Forgotten amid pipeline war brouhaha, new study details failure of Oilsands Big Five to control emissions

Posted on February 01, 2018, 1:40 am
8 mins

PHOTOS: There’s no Plan B! And Alberta’s five largest oilsands producers have set no targets let alone taken action to get their emissions in line with the Paris Climate Agreement. (Illustration: Parkland Institute.) Below: Parkland researcher and study author Ian Hussey (Photo: Parkland Institute), Parkland researcher David Janzen (Photo: Facebook), Alberta Premier Rachel Notley and B.C. Premier John Horgan.

Almost completely forgotten amid the brouhaha yesterday about Alberta’s response to the B.C. Government’s plan to restrict the flow of diluted bitumen through its territory was the new report from the Parkland Institute that shows none of Canada’s Big Five oilsands producers have even set targets to bring their emissions in line with the 2015 Paris Climate Agreement that Canada’s federal government has signed on to.

Well, timing is everything in news, and there was no way the researchers at the University of Alberta-based research institute could have known a sensational internecine Pipeline War was going to break out yesterday along the Rocky Mountain Cordillera between the social democratic governments B.C. and Alberta. Parkland and the Corporate Mapping Project went ahead anyway and released What the Paris Agreement Means for Alberta’s Oil Sands Majors with its dire analysis of “the social cost of carbon.”

The report’s conclusion that the five giant oilsands companies are causing as much as $2 trillion in pollution is probably more significant for Alberta in the long run than the political posturing yesterday by the NDP governments of B.C. Premier John Horgan and Alberta Premier Rachel Notley.

The report by researchers Ian Hussey and David W. Janzen argued this means the Big Five – CNRL, Suncor Energy, Cenovus Energy, Imperial Oil, and Husky Energy – are significantly overvalued because of their “carbon liabilities,” which the researchers defined as “an estimate of the social and environmental costs of carbon emissions embedded in fossil fuel reserves.”

“Even under the most conservative carbon cost scenario used in the report, the carbon liabilities contained in the reserves of the Big Five outweigh the total value of the corporations themselves, and taken together are greater than the GDP of Alberta,” said Mr. Hussey, the report’s lead author.

“The enormous cost associated with these reserves being combusted underscores the simple reality that business as usual is not an option for these companies,” he added. “Unfortunately, we’re not seeing that reality reflected in their actions to date.”

It needs to be noted that the problem of the social cost of carbon that is eventually going to have to be paid by someone is not exactly news to either environmentalists or the oil industry. But trying to put a number to it – even if it’s one that’s too big for normal mortals to grasp – is important work.

All of the Big Five except Imperial Oil have acknowledged the Paris Agreement, Mr. Hussey noted. But not one has set targets or implemented material action in line with emissions reductions required to limit global temperature increase to 2 degrees Celsius. “On the contrary, all five corporations project increases in their total emissions for years to come.”

Mr. Hussey argued that “if all of the Big Five’s reserves are ultimately burned, the billions of dollars in carbon liabilities will be paid by the public and governments through the cost of dealing with extreme weather events, climate change mitigation, and health impacts.”

He concluded: “If some of these costs are instead reflected accurately in the bottom lines of these corporations, we’ll start to see the kind of responses from the Big Five – which has to include leaving some of their reserves in the ground – that the reality of climate change demands.”

Right now – in Alberta generally and in oil industry circles – the idea of leaving reserves in the ground is viewed as pure insanity. Mark my words, though, smart legal strategists in Canada and the United States are hard at work developing ways to hold fossil fuel companies liable for the costs of the environmental damage they are imposing on communities and countries around the world.

As the report says, “most of the profits accrued by the Big Five and their shareholders, who are mostly not Canadians (as of July 2017), are ‘paid’ by the public and the environment through coastal damage, extreme weather events, decreased food production, and negative health effects.”

Shareholders and some governments may view this as crazy talk right now – just as Big Tobacco once did – but this message is bound to be brought home eventually to large fossil fuel companies that profit to the tune of hundreds of billions of dollars while lobbying to slow down responses to climate change, to which they are contributing.

And work like that done in yesterday’s Parkland report helps frame the social costs of carbon in terms that are meaningful to ordinary Canadians – including pipeline advocates from Alberta and pipeline enemies in B.C. alike, presumably.

I don’t know if it worries other Albertans that the report’s lowest estimate of the five companies’ total carbon liabilities, calculated at $50 per tonne, is $320 billion, higher than Alberta’s total gross domestic product of $309 billion, but, by God, it should. The high estimate of nearly $2 trillion was reached by calculating the liabilities at $200 per tonne.

What the Paris Agreement Means for Alberta’s Oil Sands Majors calls on fossil fuel corporation shareholders and governments to demand increased transparency from the Big Five. This should start with public disclosure of how they model their emissions and creation and disclosure of robust and science-based emissions-reductions targets that in line with Canada’s international commitments, it says.

For the time being, presumably, the inclination of the industry will be to put beans in its ears and continue to call for growth – abetted by the Alberta government’s friendly emissions cap, which allows dramatic industry growth between now and 2030 despite the fact that would make it impossible for Canada to meet its Paris Agreement commitments.

The Corporate Mapping Project is a six-year research and public engagement initiative jointly led by the University of Victoria, the Canadian Centre for Policy Alternatives B.C. and Saskatchewan Offices and the Parkland Institute. It is supported by the Social Sciences and Humanities Research Council of Canada.

7 Comments to: Forgotten amid pipeline war brouhaha, new study details failure of Oilsands Big Five to control emissions

  1. Dio

    February 1st, 2018

    And then there is the 50 year plan to “re-mediate” the tar sands tailing ponds. Maybe its a 100 year plan now.

