After more than a year of public hearings, the federal government unveiled its new and improved environmental assessment legislation in February 2018 with much ado.

But the new rules — designed to restore public trust in Canada’s process for reviewing major projects — didn’t contain any details on what kinds of projects would trigger a review under the new legislation.

Environment Minister Catherine McKenna skirted the issue, saying her ministry was still evaluating what kinds of activities would show up on a yet-to-be-released “project list” that was pending further consultation with Canadians.

But when pressed on the issue, McKenna told reporters she didn’t believe oilsands projects developed via in-situ methods should be included. McKenna reasoned that because Alberta already has a hard cap on emissions, future oilsands projects would be exempt from federal environmental review.

The implications of excluding new oilsands projects because of a provincial emissions cap (which is controversial) weren’t lost on Adam Scott, senior advisor with Oil Change International.

Unbelievable and unacceptable. @cathmckenna proposes exempting #tarsands in-situ projects from any federal environmental assessment because ‘Alberta has a hard cap on emissions’ #cdnpoli

— Adam Scott (@AdamScottEnv) February 8, 2018

“It’s just appalling,” Scott told DeSmog Canada in an interview. “There’s no other way to say it.”

Unlike the more familiar open-pit mines of the Alberta oilsands, in-situ projects extract the region’s viscous bitumen by injecting steam into the ground, which softens the oil that is then pumped to the surface.

In-situ development represents the future of the oilsands. Between 2016 and 2040, in-situ is expected to double in daily production reaching 2.9 million barrels per day.

And while the process is less visible than its open-pit counterpart, in-situ oilsands mining has greater greenhouse gas emissions and significant land disturbance that clashes with the rights of local Indigenous peoples.

NDP MP Linda Duncan said by not releasing the project list the federal government has left everyone in the dark.

Duncan, who serves as vice-chair of the Standing Committee on Environment and Sustainable Development which is responsible for reviewing the new legislation, said in-situ projects were exempted from federal assessments under the previous Harper government during dramatic cuts to Canada’s environmental rules. The new proposed federal legislation, bill C-69, was meant to make the gutted rules more robust.

“Everybody agrees that this bill should not be finalized until everybody knows what the project list is,” Duncan told DeSmog Canada.

“Who is it going to apply to? It’s ridiculous that they didn’t have the consultations simultaneously. This is a really serious matter. One of the things that we heard from industry today was that they’re just fed up.”

In-situ projects expected to emit 65 megatonnes of emissions by 2030

In-situ projects don’t result in the same level of visual devastation as open-pit mining: there are no toxic tailings lakes or gargantuan trucks needed.

But they have their own set of significant impacts, which critics argue should fall under the purview of federal assessment.

For one, they emit far more greenhouse gases that mining on a per-barrel basis. A 2016 assessment by the Pembina Institute found the “emissions intensity” of in-situ is about 60 per cent higher than mining. That’s because natural gas is burned to create the steam used in the process, making it extremely emissions intensive.

By 2030, in-situ projects are expected to emit 65 megatonnes of emissions per year: almost equivalent to all passenger transport in the country.

Sharon Mascher, law professor at the University of Calgary and expert in environmental law, said in an interview with DeSmog Canada that such climate impacts from in-situ projects warrant federal assessment.

“I would argue that the federal government has the constitutional power to deal with greenhouse gas emissions and they need to show some leadership if they’re going to purport to be acting in a way that’s consistent with their obligations under the Paris Agreement,” she said.

“They need to exercise that jurisdiction to make sure that over the long term Canada’s greenhouse gases are not increasing  but are decreasing and eventually reaching carbon neutrality.”

Alberta’s emissions cap allows for a 40 per cent expansion in emissions, up to 100 megatonnes. But that doesn’t include electricity cogeneration, oilsands that doens’t require steam extraction and new or expanded upgraders — which combine for another 15 megatonnes of emissions.

As noted in the recent collaborative report by Canada’s auditors general, Alberta is one of nine province and territories that doesn’t even have a 2030 emissions goal in place.

Mascher said the only way an exemption for new in-situ projects would make sense would be if the federal government conducted a strategic assessment of all existing legislative frameworks in order to provide assurance that new production fits within Paris Agreement obligations.

However, strategic assessments aren’t legislated — meaning they’re completely at the discretion of cabinet.

No environmental assessments for in-situ oilsands projects under the federal government’s new rules. @cathmckenna https://t.co/WjhonE2XgN

— DeSmog Canada (@DeSmogCanada) April 3, 2018

Without federal assessments, ‘there’s no credibility to the system at all’

Greenhouse gas emissions aren’t the only potential impact of in-situ projects.

As recently reported by DeSmog Canada, Fort McKay First Nation in northeast Alberta is currently fighting a proposed in-situ project that is feared to jeopardize a nearby sacred region.

Specific concerns include the introduction of linear disturbances like roads and cutlines — which can further endanger caribou — and constant water withdrawals.

“They’re massive water polluters with large impacts on land and endangered and threatened species like woodland caribou,” Scott said. “They obviously need to be part of any review. It’s just essential. Without that, there’s no credibility to the system at all. They need to be on the project list as a default.”

There’s growing interest by oilsands producers in the use of “solvents” for in-situ projects, which would greatly reduce the amount of natural gas required for extraction but have unknown impacts on groundwater quality.

Duncan emphasized it’s the primary responsibility of the federal government to address Indigenous rights.  In addition, she emphasized that only the federal government can regulate navigable waters, fisheries and trans-boundary waters.

Even though the previous environmental impact system implemented under Harper exempted in-situ projects, Duncan said it’s imperative that they be included in the project list.

“It’s still having a huge impact on the landbase that is by and large traditional Indigenous lands,” she said.

Committee required to review legislation without knowing what it will apply to

The proposed legislation is currently being reviewed by the Standing Committee on Environment and Sustainable Development. After it’s approved, it’ll return to the House for third reading and eventually royal assent.

In late February, the Liberals introduction a “time allocation” motion over bill C-69 in the House of Commons, limiting debate to only two days before sending it off to the Liberal-stacked committee.

But Duncan said the committee process itself is also being fast-tracked, with limitations on hearing witnesses and proposed amendments.

In response, she gave notice of a motion to break up the bill for review and send sections to relevant committees: parts addressing the Canadian Energy Regulator to the Natural Resource committee and parts about navigable waters to the Transport committee.

Those calls were rebuffed.

Now, her committee has to review over 800 clauses by late April.

Some have speculated that the continued exemption for in-situ for Alberta is a subtle trick to ensure the emissions cap remains regardless of who wins the next provincial election.

Scott suggested that would be a “terrible strategy.”

“The Alberta cap is an ineffective way of dealing with climate impacts of oil and gas operations,” he said. “Exempting projects with the environmental impacts of in-situ tarsands projects really shows the impact system was broken entirely.”

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Last year the Canadian government enjoyed a positive reception at the UN climate talks in Paris. After 10 years of climate inaction under a Conservative government, the international community anticipated the new Liberal government would mean good things for the nation’s climate governance.

But Canada’s contribution to the world’s first climate treaty remains “inadequate” according to a new report released by the Carbon Action Tracker in light of the climate talks.

The Paris Agreement, designed to limit global warming to as close to 1.5 degrees Celsius as possible, was signed in France last year and ratified, with incredible speed, less than one year later on November 4. Although a proud signatory of the agreement, Canada will not meet its climate targets, according to the new analysis.

Prime Minister Justin Trudeau adopted the same climate targets as the previous Stephen Harper government, pledging to reduce Canada’s emissions 30 per cent below 2005 levels by 2030.

