By Martha Hall Findlay and Trevor McLeod
In the Globe and Mail
March 1, 2017
The world needs to take serious action to reduce global greenhouse-gas emissions and keep global temperature increases below 2C above pre-industrial levels. We agree on that.
But here’s the thing.
Keeping oil sands in the ground and stopping new pipelines will actually increase global GHG emissions. It sounds counter-intuitive, but bear with us.
The story starts with global energy forecasts. Even if there is very aggressive adoption of electric vehicles and renewable energy technologies – which we wholeheartedly support – the world will use more oil each year through at least 2040. According to the International Energy Agency (IEA), if the world goes beyond the aggressive commitments made in Paris and achieves the 2C global goal, then oil demand would fall by 2040. Yet, oil demand will remain high for years after that.
And, since there is no shortage of oil reserves in the world, oil won’t disappear on its own any time soon. The world will use more oil even if pipelines are stopped and oil sands remain in the ground.
But, you say, oil sands need to stay in the ground because they are dirtier than other crudes. That used to be true.
In 2014 – on a well-to-wheel basis – the average oil sands barrel emitted between 6 per cent to 9 per cent more GHGs than the average barrel consumed (refined) in the United States. This number has come down over the past two years in existing facilities primarily because oil-sands projects are using less energy to produce the same amount of oil.
In fact, newer projects are proving that oil sands can compete on a low-carbon basis. The Paraffinic Froth Treatment (PFT), for example, brings oil sands GHG emissions close to the average crude; it has a low boiling point (so it requires less heat and steam) and it eliminates the need to build upgraders.
According to a 2014 IHS Markit report, the GHG intensity of oil sands crudes are the same as that of 45 per cent of crude oils supplied to U.S. refineries in 2012. Two-thirds of the crudes in this range came from Latin America, Africa, the Middle East and some U.S. domestic production. Each new oil-sands facility produces less GHG-intensive product and, ironically, it is this newer oil that would use the pipelines being protested.
If U.S. refineries – which consume heavy oil – were to take more production from the oil sands, it would most likely displace a similar crude oil with a GHG intensity in the same range. It would not replace the average U.S. barrel. If, for example, an oil-sands barrel replaced a Venezuelan Petrozuata barrel, there would be a net GHG benefit as the Venezuelan barrel has a GHG intensity that is higher than the average oil-sands barrel – and significantly higher than oil from newer oil-sands projects.
Alberta’s climate policies – which are very stringent compared with other oil producing regions – create additional incentive to drive down oil-sands emissions. Alberta now has a 100MT cap on oil-sands emissions and a $30/tonne carbon price that pushes all oil-sands facilities to perform at a level already achieved by high-performing facilities. There should be little doubt that these twin policies will decrease the carbon intensity of oil-sands facilities.
While in the past it might have made sense to protest pipelines and oil-sands projects for climate reasons, it doesn’t make sense any more.
Demand for oil and gas will remain strong for years to come; we are nowhere near peak oil supply; not all barrels of oil are created equal; new oil-sands production is cleaner than both existing oil-sands production and competing crudes; Canada is one of the only oil producing jurisdictions in the world to truly focus on reducing the GHG intensity of its barrels.
Efforts to keep the oil sands in the ground by stopping pipelines will actually increase global GHG emissions. At a minimum, oil sands will be replaced by heavy crudes with near the same carbon intensity and, since Canada has an emissions cap and incentives that other heavy oil suppliers do not, over time Canada is going to be lower carbon than the alternatives.
It is time to end the charade. Pipelines and oil-sands opposition are not a good proxy for climate action.
If we actually want to keep global temperatures below 2C above pre-industrial levels, we need to get beyond entrenched positions and focus on tackling climate change together.
As long as there is demand for oil, oil will be produced. And Canada’s oil sands oil is increasingly a better choice for climate. By far the biggest change we can all make to reduce GHG emissions is to focus on consumption and demand.
Martha Hall Findlay is the CEO of the Canada West Foundation; Trevor McLeod is the director of the Natural Resources Centre at the Canada West Foundation.