Thursday, October 05, 2006

Shifting the Burden

For some time, it's been evident that Canada has a problem meeting its greenhouse gas emissions targets under the Kyoto Protocol, to which it is a signatory. That problem originates in the oil sands deposits of northern Alberta province, which are being exploited at a rapidly increasing rate to meet growing North American and global oil demand. Current oil sands production of a million barrels per day is likely to double in the next 10 years. Until now, it wasn't obvious how Canada would respond to this disconnect, whether by clamping down on the oil sands operations that have turned Calgary into a boom town, by purchasing offsetting emissions credits, or altering its Kyoto commitments. Today's Washington Post reports on a different approach, in which the burden of reducing emissions would be shifted to Canada's auto industry in Ontario, by imposing California-style emissions regulations on cars. The politics of such a shift look daunting, and it's hard to imagine that at least some of the responsibility for these emissions won't end up with the oil producers.

Unlike conventional crude oil, which comes out of the ground under its own pressure, or with help from pumps, the oil sands must be mined and heated to separate the oily part from the sand. This requires the expenditure of between 500,000 and 1.2 million BTUs of energy per barrel extracted, the equivalent of 3.5 to 8.4 gallons of oil for each 42 gallon barrel, depending on which of the two available techniques are appropriate for each deposit. All of this extra energy input generates greenhouse gas emissions, before the oil even goes into the pipeline.

As the article notes, the oil sands operators have an option for reducing emissions themselves, by capturing and sequestering the carbon dioxide produced from burning natural gas to make the steam and process heat used in oil sands extraction and processing. But sequestration isn't cheap or fully proven, though it looks very promising. And although there are plenty of oil and gas reservoirs in Alberta into which to inject the CO2--with some offering enhanced oil recovery benefits in the bargain--requiring oil sands to be emissions neutral would add to the cost of an already expensive oil substitute and reduce the ultimate extent of production, unless oil prices remained at or above current levels.

The other interesting aspect of this situation is that it's the reverse of what we see occurring in the US. Here, states such as California and New York are seizing the initiative from a cautious federal government, pushing through greenhouse gas emissions caps and trading schemes, and setting standards for new car emissions. Although the Canadian government isn't wrong in thinking that it can obtain the necessary emissions reductions from any sector or province it chooses, because of the global equivalence of these emissions, that may not turn out to be politically viable. I'd be interested to hear what my Canadian readers think about this idea.

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