“Under its current policies, Canada will miss both its 2020 pledge and its 2030 [Nationally Determined Contribution] targets by a wide margin,” Climate Action Tracker states.

The group estimates that based on current climate policies Canada’s emissions will increase by three to 18 per cent by 2030.

Last month Trudeau announced a national carbon tax that will price carbon at $10/tonne in 2018 and increase to $50/tonne by 2022.

But according to the analysis of four prominent environmental groups, Canada’s fossil fuel subsidies eliminate the supposed benefits of that carbon tax.

Canada Must Phase Out $3.3 Billion In Fossil Fuel Subsidies

“It makes no sense to put a price on carbon while continuing to give handouts to oil and gas companies,” Alex Doukas, senior campaigner and author with Oil Change International, told DeSmog Canada. 

“That's like pouring water on the fire with one hand while spraying gasoline on it with the other.” 

Doukas added Trudeau promised to eliminate fossil fuel subsidies when campaigning last year.

“Now his government has to deliver.”

Canada first committed to phasing out fossil fuel subsidies in 2009 along with other G20 nations. That commitment was later affirmed at a 2015 G7 meeting and named as a priority for Finance Minister Bill Morneau in a mandate letter from Trudeau.

“Unless Canada phases out massive subsidies to oil and gas companies, Trudeau’s carbon price will do little to encourage polluters to cut carbon emissions,” Dale Marshall, national program manager with Environmental Defence, said in Marrakech.

“The three billion dollars in annual subsidies could be put to much better use by investing in climate action, health care and other initiatives.”

In Marrakech, Minister of Environment and Climate Change Catherine McKenna participated in the Carbon Pricing Leadership Coalition, an international group pushing for more integrated market-based climate solutions.

“In light of Minister McKenna’s participation…we take the opportunity to remind Canada that leadership requires coherent fiscal policies,” Annie Bérubé, Director of Government Relations at Équiterre, said.

“Finance Minister Bill Morneau must announce a predictable phase-out of all remaining preferential tax treatment to the oil and gas sector starting in Budget 2017.”

Canada’s #ClimateAction Called ‘Inadequate’ at UN Climate Talks in #Marrakech https://t.co/KpTN378mXJ #cdnpoli @cathmckenna @JustinTrudeau

— DeSmog Canada (@DeSmogCanada) November 15, 2016

More Opportunity for Canadian Leadership at UN Climate Talks

She added there is some work to be done, however, to bridge the gap between Canada’s international climate commitments and decision-making domestically.

“This is a core question that Canada has to reconcile,” she said.

“Can we build a national climate plan that allows us to achieve the 2030 target with deeper reductions over time?”

Canada has come under harsh criticism recently for approving the Pacific Northwest LNG export terminal on the coast of B.C.  The LNG facility is estimated to be the largest single point source of emissions in Canada, adding the equivalent of 1.9 million cars to the roads.

Analysts have pointed out the approval of the LNG project is a serious obstacle to Canada meeting its climate commitments.

Flanagan said she sees an opportunity for Canada to really “do the math” on its climate targets.

“That’s really what this COP is about,” she said. “It’s about taking the rhetoric and turning it into plans that will drive the change we need to see.”

Image: COP22 signage in Marrakech, Morocco. Photo: Carol Linnitt/DeSmog Canada

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For years, the Canadian public has been besieged with the same message: Alberta’s pipeline network is completely maxed out, meaning the oilsands are landlocked and new pipelines must be constructed to allow producers to ship their product to new markets and eliminate the discount imposed on exports.

It’s a notion that’s been repeated by politicians of all stripes, including Alberta Premier Rachel Notley and Prime Minister Justin Trudeau.

But there’s no merit to that argument, according to a new report from the Washington, D.C.-based nonprofit Oil Change International.

In the briefing, titled “Canada Not Running Out of Pipeline Capacity,” authors Adam Scott and Greg Muttitt point out that there’s around 400,000 barrels/day of unused capacity in the network, easily accommodating exports for projects currently operating and under construction.

This calculation was derived from the organization’s Integrated North American Pipeline model, which then concluded the network was 89 per cent full.

As a result, the only reason that new pipelines like Kinder Morgan’s Trans Mountain and TransCanada’s Energy East would be required is if there’s a massive expansion of the oilsands, a move that would arguably undermine the Paris Agreement and other international climate commitments (an argument also made by David Hughes in his thorough June 2016 report for the Canadian Centre for Policy Alternatives).

“When you look at the reality of the situation building new pipelines would not increase the amount of money that producers receive because there isn’t a shortage,” Scott told DeSmog Canada. “And there’s no discount anymore that could be relieved by building a new pipeline.”

“It’s really that missing piece of the puzzle that Canadians are not getting good information on.”

Only Reason for Kinder Morgan and Energy East Would Be For Huge Oilsands Expansion

Scott isn’t discounting the historical existence of an artificial price differential. Rather, he’s arguing that it no longer applies.

There was a serious pipeline constraint in 2012 and 2013 that resulted in a transport-related price gap between Western Texas Intermediate (WTI) and Brent Crude with Western Canadian Select (WCS). In other words, the lack of pipeline access rendered bitumen production and transport less economically viable.

But that changed with the construction of new pipelines between Illinois, Oklahoma and refineries on the Gulf Coast in 2013 and 2014, as well as the removal of a 40-year ban in the U.S. on exporting domestically produced oil in December 2015 (which the report suggests “reduced market distortions between shale oil and oil sands crude oil at U.S. Gulf Coast refineries”).

Now, oilsands producers are facing three major issues that ultimately have nothing to do with pipelines: lower quality crude, distance from major markets (almost exclusively in the U.S. given access to heavy oil refineries) and extremely low global prices.

“In reality, that differential is basically gone now,” Scott says.

He suggests that the pipeline network may come close to full in 2018, resulting in a “very brief” spike in prices.

But there are more expansions planned for the network that will likely come online to loosen that bottleneck: Enbridge is currently planning to add 800,000 barrel/day worth of pipeline capacity to its mainline system by 2020, which wouldn’t require new permits as it would be an expansion rather than a new pipeline. Kinder Morgan and Energy East wouldn’t be constructed until 2020 or so.

“It has nothing to do with the decision about current pipelines,” he says.

Taking the Enbridge expansion into consideration, the Oil Change International report concludes that “only significant additional plans to increase production beyond projects already operating, in-construction or sanctioned would change this situation.”

One Million Additional Barrels/Day Allowed Under Oilsands Cap

Here’s a bit of rough math to provide some additional context.

The oilsands currently produce about 2.4 million barrels/day and 70 megatonnes (Mt) of carbon emissions per year. Alberta’s new emissions cap on the oilsands allows for only 100 Mt per year.

Assuming that per-barrel emissions stay constant (which is unlikely given that most new production will occur via the more energy intensive process of in-situ), the cap allows for another one million barrels/day or so of production, up to around 3.4 million barrels/day.

David Hughes has also calculated the 45 per cent increase in production could be accommodated via existing pipeline and rail networks, which includes a 15 per cent surplus for maintenance and pipeline problems.

Specifically, the potential addition of 800,000 barrels/day from Enbridge added to the 400,000 barrels/day in current spare capacity allows for 1.2 million barrels/day in new production.

If Kinder Morgan Trans Mountain or TransCanada’s Energy East are approved by the federal government, it will serve as a clear signal that nobody’s taking that cap seriously.

That’s the assumption that allows the Canadian Association of Petroleum Producers to estimate that oilsands production will increase from 2.4 million barrels/day in 2015 to 3.7 million barrels/day in 2030, and the National Energy Board to calculate that oilsands exports could increase to 4.5 million barrels/day by 2040.