    Reply
  2. Sam Gunsch

    February 1st, 2018

    Ed Finn just reported on another corporate subsidy report (January 2018) that didn’t make headlines… AB taxpayers subsidize corporations at the highest rate… Big surprise, eh. Note the report is from the RW… U of C’s pro-market/business folks who say this: ‘constitute a colossal waste of government revenue.’ Oil/gas get the most $$.

    excerpt: ‘On a per-capita basis, Alberta provides the largest financial bonus to its companies, amounting to $640 for every resident of the province.’

    excerpt:
    ‘ A study from the University of Calgary’s School of Public Policy published in January reports that our federal government and the four largest provinces spend $29 billion a year subsidizing business firms.

    https://www.policyschool.ca/wp-content/uploads/2018/01/Business-Subsidies-in-Canada-Lester.pdf

    The study’s author, John Lester, says that half of these huge subsidies fail to improve economic performance and therefore constitute a colossal waste of government revenue.

    “And because nearly one-third of all such subsidies just go generally to support specific industries or regions rather than to enhance economic development,” he added, “the proportion of questionable spending rises to 60 per cent of the total.”

    ‘Of the $29 billion in government handouts that corporations receive annually, $14 billion comes from the federal government and $14.6 billion from the provinces of Ontario, Quebec, Alberta and British Columbia. On a per-capita basis, Alberta provides the largest financial bonus to its companies, amounting to $640 for every resident of the province.

    The most extravagant and harmful subsidy, by far, is the $3.3 billion a year that our federal and provincial governments bestow on the large oil and gas producers. This is an enormous financial boost to the worst polluters of the environment. In effect, it pays them to keep spewing the carbon dioxide emissions that are causing global warming.’

    Ed Finn
    January 26, 2018

    http://rabble.ca/news/2018/01/huge-wasteful-subsidies-corporations-deplete-funds-social-programs
    rabble.ca

    Reply
  3. Albertan

    February 1st, 2018

    Being of Dutch background, and being raised with the ‘money talks’ adage, it really makes me wonder when the
    ‘hit between the eyes’ moment would occur, for some, as to when the costs of mitigating severe weather damage
    due to climate change, registers. In Alberta, recently, this includes flooding, wild fires, drought, wind and hail, to the tune of $billions in damage over the last few years along with ever increasing insurance claims and costs.
    For the naysayers re: climate change, perhaps it would be a good idea to read this:
    “The Dutch Have Solutions to Rising Seas. The World Is Watching. In the waterlogged Netherlands, climate change is considered neither a hypothetical nor a drag on the economy. Instead, it’s an opportunity.”
    http://www.nytimes.com/interactive/2017/06/15/world/europe/climate-change-rotterdam.html
    In other words, The Netherlands, largely being below sea level, cannot ignore the effects of climate change. To do so, for them, would be folly, and more brashly, utter stupidity.

    Reply
  4. Chris

    February 2nd, 2018

    If five companies in Alberta are responsible for $2-trillion in climate costs then China’s costs must be in the quadrillions. I take any numbers from any Parkland Institute report with the same huge grain of salt as any numbers from a Fraser Institute report. I think we should ask a non-partisan third party for some sober analysis.

    Reply
    • February 2nd, 2018

      As far as who should you trust more, the Fraser or Parkland institutes, I will say this. Look to what each one is trying to convey. The Parkland institute is looking out for the environment and populations generally. The Fraser institute looks after business and money.

      Reply
  5. Farmer Brian

    February 2nd, 2018

    First off 80-90% of the C02 is created when fossil fuels are burned not when they are produced. If there was no market or demand for the oil it wouldn’t be produced. So who really is at fault the producer or the consumer? Furthermore, if the oilsands are shutdown the oil will come from somewhere else, probably by pipeline from the U.S. or by tanker is that better?

    Now let’s look at a couple of examples of the direction being promoted by those who believe we can live without fossil fuels. Last night I looked at the AESO supply and demand report, it is -23 outside, typical Alberta winter night, the 20 wind farms in Alberta with a total generation capacity of 1445 MW were producing 0. This morning by 7:47 they were up to a whopping 18 MW or 1.25% of production capacity. Listened to an interview the other day on my favourite talk show of a employee of the Pembina institute. There were a couple ideas he was promoting. First was that we could produce 80-90% of our electricity from renewables. After watching the AESO supply and demand report for a little over a month I have seen the windmills produce anywhere from 0 to 1100 MW. If 80-90% percent of our generation capacity is turned over to renewables what do we do on the days when windmills are producing nothing? His second point was that we should all heat our homes with electricity. Went on an Atco website comparing the cost of different home heating sources and the cost to heat your home per year. Using a mid efficiency natural gas furnace(80% AFUE) and natural gas at $6.75 a gigajoule(my cost including C02 tax) it projects a cost of $600.75 per year. To heat the same theoretical home with electricity with a price if 20 cents a kwh(what I pay all in not including gst) would cost $3981 per year, 6.63 times as expensive as natural gas!

    So I agree David, the large companies producing oil need to improve their operations but in the climate we live in the alternatives don’t make sense yet. One other thought, on the AESO report this morning we were bringing in 192 MW of coal fired power from Montana. Good policies of our Alberta government, Battle River sits idle putting Albertans out of work while we import power from the U.S. Environmentalists would have us do the same with oil. Enjoy your day..

    Reply
  6. Geoffrey Pounder

    February 2nd, 2018

    Corporations may not serve the public interest — but democratic governments must.
    By signing on to Big Oil’s agenda for indefinite oilsands expansion, Notley’s NDP have not only sabotaged Canada’s emissions reduction program but also betrayed future generations, for whom we manage planet Earth in trust.
    Unconscionable.

    Reply

Leave a Reply

  • (not be published)