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Politics versus the future

Canada’s Orwellian energy standoff

This op-ed by David Hughes, author of the Parkland Institute/Canadian Centre for Policy Alternatives report Canada’s Energy Outlook: Current Realities and Implications for a Carbon-constrained Future appeared in the May 14, 2018 Vancouver Sun.

These are strange days, indeed.

Our federal government, which has signed on to the Paris Agreement, has also come out swinging in support of the Trans Mountain pipeline expansion. And we continue to be told that increasing oil and gas production and meeting emissions reduction targets are mutually compatible goals.

This thinking is also reflected in Alberta’s ‘climate leadership plan,’ which allows oil sands emissions to grow by 40 per cent and places no restrictions on oil and gas production outside of the oil sands.

Even with that cap in place, National Energy Board oil and gas production projections show that upstream emission will increase enough that a 49 per-cent reduction in emissions from the rest of Canada’s economy will be required to meet our Paris targets.

Notwithstanding the difficulty in making such radical reductions in a short timeframe, Justin Trudeau and Rachel Notley have both dug in on the “need” to build the Trans Mountain pipeline expansion, going so far as to threaten that a failure to build the pipeline could result in Alberta’s extremely modest ‘climate leadership plan’ being cancelled.

Let’s examine this “need.” Even if oil and gas production is allowed to grow per the National Energy Board’s projections, there are two other approved export pipelines (Line 3 and Keystone XL), that without the Trans Mountain pipeline expansion would provide sufficient pipeline export capacity for foreseeable production growth, and access to world prices on the Gulf Coast.

The oft-repeated ‘Canada has only one market’ rhetoric ignores the fact that oil is a globally priced commodity, that the U.S. Gulf Coast has the world’s largest concentration of coking refineries able to optimally refine Canadian heavy oil, and that there is likely a price discount, not a premium, from exporting to Asia, given transportation costs.

But building any of these pipelines ignores the fact that upstream oil and gas emissions under Alberta’s plan, given National Energy Board projections, will account for more than three quarters (76 per cent) of Canada’s emissions by 2040 and 100 per cent by 2050—if emissions reduction targets are to be met.

Some environmental groups assert that it will be relatively easy to swap out fossil fuels for renewable energy—wind, solar, biomass, biofuels and geothermal energy. That is unlikely given the scale of such a transition. Renewable energy can certainly be scaled up a lot, along with geothermal energy for heating and cooling, but we will likely need fossil fuels for decades to come as we make the transition.

That’s because solar and wind are intermittent, on an hourly and seasonal basis, and the energy they produce – electricity – makes up only 17 per cent of current delivered energy in Canada.

They need to be backed up by dispatchable sources like natural gas, or with storage, to provide reliable power. Solar and wind now provide less than 5 per cent of Canada’s electricity generation, and much less of total delivered energy.

All of which means we can’t make the transition overnight, and the longer we delay, the more difficult it will become. It also means we can’t simply plan to swap one source of plentiful energy for another, without reducing consumption. Mass transit, building codes, building retrofits and other efficiencies will be important.

Industry extracts the lowest-cost, highest-quality, least emissions-intensive fossil fuel resources first. Knowing that fossil fuels will likely be needed for a long time to come, and that producing them is very emissions-intensive, Canada’s current de facto strategy of selling them off at rock bottom prices with declining revenues to government makes little sense.

Governments telling us we must increase emissions from oil and gas production in order to meet emissions reduction targets would make George Orwell proud. Canada needs a viable energy strategy that will meet long-term energy security needs and emissions reduction commitments. Investments in political capital, to the exclusion of common sense and a view beyond the next election, seem to have relegated us to Orwell’s world.

David Hughes

David Hughes is an earth scientist who has studied the energy resources of Canada and the US for more than four decades, including 32 years with the Geological Survey of Canada as a scientist and research manager, where he headed unconventional gas and coal research. His research focus has been on unconventional fuels, primarily shale gas and tight oil, but also coal, coalbed methane and other unconventional sources, including oil sands, coal gasification and gas hydrates. Hughes is currently President of Global Sustainability Research Inc, a consultancy dedicated to research on energy and sustainability issues.

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