Oil Industry Is ‘Betting That In The Future the Government Will Ignore Its Own Climate Policy’

But such a spike can’t happen if Canada has any intention of meeting international climate commitments, especially its Paris Agreement target of reducing emissions by 30 per cent below 2005 levels by 2030.

A widely shared report published in September by Oil Change International titled “The Sky’s Limit” concluded that no new oil, gas, or coal extraction projects can be built if the world has any legitimate interest in staying below the mark of two degrees celsius above pre-industrial averages.

“Investment in new projects beyond what’s already under construction has stalled completely with the oil prices,” Scott says. “The oil industry knows these pipelines aren’t required and they’re betting that in the future the government will ignore its own climate policy and that somehow, miraculously, the price of oil will recover. Both of those things would be required for those pipelines to be needed.”

A recent analysis by economist Robyn Allan found that constrained oil production in the oilsands is exclusively the result of low oil prices, not restricted pipeline capacity. Allan found a total of 2.7 million barrels per day of oilsands production was cancelled between January 2014 and September 2016 due to the low price environment.

Per-Barrel Emissions Have Increased by One-Quarter in Last Decade

It also assumes that technological innovations will help decrease per-barrel emissions in order to meet those climate commitments.

Yet recent history shows little precedent for that: a Pembina Institute report from August 2016 noted that total emissions intensity has increased by 25 per cent between 2004 and 2014.

Technologies such as using solvents instead of gas to extract bitumen via in-situ isn’t very advanced, Scott says, and the increasingly popular technology features a far higher per-barrel emissions rate in both carbon dioxide and sulphur dioxide than open-pit mining.

“With the crash in oil prices, [research and development] budgets and the willingness of the oil industry to spend extra marginal dollars on extra technology that would increase the cost is gone,” he says.

“We don’t expect the oil industry will have a real ability to dramatically reduce emissions intensity.”

Yet politicians across Canada continue to push for pipelines, with the Kinder Morgan Trans-Mountain project expected to receive approval shortly before Christmas.

Scott suggests that such elected officials “are completely ignoring the reality of what the Paris Agreement means” and those who contend that new fossil fuel development can be allowed under such commitments “don’t understand climate science.”

“We’re not saying we need to shut down the fossil fuel industry tomorrow,” Scott says.

“But Canada can’t meet its own obligations to the Paris Agreement if it intends to allow for that expansion. In that way, the decision of whether or not to build these pipelines is a direct choice from politicians about whether or not they’re going to honour their obligations on climate change. It’s that simple.”

Image: Alberta Premier Rachel Notley, Prime Minister Justin Trudeau and Calgary Mayor Naheed Nenshi. Photo: Government of Canada

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Canada’s fossil fuel industries are the recipients of $2.7 billion US ($3.6 billion CDN)  in handouts each year, despite a promise from all G20 nations, including Canada, to eliminate subsidies in 2009.

About $1.6 billion US of those subsidies came from the federal government with the rest distributed by the provinces, according to a new report from Oil Change International.

The report finds G20 countries spend about $452 billion US each year to prop up their oil, gas and coal industries.

The Liberals promised to “fulfill Canada’s G20 commitment to phase out subsidies for the fossil fuel industry,” in their election platform. The party singled out the Canadian Exploration Expenses tax deduction as too generous to industry, saying the tax break should only kick in if companies are completely unsuccessful in their resource exploration.

“The saving will be redirected to investments in new and clean technologies,” the party platform says.

But the Canadian Exploration Expenses tax deduction isn’t the only place where companies can take advantage of a generous subsidy system.

So were else is the money coming from and going to?

Direct Handouts to Fossil Fuel Industry

The Canadian government has heavily invested in fossil fuel projects, research and development in recent years.

Perhaps most notably, the government poured millions of dollars into the development of carbon capture and storage (CCS) technology.

Between 2011 and 2014, $226 million US was handed over to SaskPower, Saskatchewan’s main energy provider to develop CCS infrastructure at the Boundary Dam coal power plant. SaskPower, owned by the province, invested an additional $1.2 million US into the project over four years.

An additional $18 million US was paid into CCS research at the Saskatchewan Petroleum Technology Research Centre in a joint project funded by Canada, Saskatchewan, the University of Regina and the Saskatchewan Research Council.

Two CCS projects in Alberta received $156 million US from the federal government and an annual supplement of roughly $103 million US from the province for several years.

The development of CCS has been extremely controversial because it is an expensive, risky and unproved technology that, while ostensibly removing carbon from the atmosphere, is also used to facilitate enhanced oil and gas extraction, thereby releasing more carbon into the atmosphere.

B.C. also invested $19 million US directly in oil and gas extraction activities under the banner of  ‘transportation investment’ objectives.

Screenshot from Oil Change International.

Public Finance of Fossil Fuel Activities

The OCI report found Export Development Canada, the country’s main public finance institution, mostly funds projects that involve oil and gas production. The institution, however, doesn’t keep precise records on how much money is provided per transaction (records only provide a range, i.e. $250-$500 million US).

But OCI estimates that the institution provides an average of $2.5 billion US per year to fossil fuel production for companies like TransCanada, Enbridge, Encana, Devon Energy and Chevron.

Fossil Fuel Industry Tax Breaks

One of the main ways the federal and provincial government subsidizes the fossil fuel industry is through major tax breaks.

Canada has no shortage of generous tax deductibles and expenses for industry when it comes to expensive upstream development, which can include high resource exploration and infrastructure costs.

Here are some highlights:

The Canadian Development Expense

Under the Canadian Development Expense, oil and gas companies can claim up to 30 per cent of their field development costs when starting up a new project.

In 2013 oil and gas companies claimed an estimated $981 million US in tax deductions for drilling or completing an oil field or sinking a new mine shaft, according to OCI.

Canadian Exploration Expense

Companies exploring for new resources can claim up to 100 per cent of their expenses for exploratory drilling or seismic testing. This cost the federal government an estimated $159 million US in 2013.

Until January 2015, all pre-production expenses for development of the oilsands were eligible under this tax break, although now operators can only make those claims under the CDE (where they can only recoup 30 per cent, rather than 100 per cent, of their expenses).

Canadian Oil and Gas Property Expense

This tax break, which allows companies to claim a 10 per cent deduction on the cost of purchasing new oil and gas wells, has amounted to $35 million US in subsidies since 2011.

This expense did bring the benefit of reclassifying oilsands property and leases, which were previously eligible for 30 per cent deductions under the Canadian Development Expense. This change is estimated to save Canada $69 million US each year by 2015/2016, according to the report.

Atlantic Investment Tax Credit

This tax credit cost subsidized the oil and gas industry to the tune of $136 million US between 2013 and 2014 by providing tax deductions for developing mature or non-conventional resource fields in Atlantic Canada.

This credit mechanism is currently being phased out but companies can claim past expenses until 2017.

Foreign Tax Breaks

The Foreign Resource Expense and the Foreign Exploration and Development Expense allow Canadian companies to deduct 30 per cent of their overseas exploration costs.

OCI notes a lack of disclosure for deductions claimed under these foreign operations tax brackets means no one knows exactly how much these breaks cost for 2013 or 2014.

Alberta Crown Royalty Reductions

In 2013, companies were spared from paying an estimated $631 million US in taxes and royalties under this provincial subsidy. In 2014, the estimated total was $578 million US.

B.C. Deep Drilling Credit

B.C. gave $260 million US worth of royalty relief to gas developers in 2013 and an additional $238 million US in 2014.

