Harper rolls dice to play oil sands 'wild card'
Mar 02, 2009
Tyler Hamilton
ENERGY REPORTER
Canada's oil and gas sector is a crucial engine of our economy and isn't going away, so any technologies that help reduce or capture emissions are both welcome and necessary.
But can these technologies help us right now, particularly to justify rapid expansion of oil-sands projects? And, taken alone, are they enough?
Don't bet on it. Climate expert James Hansen, director of NASA's Goddard Institute for Space Studies, got it right earlier this month when he called the oil sands a climate-change "wild card" that shouldn't be played. "You just can't do it, that's what politicians and international leaders have got to understand."
Canada, however, is playing that card. It's gambling that technology will make sure the house wins.
But here's the rub: Prime Minister Stephen Harper is delusional if he believes that capturing carbon dioxide from coal plants and oil-sands operations and storing it underground is going to have a material impact on reducing greenhouse-gases over the next decade, let alone the next two decades.
Not because the technology doesn't work or isn't safe, which is still up for debate, but because it's too expensive and risky to deploy on the scale that's required.
The thing is, Harper isn't really delusional. He's just greenwashing, which according to Wikipedia occurs when "significantly more money or time has been spent advertising being green."
Harper will know, if the economist in him has done his homework, that there are no real incentives for oil and gas companies to pay for the deployment of carbon capture and storage (CCS) systems. Sure, putting a price on carbon might nudge them to dabble, but large-scale deployment won't happen if the price on carbon isn't high enough.
And there's a strong chance it won't be, at least not before 2020. New York-based New Energy Finance, a consultancy that specializes in carbon pricing, says reduced economic activity over the past year has already led to a significant decrease in U.S. emissions as fossil fuel and electricity use falls.
Given this – and turbulent economic times – it's unlikely that the U.S. Congress, despite the wishes of President Barack Obama, will have the stomach this year to pass legislation to create a stringent cap-and-trade program, which would ultimately set the standard for Canada.
A cap-and-trade program with relatively soft targets is much more realistic. New Energy Finance estimates that carbon pricing under such a regime would likely start at $10 (U.S.) per tonne of CO2 in 2012 and climb no higher than $15 up to 2020.
Milo Sjardin, head of the consultancy's North American research, says carbon prices alone simply won't be high enough under this scenario to spur commercial-scale deployment of CCS. The industry, in other words, will need big government handouts.
Depending on who you ask, the price of these systems will cost anywhere from $50 to $100 per tonne of CO2 that can be captured and stored. By comparison, the C.D. Howe Institute estimates it costs anywhere from $30 (Canadian) to $50 per tonne of avoided CO2 to deploy most forms renewable energy, including wind and solar thermal systems.
Despite these more affordable and nearer-term energy options, the Conservative government continues to tout CCS as Canada's single-most important "clean energy" investment.
Harper and his ministers do this without mentioning that carbon capture isn't effective for most oil-sands emissions.
Just last week, Environment Minister Jim Prentice – talking like the industry minister he really is – had this to say in response to a National Geographic feature that was highly critical of Canada's oil-sands push: "The answer to all of this is technology, investments in technology, and that's why we'll be working together with the United States to that end."
Prentice, who was dismissive of the article, cited Canada's "clean energy dialogue" with the U.S. like it was some kind of magic mechanism that will make everything okay.
What he didn't say was that the agreement signed with Obama on Feb. 19 is singularly focused on "near-zero-emission" coal plants. It doesn't once mention the word "oil" or the term "oil sands."
But even on the topic of coal, Harper and Prentice never mention that retrofitting existing coal plants with CCS technology will only capture about 10 per cent of CO2, or that the technology decreases the efficiency of coal plants – meaning more coal must be burned to get the same amount of power, which is great news for coal mining companies.
Instead, Canadians are given the impression that CCS is a silver bullet that's just around the corner, a message that's supported by the oil industry's public-relations juggernaut.
Meanwhile, as other governments – including Ontario – push forward on renewables and carbon-trading systems with hard caps on emissions, the feds increase spending on CCS, cut support for renewables, and lobby the United States for softer "intensity-based" emission targets.
Has Harper ever once talked about the potential for using geothermal and solar thermal energy to offset natural gas use in the oil sands? No, even though it can be done sooner in areas of the oil sands where CCS doesn't work well. And rather than simply capturing and hiding emissions, these renewable options avoid emissions altogether.
Obama gets that. He talks about the potential of clean coal and CCS, but read every one of his speeches and renewables and conservation come first, not as some kind of calculated afterthought. It's why Ottawa and Edmonton might get burned if they continue to assume Obama's commitment to wean America from Venezuelan and Middle Eastern oil means increased dependence on the oil sands.
Reality check: Go to the White House website and you'll find Obama's real goal: "Within 10 years save more oil than we currently import from the Middle East and Venezuela combined."
The word used here is "save," not "shift." Call it unrealistic if you want, but Obama has made it clear that he wants to reduce U.S. oil use by switching to electric cars, increasing fuel economy standards in gas-powered vehicles and establishing a national low-carbon fuel standard.
America will still need Canadian oil, but not as much as some might think.
In effect, under an Obama administration, America is no longer in denial. Having acknowledged its addiction to oil, the United States is checking itself into rehab.
Canada's steadfast position? Renovate the crack house, use cleaner needles and continue feeding a nasty global habit.
Surely we could broaden that narrow, dangerous vision.
