB chooses a "more complete and balanced review of the Energy East proposal – one that looks at the environmental impacts of filling the pipeline as well as the pipeline infrastructure itself – I think the regulators would simply be catching up to where Canadians already are."

TransCanada is set to submit its regulatory application for Energy East to the NEB later this year.

The report recommends that the NEB "include the pipeline's full upstream impacts in the scope of its review, and that the federal government should end its delays and adopt strong emissions regulations for the oil and gas sector."

The report mentions that carbon capture and storage (CCS) technologies have been found to lower oilsands production emissions, but adds that "Canada lacks the kind of stringent climate policies that would provide a strong incentive for those kinds of investments," especially considering the high cost of such technology.

ICO2N, a group of energy companies invested in developing CCS technology, estimates that a carbon price of $125/tonne is necessary to justify capture of approximately 15 per cent of oilsands CO2.

The authors believe that approving projects like Energy East and Keystone XL could "see less emphasis on, and less encouragement of, clean energy investment in Canada" when the country needs to be "starting the transition to a clean energy future."

"The oilsands industry plans to triple production by 2030 and building new pipelines is necessary to realize those ambitions. We need to look at the full scope of impacts when evaluating pipelines," said Flanagan.

In its 2013 World Energy Outlook, the International Energy Association (IEA) modelled a scenario where countries take the action required to keep global warming below 2 degrees C, and found that global demand for oil would likely peak in 2020 and fall thereafter. Demerse and Flanagan suggest that Canada needs to "keep that kind of long-term picture in mind when we're considering a pipeline proposal that could last for 30, 40 or 50 years."

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The Globe and Mail’s Report on Business reported Friday that investors are reconsidering the viability of the Alberta tar sands as a worthy venture.

After putting numerous assets up for sale earlier this year, tar sands companies have so far come up empty-handed. With operating costs constantly rising, unstable oil prices and dropping revenues, major energy corporations are losing deals due to skittish investors.

They are being forced to hold off on selling what they anticipated would be valuable assets after receiving less than enthusiastic bids.

Suncor Energy Inc., Canada’s largest oil company has scaled back its spending by $1 billion from last year as a means of offsetting lagging revenues.

Recent predictions by the International Energy Association and British Petroleum show that instead of a rise in the demand for Canadian crude oil, Canada’s prime export destination—the United States—is on its way to becoming the world’s largest energy producer, potentially becoming energy self-sufficient by 2020.

There are American companies, such as Murphy Oil based in El Dorado, Arkansas, who are considering selling off their stake in Canadian oil companies. The Houston-based Marathon Oil Corporation spent the last seven months in talks to sell part of its 20-percent stake in the Athabasca Oil Sands Project before the deal fell through. The company has declined to say what went wrong.

Environmental journalist Andrew Nikiforuk warned Canadians almost three years ago that government overspending to develop fossil fuels and a failure to diversify would lead to the industry’s collapse. In an opinion piece for The Tyee, he wrote about the dangers of allowing the Canadian dollar to become to closely tied to the price of oil, something that was already beginning to happen at the time:

“For better or worse Canada's economic fate is now chained to oil exports and oil price shocks. That's what happens when a nation supplies the United States with 20 per cent of its oil and refuses to have a national conversation about the consequences.”

Recent stocks reports show that Canada’s biggest oil companies have taken a turn for the worse.

In April, major companies including Shell, Exxon and BP, were trading at the lowest numbers seen in nine months.

These numbers cast doubt on the Harper government’s assertion that oil sands production will triple by 2035. If BP's predictions are correct, some say Canada will be lucky to hold steady at current levels of export to the US, let alone increase it by millions of barrels per day.

The fossil fuel industry may in fact be undermining its own economic viability. The rise of natural gas production via hydraulic fracturing is at least partially to blame for the drop in demand for crude oil down south – due to the high volume and availability of shale gas.

Investors' wariness will also have a huge impact on development should the Canadian and America governments approve the Keystone XL and Northern Gateway pipelines.

With willing investors dwindling, it's hard to say who will be willing to risk the money to build more tar sands insfrastructure.

Image Credit: Kris Krug via flickr, used with permission.

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