In its primer on Canada, Oil Change International, along with the Overseas Development Institute and International Institute for Sustainable Development, outlines how these tax breaks work in more detail.

Why Stopping Fossil Fuel Subsidies Matters

Global subsidies for the fossil fuel industry are four time the global subsidies for renewable energy.

Clean energy analysts say the lack of tax breaks and subsidies for clean energy is holding the sector (which is still booming, by the way) back from reaching its potential.

Many countries in the developed world have already promised a long or medium-term phase out of fossil fuels as a pathway to lowering their emissions.

This year more than 190 countries are convening in Paris for the UNFCCC COP21 climate talks in the hopes of singing an international climate treaty.

“Axing $1.7 billion US in handouts to fossil fuel producers is a critical step that Canada needs to take towards tackling climate change, and it would be very welcome in the lead-up to major climate talks in Paris next month,” Alex Doukas, co-author of the report for Oil Change International, said.

“This is a unique opportunity for the new Canadian government to hit the ground running at the G20, live up to election promises, and push other G20 leaders to phase out subsidies as they first committed to doing six long years ago,” Doukas added.

“Continuing to fund the fossil fuel industry today is like accelerating towards a wall that we can clearly see,” Stephen Kretzmann, director of Oil Change International, said.

“G20 leaders need to slow down and turn us around before we hit climate disaster.”

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A new report from Oil Change International challenges industry’s common assumption that the continued production of oilsands crude is inevitable.

The report, Lockdown: The End of Growth in the Tar Sands, argues industry projections — to expand oilsands production from a current 2.1 million barrels per day to as much as 5.8 million barrels per day by 2035 — rely on high prices, public licence and a growing pipeline infrastructure, all of which are endangered in a carbon-constrained world.

As the report’s authors find, growing opposition to oil production — especially in the oilsands, which is among the most carbon intensive oil in the world — has significantly altered public perception of pipelines, a change amplified by the cross-continental battles against the Enbridge Northern Gateway, Kinder Morgan Trans Mountain, TransCanada Energy East and TransCanada Keystone XL pipelines.

According to the report’s authors, production growth in the oilsands hinges on the construction of these contentious pipelines because the existing pipeline system is currently at 89 per cent capacity.

Oilsands Offside Canadian Values and Economic Diversity

Report author Hannah McKinnon said oilsands pipelines represent a “high risk, high carbon, high cost path” that is at odds with “diversifying the Canadian economy and building a cleaner, safer energy future.”

“Widespread public concern from citizens across the country and the continent have made it clear: we can't afford to keep putting the transition to a clean, safe, renewable and just energy economy off,” McKinnon told DeSmog Canada.

A poll released by the Climate Action Network in April found the majority of Canadians feel addressing climate change is more important than developing the oilsands or constructing pipelines.

“And this public concern, as the report shows, has had an incredible impact in making politicians, municipalities and Canadians more generally think about the kind of future Canada wants, and as a result, pipelines and expansion are hitting legal, political and public hurdles everywhere they turn.”

McKinnon said the oil industry is making “desperate efforts” to “prove they are still in the game.”

“But, thanks in large part to inspiring people-powered movements, they are not getting away with it anymore,” she said.

“Whether it is exposing Exxon's efforts to bury climate science for decades, calling out governments for basing energy policy on demand scenarios that take us towards five degrees or more of warming, or exposing the industry for meddling and undermining climate and clean energy policy the world over — people power is killing fossil fuel fatalism.”

Pipeline Delays Critical to Oilsands

U.S. President Barack Obama has delayed a decision on the Keystone XL pipeline, which would carry oilsands crude from Alberta to the Gulf Coast, for six years.

Canada’s newly elected Liberal government has indicated it will not support the construction of the Northern Gateway pipeline, which is currently facing 18 separate legal challenges.

The Trans Mountain pipeline also faces a legal challenge from Vancouver-area First Nations and the Energy East pipeline has generated significant opposition from Alberta to the Atlantic.

Together these four pipelines have the capacity to transport nearly three million barrels of oil per day. Pipeline uncertainty means oilsands companies do not have the security of affordable access to commercial markets. As a result, operators have backed out of oilsands projects — something that occurred well before the current oil price plunge, according to the report.

Oil Change International found that for every 1,000 barrels per day of production capacity (both under construction and approved), 500 of those barrels are trapped in delayed or suspended projects. 

Oil giant Total suspended its $11-billion Joslyn North project, Statoil halted its multi-billion Corner project and Shell shelved the Pierre River project while prices were still above the $90 per barrel mark, the report notes.

“While the circumstances for rapid expansion of the tar sands have been favorable for the industry over the past two decades, there are clear signs that this perfect storm of unfettered market access, political support, growing U.S. demand and minimal regulatory constraints is shifting,” the report states.

“The groundswell of local, national and international opposition to the tar sands industry, which has become a poster child of a high-carbon future incompatible with a safe global climate, was not predicted by industry.”

Oilsands Boom Becomes Bust

The recent drop in oil prices has furthered the troubles of oilsands producers who, during the last 15 years, have dumped an estimated $200 billion into the resource.

In recent months roughly 35,000 energy industry jobs have been lost in Alberta. Pipeline builder TransCanada, oil companies Penn West, PHX Energy Services, ConocoPhillips, Nexen and Talisman Energy have all reduced their employment numbers as did waste management company Tervita.

Teck Resources, Cenovus Energy and Nexen have all delayed the start of new projects or pared down investment in the region amid the price slump.

Canadian Natural Resources, one of Canada’s largest oilsands producers, recent reported a $405-million net loss in the second quarter of 2015. The company blamed the loss on the province’s NDP provincial government, which recently raised corporate taxes by two per cent.

One unnamed oil executive and investor told the New York Times growing public sentiment that the industry doesn’t pay enough in taxes and concern around environmental protections is stifling new investment in the oilsands.

“There’s never been a time when I’ve been less optimistic,” he said.

The End of Oilsands and the Fossil Fuel Era

The oil industry’s tight profit margins, eroding public licence and access problems are in stark contrast to a flourishing low-carbon and renewable energy market.

Clean Energy Canada recently release a report that found the value of clean energy projects in Canada reached $10.9 billion in 2014, up 88 per cent from 2013.

The report also found the rate of increase for clean energy jobs outpaced every other sector. In 2013, the most recent year for which data exists, Canada’s clean energy sector provided 26,900 direct jobs.

Global investment in clean energy skyrocketed to $310 billion in 2014.

A September report from Arabella Advisors found the combined assets of those divesting from fossil fuels reached an unexpected $2.6 trillion in 2015. An estimated $784 billion of those divested funds are pledged to finding climate solutions.

The investment analysis group found uncertainty around stranded assets and unburnable carbon has significantly affected investment in the oil and gas sector. In addition, investors are noting the financial success of divested portfolios. 

The Oil Change International report found that “public concern and efforts to slow and stop tar sands expansion by challenging expansion of the North American tar sands pipeline system are poised to have a meaningful impact on keeping carbon in the ground — close to 34.5 billion tonnes of CO2 — if existing hurdles to pipeline expansion are maintained.”

“This is equivalent to the emissions of 227 coal plants over 40 years,” the report states.

“No matter how you look at it, the end of the tar sands is inevitable,” McKinnon said.

“[Canada has] federal (as part of the G7 commitment) and provincial promises to decarbonize within the century,” she added.

“But how hard we make the transition on ourselves and how much climate damage we do in the meantime is still front and centre.” 

Image: Julia Crawford and Jane Kleeb at the People's Climate March. Photo by Zack Embree.

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When a CN train carrying crude oil derailed and caught fire last weekend near Gogama, Ontario, it became the fifth loaded oil train to leave the tracks in North America in the past two months — and it's raising new questions about the volatility of diluted bitumen from Alberta's oilsands.

In the March 7th accident, several cars slid into the Mattagami River and ignited, leading local officials to issue a drinking water warning for the Mattagami First Nation.

The accident comes less than a month after another CN tanker train carrying crude derailed in the same region, about 200 kilometres north of Sudbury, spilling an estimated more than one million litres of diluted bitumen into local waterways. Twenty-nine cars left the tracks, causing an explosion that left fires burning for six days.

Officials are still scrambling to clean up the oil, which has spilled into a nearby creek, pond and section of Kasasway Lake, before spring thaw.

Gogama Village Inn owner Roxanne Veronneau told the Toronto Star, “People here are on pins and needles. The tracks run right through town … I’m sure that there’s going to be a lot of talk afterward that this shouldn’t be in the middle of our town.”

“It’s frightening and nerve-wracking, especially after what happened in Quebec.” 

The recent accident near Gogama is the third CN Rail derailment in Ontario in the last month and the fifth tanker train derailment continent-wide.

CN Rail experienced another tanker train derailment on March 5 near Horneypayne, Ontario. No oil spilled as a result of the derailment.

On February 16, a tanker train carrying fracked shale oil from North Dakota derailed in West Virginia, causing a spectacular explosion and forcing the evacuation of two towns. At least one of the derailed cars fell into the Kanawha River, a source of drinking water for two counties.

On March 6 a BNSF train carrying Bakken crude oil derailed south of Galena, Illinois. Twenty-one cars left the tracks and five cars ignited causing a large fireball and plumes of black smoke. Emergency responders spent three days working to bring that fire under control.

Growing Concern Over Volatility of Diluted Bitumen

The spate of recent tanker train explosions in Canada has raised concerns about the volatility of diluted bitumen, which contains highly flammable light hydrocarbons. Although the explosive qualities of Bakken oil — which was central to the tanker train disaster in Lac-Mégantic that left 47 dead — is well-documented, similar attention has not been paid to diluted bitumen, as DeSmogBlog recently reported.

As Railway Age reports, “before CN’s first Gogama wreck Feb. 14, there was a widespread and comforting belief among railroaders, regulators and, yes, even railroad reporters, that tar sands bitumen was much safer for transport by rail than light or conventional crude oils.”

“We now know, thanks to Gogama 1 and Gogama 2, that neither dilbit nor synbit, the synthetically diluted variant of tar sands oil, are safer than untreated Bakken crude.”

The hazardousness of crude oil blends is determined by its ignitability, which is determined by the blend’s most volatile component, Railway Age reports. Thus for diluted bitumen, the volatility of light hydrocarbons used as diluents is a critical factor in determining how fuel will respond in a tanker car accident.

Oil Change International recently calculated an average of 100,000 to 150,000 barrels of dilbit is loaded onto tanker trains at Alberta terminals each day.

“As it takes on average around nine days for a train to reach its destination, this means that at any given time there are between 18 and 27 trains carrying dilbit through the continent loaded with some 900,000 to 1.4 million barrels of dilbit,” Oil Change International’s Andy Rowell reports.

“Together with the roughly one million barrels per day of light, tight crude oil loaded in the Bakken and elsewhere around the continent the threat is enormous.”

Lessons Learned in Lac-Mégantic Not Enough

After the disaster in Lac-Mégantic, Transport Canada ordered all Class 111 tanker cars be upgraded to new standards. The new CPC-1232 standards required cars to be enhanced with half-head shields, fitting protections and normalized steel.

The enhanced cars were meant to prevent another accident like Lac-Mégantic from occurring.

However, as the Toronto Star reported, the Transportation Safety Board’s investigation into the first derailment near Gogama showed the new CPC-1232 cars “performed similarly to those involved in the Lac-Mégantic accident.”

The cars exploded upon impact even though they were travelling at nearly half the speed of the cars involved in the Lac-Mégantic incident.

“The TSB has warned (Transport Canada) that this standard was not sufficient and that more needed to be done to provide an adequate level of protection,” the board’s investigation update states.

“Preliminary assessment of the CPC-1232-compliant tank cars involved in (the first Gogama derailment) demonstrates the inadequacy of this standard given the tank cars' similar performance to the legacy Class 111 tanks cars involved in the Lac-Mégantic accident.”

Greenpeace climate and energy campaigner Keith Stewart told the Toronto Star he’s worried more deaths will occur before the federal government revisits the tanker standards.

“The safety authorities have been warning that even the newer cars are not safe, and we have to wonder where the federal government is in this,” he said.

Image Credit: Transportation Safety Board of Canada

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Rich G20 nations are spending about $88 billion (USD) each year to find new coal, oil and gas reserves even though most reserves can never be developed if the world is to avoid catastrophic climate change, according to a new report.

Generous government subsidies are actually propping up fossil fuel exploration which would otherwise be deemed uneconomic, states the report, “The fossil fuel bail-out: G20 subsidies for oil, gas and coal exploration.”

Produced by the London-based Overseas Development Institute and the Washington-based Oil Change International the 73-page analysis also noted the costs of renewables is falling and the investment returns are better than fossil fuels.  

“Every U.S. dollar in renewable energy subsidies attracts $2.5 in investment, whilst a dollar in fossil fuels subsidies only draws $1.3 of investment,” said the report released Tuesday, just days ahead of the G20 leaders meeting in Brisbane, Australia.

The report also notes the G20 nations are creating a ‘triple-lose’ scenario by providing subsidies for fossil-fuel exploration.

“They are directing large volumes of finance into high-carbon assets that cannot be exploited without catastrophic climate effects,” the report said. “They are diverting investment from economic low-carbon alternatives such as solar, wind and hydro-power. And they are undermining the prospects for an ambitious climate deal in 2015.”

Noting that leaders of the G20 countries, which produce about 80 per cent of global carbon emissions, pledged in 2009 to phase out ‘inefficient’ fossil-fuel subsidies, the report says there is a large gap between G20 commitment and action.

So who is paying for this exploration?

According to the report $49 billion of these subsidies occurred through state-owned enterprises, $23 billion from national subsidies delivered through direct spending and tax breaks and $16 billion from public finance from banks and financial institutions.

During the same period, the report said, the top 20 private oil and gas companies, globally, invested just $37 billion in exploration – less than half of what is provided annually by G20 governments – suggesting their exploration activities are highly dependent on public finance.  

The report added global fossil fuel subsidies — of which exploration is just one portion — are estimated to be $775 billion a year. 

Key findings in the report show that the U.S. provided some $5.1 billion in national subsidies to fossil fuel exploration in 2013 – almost double the level in 2009.

Australia, meanwhile, is providing $3.5 billion for the development of offshore and inland fossil-fuel resources and Russia is provides $2.4 billion in national subsidies for fossil fuel exploration.

The report noted the Canadian government offers a wide array of national subsidies that total a minimum of $928 million annually to encourage fossil fuel exploration, including tax benefits for nearly all exploration activities.  

“Despite the widespread perception that renewables are costly, our research reveals that finding new fossil fuel reserves is costing nearly $88 billion in exploration subsidies across the G20,” the Overseas Development Institute’s Shelagh Whitley said. “Scrapping these subsidies would begin to create a level playing field between renewables and fossil fuel energy.”  

Oil Change International’s director Stephen Kretzmann said “five years ago, G20 governments pledged to both phase out fossil fuel subsidies and take action to limit climate change. Immediately ending exploration subsidies is the clearest next step on both fronts.”

The report recommended governments should price carbon to reflect the social, economic and environmental damage associated with climate change, and reduce emissions to levels compatible with the globally agreed 2oC target.

It also recommended that G20 nations should immediately phase out exploration subsidies as a first step towards a wider fossil-fuel subsidy phase out and reform.

In addition, it said governments should transfer subsidies from exploration and other fossil-fuel subsidies to support for the transition to low-carbon development and universal energy access.

On the same day the report was published, a number of high-profile economists said in a letter to a number of newspapers that governments should end fossil fuel subsidies and galvanize international action on climate change.

“Given that two-thirds of currently known reserves cannot be exploited if the world is to remain within the internationally agreed 2º Centigrade threshold, this is a bad investment for tax-payers and the planet,” said the economists. “Fossil fuel subsidies turn upside down the logic of effective action on climate.”  


Religious leaders in Australia, according to a story published Wednesday, said “world leaders must move towards a renewable energy future or there will be human suffering on an unthinkable scale.”  

Anglican Church Bishop Professor Stephen Pickard was quoted as saying there is overwhelming scientific evidence about the impact of unchecked climate change.

“To our very great shame, unthinking economic growth has become the great treasure,” Pickard said. “It has captured our hearts. It has captured our pockets. It has blinded us to the wellbeing of the planet.”

Under Prime Minister Tony Abbott, coal-rich Australia, described as “being the developed world’s worst polluter per head of population,” repealed the nation’s carbon tax earlier this year.

Image Credit: Stop sign in the oilsands region. Photo by Kris Krug.

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Oil companies and fossil fuel investors seeking further developments in the Alberta tar sands have been dealt another setback with the publication of a report showing producers lost $17.1 billion USD between 2010-2013 due to successful public protest campaigns.

Fossil fuel companies lost $30.9 billion overall during the same period partly due to the changing North American oil market but largely because of a fierce grassroots movement against tar sands development, said the report — Material Risks: How Public Accountability Is Slowing Tar Sands Development.

A significant segment of opposition is from First Nations in Canada who are raising sovereignty claims and other environmental challenges, added the report, which was produced by the Institute for Energy Economics and Financial Analysis (IEEFA) and Oil Change International (OCI).

“Tar sands producers face a new kind of risk from growing public opposition,” Tom Sanzillo, director of finance at IEEFA, and one of the lead authors on the report, said. “This opposition has achieved a permanent presence as public sentiment evolves and as the influence of organizations opposed to tar sands production continues to grow.”

Opposition to tar sands unexpected

Steve Kretzmann, executive director of Oil Change International, added industry officials never anticipated the level and intensity of public opposition to their massive build-out plans.

“Public opposition has caused government and its administrative agencies to take a second and third look,” Kretzmann said. “Legal and other challenges are raising new issues related to environmental protection, indigenous rights and the disruptive impact of new pipeline proposals.”

He added anti-pipeline protests are keeping carbon in the ground, and changing the bottom line for the tar sands industry. 

“Business as usual for Big Oil – particularly in the tar sands – is over,” Kretzmann said.

The report said market forces and public opposition have played a significant role in the cancellation of three major tar sands projects in 2014 alone: Shell’s Pierre River, Total’s Joslyn North, and Statoil’s Corner Project.  

“Combined, these projects would have produced 4.7 billion barrels of bitumen that would in turn have released 2.8 billion metric tonnes of carbon dioxide (CO2) into the atmosphere,” the 28-page report said. “This is equivalent to the emissions of building 18 new coal plants that would last 40 years each.”

Growing First Nations voices take tar sands story international

“I think it’s pretty inspiring and also uplifting to see the recognition of First Nations that have been very vocal and have articulated their staunch opposition to tar sands expansion in our traditional homelands,” Melina Laboucan-Massimo, a Greenpeace Canada campaigner from the Lubicon Cree, told DeSmog.

Laboucan-Massimo and other representatives from local First Nations like Eriel Deranger from the Fort Chipewyan have been campaigning for years to bring greater awareness to the human health and environmental impacts of rapid tar sands expansion. Laboucan-Massimo said she spent a lot of energy campaigning outside of Canadian borders, speaking to parliamentarians in the U.K., across Europe, as well as to U.S. Congress and the shareholders of major companies.

“We wanted to tell the story on the outside and really put that pressure on the Canadian government to do its due diligence and be accountable to its own citizens,” she said.

“I think that’s a part of what’s been effective in this campaign of accountability, that people not only in Canada but around the world were asking what is happening in Canada? Why is Canada such a climate laggard? Why is the Canadian government not listening to the voices of their own people?”

The growing environmental movement, she said, has been better at incorporating the voices of local First Nations living on the front lines of the tar sands. The movement also now represents a much wider range of social perspectives.

“When we work in coalitions – the environmental movement, First Nations and the labour movement – there’s such a convergence of diverse voices…we’re really starting to see growing public accountability and public opposition being seen and taken seriously.”

She added the future of the tar sands under the Harper government is “tenuous” because “you can see he has a very pro-tar sands agenda,” she said. But, she added, even five or 10 years ago very few Canadians knew what the tar sands were and had little awareness of the switch from conventional to unconventional, extreme forms of energy.

“Now people are quite aware that that’s what been happening and there has been a public dialogue created on that and there has been more pressure on the government to really address the environmental concerns, the health issues and indigenous rights violations. I feel like people really are a lot more aware of these issues now than in the past.”

Keystone XL delay shows tar sands "weakness"

The report says the proposed Keystone XL tar sands pipeline is one of the most talked about North American energy and political issues of the era.

“Once thought inevitable, the project and Canada’s plan to expand tar sands production have been confronted by an accumulation of economic and political risks creating a veritable ‘carbon blockade.’”

Project delays are taking a financial and political toll on proposed tar sands projects, the report said.

“The delays and cancellations have exposed the fact that tar sands investments, once thought to be highly lucrative, are showing signs of financial weakness. With growing public awareness and market hesitancy, expansion of tar sands production in Canada will remain contested terrain for the foreseeable future.”  

The report also noted that the tar sands sector faces a growing constellation of risks as project economics become pressured by low oil prices and shrinking revenues, rising costs, smaller profit margins, tougher capital markets, transport constraints, environmental challenges and protectionist legislation.

Nine of 10 leading tar sands producers in Canada have underperformed the stock market in the last five years, it said, adding industry experts have recently downgraded their outlook for future tar sands production.

“Tar sands pipeline campaigns are a recent example of how public advocacy efforts can alter capital investment decision making,” the report said.

“The Keystone XL campaign has managed thus far to delay a final governmental decision on the project while raising public awareness about the environmental costs of tar sands development.”

“These citizen interventions have resulted in increased diligence by government agencies with public health and environmental mandates, impaired the project development process of the capital markets and mobilized a permanent, political constituency in support of alternatives to tar sands expansion.”

The report noted there was an expectation that the TransCanada Keystone XL pipeline would receive necessary approvals quickly when it was originally proposed in 2008 and be up and running by late 2011.

“Time and events changed this storyline,” the report added. “By 2011 Russ Girling, the CEO of TransCanada, said ‘There is no way we could have ever predicted that we would become the lightning rod for a debate around fossil fuels and the development of the Canadian oil sands.’”

According to a report in the Guardian, Canada has staked its energy future on a massive expansion of tar sands, which hold the world’s third largest reserve of crude after Saudia Arabia and Venezuela.

“But the huge amounts of water and solvents needed to extract oil from bitumen dramatically boost greenhouse gas output and, on latest production forecasts, will increase Canada’s CO2 emissions by 56 megatonnes by 2020,” the Guardian said.

Image Credit: People's Climate March by Zack Embree

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On July 6th, 2013, one year ago today, a train carrying oil derailed in the sleepy Quebec town of Lac-Mégantic, resulting in an explosion so wild and so hot it leveled several city blocks and incinerated the bodies of many of its 47 victims. The accident put the tiny town on the international media circuit and dragged a new social concern with it: oil trains.

Whether you call them oil trains, tanker trains or bomb trains, chances are you didn’t call them anything at all before this day last year.

Before the tragedy of Lac-Mégantic, several smaller tanker train accidents across North America had already raised alarm over the danger of transporting oil and other fuels by rail in small communities with tracks often running through city centres and residential areas.

In the wake of Lac-Mégantic, however, critics, environmental organizations, journalists and concerned communities began tracking the growing movement of volatile oil shipments across the continent.

Keeping pace with oil transport

Overall shipments of oil by rail have increased by 28,000 per cent since 2009.

In 2012 nearly 40,000 barrels of oil were shipped to the U.S. each day, although surging oil production in the Bakken Shale has simultaneously led to an increase of oil by rail shipments of crude north of the border.

In 2013 oil train accidents resulted in more than 1.15 million gallons of spilled oil. This represents a 50-fold increase over the yearly average between 1975 and 2012.

According to some, the surge in rail transport of petroleum products has outpaced regulatory oversight. Lax oversight may have contributed to the devastation at Lac-Mégantic, according to the Canadian Centre for Policy Alternatives (CCPA).

In an October 2013 report, author Bruce Campbell, the CCPA’s executive director, wrote, “In my view, the evidence points to a fundamentally flawed regulatory system, cost-cutting corporate behaviour that jeopardized public safety and the environment, and responsibility extending to the highest levels of corporate management and government policy making.”

According to Transport Safety Board of Canada data, accidents involving dangerous goods have increased since last year.

Screen grab of TSB Canada data complied by CTV News. 

Poor tank design, poorer response plan

According to CN Rail chief executive Claude Monegau, poor tank car design was “one of the most important systematic issues” leading to the tragedy in Lac-Mégantic. Earlier this year a Canadian government-commissioned rail safety group said more needed to be done to ensure the safety of oil tanker cars carrying crude through communities.

Since then the government has implemented a plan to upgrade or retire generic oil tanker cars, known as DOT-111s. In February there were roughly 228,000 DOT-111 cars in operation across North American and 92,000 of those were carrying flammable liquids.

Civil engineering expert and professor Roza Galvez-Cloutier, who examined the derailment in Lac-Mégantic, recently said no appropriate plans or equipment are in place to prevent a similar situation from recurring in Canada.

“There was an evident lack of preparation at all levels,” Galvez-Cloutier said recently in a Science Media Centre of Canada webinar reviewing the events at Lac-Mégantic. “Prevention measures, preparedness and emergency plans need to urgently be updated.”

“I think there was a panic and there was a lack of co-ordination,” she said.

At the time of the incident, firefighters were cooling oil tankers without having subdued the fire, Galvez-Cloutier recounted, adding the emergency response personnel did not know what the composition of the burning oil was.

Had they known, it’s likely they would have responded more appropriately to the fire, she said, using foam suppressants, for example.

“I know that Ultramar brought in, as a last resort, some foam to assist, but this was based on their goodwill, not a pre-planned emergency measure,” she said.

Grassroots groups respond

The increase in oil tanker accidents led a coalition of environmental organizations to create an ‘Oil by Rail Week of Action’ between July 6 and 13.

The coalition includes ForestEthics, Oil Change International, 350.org and the Sierra Club.

On Monday the groups plan to launch a ‘blast zone’ website which will make communities along oil tanker routes searchable by address.

Eddie Scher, spokesperson for ForestEthics, said the website brings together rail industry data and Google maps to make evacuations zones visible.

“It allows you to plug in your address and see where you sit in relation to this Google map blast zone,” Scher told DeSmog by phone.

“And what you find, which isn’t that surprising, is that these trains — mile long trains carrying 3 million gallons of oil — go right through the centre of almost very major city in U.S.”

“Our rail system was designed to carry goods, not carry hazardous materials through city centres,” he said.

Major cities including L.A., Oakland and Chicago have oil trains running through them.

The database, which is searchable for both U.S. and Canadian addresses, is designed to bring information about oil train transport to the public, something Scher says should already be available to the communities along rail transport lines.

“It’s pretty outrageous that we’re the ones to have to do this. We’re happy that emergency responders have this information but everyone should know what’s going on.”

“We’re working on the numbers right now, but it’s easy to say with the information we have that 10 of millions of Americans live in that blast zone,” he said.

“The amount of the populations that is threatened is huge. What we’re really trying to do is to let folks see what is going on.“

Image Credit: Transportation Safety Board via flickr.

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In the coming months, European Union environment ministers are set to vote on the proposed Fuel Quality Directive (FQD), which would label tar sands oil as 'dirty' because of its higher GHG emissions in comparison to other fuels, bringing the Harper government and Alberta's years-long lobbying against the law to a decisive point.

As Jason Fekete writes for Postmedia News, this is "a critical few months for the future of Canada's oilsands industry and the environmental movement that has targeted the development."

It's hardly surprising that two senior Alberta government ministers depart Saturday "for a weeklong trip to Europe to trumpet what they say is Alberta and Canada's solid environmental credentials, and have EU countries reject a proposal that would "discriminate" against oilsands-derived fuels," as Postmedia News reports.

Canada has been actively fighting the EU proposal for years now for its labelling of tar sands oil as leaving an especially high carbon footprint. A July 2011 report by environmental group Friends of the Earth Europe documented over 110 lobbying events organized by the Canadian government on the tar sands and FQD between 2009 and 2011.

For example, in October 2011, Natural Resources Minister Joe Oliver wrote to the EU Commissioner for Energy, Gunther Oettinger, warning that "if unjustified, discriminatory measures to implement the FQD are put in place, Canada will not hesitate to defend its interests."

In December 2011, David Plunkett, Canadian Ambassador to the EU, wrote to European Commissioner for Climate Action Connie Hedegaard saying that "Canada will not accept oil sands crude being singled out in the Fuel Quality Directive." He added that the Canadian government would "explore every avenue at its disposal to defend its interests, including the World Trade Organisation."

Hedegaard has called the FQD a "science-based and non-discriminatory proposal," and stressed that “studies on the lifecycle GHG intensity of various fuels have been conducted" for it, in a 2011 letter to Minister Oliver.

A 2013 briefing by Friends of the Earth Europe details more recent instances of Canada's lobbying for the tar sands in Europe, including sending two Albertan government ministers on tour in Europe this January to hand out fliers assuring the 11 countries visited that Canada was showing "global leadership in the fight against climate change" despite leaving the Kyoto Protocol and pushing for the tar sands.

The aggressive lobbying efforts by Canada and its EU supporters like the UK have continued unabated since reduction targets were decided on in 2009, forcing the European Commission to undertake an Impact Assessment on the FQD and delaying the vote on the proposal from June 2012 to later this year.

"It has got to be fair, it can't be discriminatory, and it should be based on the facts and the science – and this is not. This is my definition of bad policy," Minister Joe Oliver said of the FQD in an interview last Friday.

Oliver made a similar claim that the proposal "is not based on science and so discourages disclosures and will not achieve its stated objectives," last month in an email to the Canadian Press.

The repeated refrain from the Canadian government that the FQD is not scientific doesn't address the fact that the proposal is based on a 2011 Stanford University study commissioned by the European Commission. The study found that average lifecycle GHG emissions from tar sands oil are 23 per cent higher than conventional fossil fuels.

Image: 'Upstream greenhouse gas (GHG) emissions from Canadian oilsands as a feedstock for European refineries,' by Adam R. Brandt.

Since then, research by NGO Oil Change International has indicated that emissions from tar sands oil could be even higher than thought before, because of emissions released by the burning of tar sands refinery byproduct petroleum coke, or petcoke, which is also used as a cheap fuel.

According to the Stanford study, "GHG emissions from oil sands production is significantly different enough from conventional oil emissions that regulatory frameworks should address this discrepancy with pathway-specific emissions factors that distinguish between oil sands and conventional oil processes."

The Pembina Institute also published a June 2013 report confirming that "average oilsands production is significantly more GHG-intensive than conventional oil production," and calling tar sands GHG emissions "the fastest growing source of climate change pollution in Canada."

The FQD sets a mandatory six percent reduction in GHG emissions from transport fuel suppliers by 2020, and assigns default emission values to different fossil fuel feedstocks (the raw material from which the fuels are made).

Tar sands oil production requires more energy than conventional fossil fuels because of its extraction and refining process from bitumen. Because of this, the FQD would give tar sands oil a higher default emission value, making it unattractive to European fuel suppliers, who would be hit with financial penalties and higher carbon offsets if importing it.

The Harper government's plan of making Canada a global energy superpower by opening up the tar sands oil reserves via international trade would be adversely affected by the FQD, which guarantees that the federal government and the Albertan oil industry will continue lobbying against it, and for the tar sands, in full force in the months to come.

Postmedia News reports that EU environment ministers are set to vote on the FQD in mid-October or mid-November. If approved, the proposal would need to be ratified by the European Parliament in 2014.

Image Credit: Pembina Institute / Flickr  

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The misconception with 'west-to-east' pipeline proposals like Enbridge’s Line 9 or TransCanada’s Energy East is shipping western Canadian oil to eastern Canada means ‘Canadian oil for Canadian refineries.’ This assumption overlooks the fact eastern Canadian refineries cannot refine a certain type of Canadian oil – tar sands bitumen.

Bitumen is the heavy unconventional oil found in the Alberta tar sands (also called oil sands). Only a specialized refinery can process bitumen and turn it into refined products such as fuels. Few refineries in Canada can do it. None of the refineries in eastern Canada can refine large quantities of bitumen.

TransCanada and Enbridge claim their west-to-east pipelines will transport mainly conventional oil and only small amounts of bitumen. This is unlikely to be true in the long term as conventional sources of oil dry up in Canada and bitumen production continues to increase.

If no eastern Canadian refinery makes the massive investment to outfit their operation to refine bitumen, Line 9 and Energy East are destined to ensure more bitumen will flow to markets overseas, not Canadian refineries.

“Building more tar sands pipelines will lock Canada into a highly polluting carbon-based economy for decades,” says Adam Scott, a climate and energy program coordinator for Environmental Defence Canada based in Toronto.

“We cannot support any pipeline that furthers the ongoing reckless and unchecked expansion of the tar sands,” Scott told DeSmog Canada.

TransCanada's proposed Energy East pipeline route

Refineries Require an Expensive Coker Unit to Refine Bitumen

Bitumen is not the black liquid that many people think of when they think of oil. It is low-grade oil with the consistency of peanut butter and riddled with impurities.

Bitumen is high in carbon and low in hydrogen. High quality oils such as light sweet conventional crude oil are just the opposite. Much of the carbon in bitumen needs to be stripped in order to convert bitumen into refined products that can be sold.

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Refineries usually require a coker unit to remove the carbon from bitumen. To remove the carbon, bitumen is heated in large steel coke drums at higher temperatures (480 degree Celsius) and for longer periods of time than typical conventional oil refinery is capable of. Hydrogen is added afterwards to make bitumen more like a liquid-fuel.

Suncor’s Montreal Refinery May Refine Bitumen if Line 9 is Approved

A few refineries in Alberta and one in Ontario have coker units. A massive investment $2 billion is required to install a coker. None of the three eastern Canadian refineries – Suncor, Valero, and Irving – have publicly announced their intentions to make this investment.

“Suncor is the most likely to install a coker because the company has tar sands projects in Alberta. Irving and Valero do not,” says Lorne Stockman, research director at Oil Change International (OCI) in the US.

“There is plenty of lighter, easier to refine oil coming out of new sources such as Bakken oil shale in the US. Irving and Valero will probably to stick to processing lighter oils for the time being,” Stockman told DeSmog Canada.

Neither Valero nor Irving appears interested in buying a coker at the moment. Irving, which has equipment to process small amounts bitumen, is investing in a $300 million marine terminal in Saint John, New Brunswick to export oil from the proposed Energy East pipeline. Valero announced earlier this year oil from Texas will be sent to its Quebec City refinery.

“Suncor may make more of a profit supplying its Montreal refinery with bitumen than by selling bitumen to its competitors,” says Stockman. 

There is speculation Suncor will announce its plans to construct a coker unit at its Montreal refinery after the National Energy Board (NEB) – Canada’s independent energy regulator – makes its decision on Line 9. The NEB decision on Line 9 could come as early as January 2014.

The US Has the Most Capacity to Refine Bitumen in the World

The probable destination of Energy East's or Line 9's bitumen is a refinery somewhere in the US, although some bitumen refining capacity does exist in Europe as well as China.

In the US, 59 of the 134 refineries are equipped with coker units. Approximately 30% of the US's bitumen refining capacity is in the nine Gulf of Mexico refineries TransCanada seeks to supply through its controversial Keystone XL pipeline. Sea-faring oil tankers traveling from Saint John, Quebec City or Montreal could also access these refineries.

Pet coke: the Coal Hidden in the Tar Sands

A major problem with refining bitumen is it has a rather nasty byproduct called petroleum coke or ‘pet coke’. Pet coke contains most of the heavy metals, sulphur and other impurities removed from bitumen during the coking process. Approximately 15% of a barrel of bitumen will become pet coke.

The research and clean energy advocacy group Oil Change International describes pet coke as “the coal hiding in the tar sands” because it has emerged as an inexpensive alternative to coal since the bitumen boom in Alberta began ten years ago.

“Pet coke is providing coal-fired power plants with a cheaper and dirtier source of fuel. It is breathing new life into the industry, which is cause for concern as the world desperately tries to reduce its carbon emissions output,” says Stockman of OCI.

The majority of pet coke produced in North America is sold to Asia and Latin America where regulations on sulphur releases from coal-fire power plants are lax. Pet coke produces 5-10% more greenhouse gas (GHG) emissions than coal per unit of energy.

In Canada, pet coke is largely being stockpiled in Alberta. There are some exports of Canadian pet coke to Asia via ports near Prince Rupert, British Columbia.

Last August, the mayor of Detroit ordered the removal of pet coke piles sitting uncovered along the Detroit River. The piles were three-storeys tall. Dust particles containing the toxic heavy metals in pet coke were blowing off the piles and into the air and river.

The pet coke piles were from Marathon's refinery in Detroit. The refinery began refining bitumen in November 2012.

Oxbow Corporation is one of the largest sellers of pet coke in the world. The company is owned by William Koch, brother of the infamous pro-fossil fuels billionaires Charles and David Koch.

Image Credit: Northern Rockies Rising Tide, TransCanada, Enbridge, Oil Change International.

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