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Numbers on energy industry growth, climate commitments don’t add up: report


Edmonton – Canada can’t reach growth projections for the energy industry as well as meet its greenhouse gas commitments without damaging the rest of the economy, a study suggests.

David Hughes, former research director at the Geological Survey of Canada, says other industries will have to reduce emissions by huge margins if Canada tries to expand oilsands and LNG exports while living up to the climate change promises it made in Paris.

“If you factor in the expansion that’s planned in oil and gas production, it’s pretty difficult to see how you can cut the rest of the economy’s emissions by 55 per cent without destroying the economy in the process,” he said.

Hughes, who did the study for the University of Victoria, the Canadian Centre for Policy Alternatives and the University of Alberta’s Parkland Institute, also questions whether Canada needs new pipelines to move oilsands products to coastal terminals to get the best price for them.

An industry spokesman said Hughes relied on out-of-date information and didn’t account for innovation.

Hughes combined National Energy Board growth projections with the Alberta government’s cap on oilsands emissions and British Columbia’s plans for up to five new liquefied natural gas terminals to determine how much greenhouse gas the sector would release.

He compared that with targets Canada agreed to at the Paris climate summit last December. The government promised a 30 per cent reduction from 2005 levels by 2030.

Hughes found that the energy industry’s share of Canada’s total emissions would double to 52 from 26 per cent. That means other parts of the economy would have to pick up the slack.

More than three-quarters of electrical generation is already emissions-free. Switching Canada’s stock of cars, trucks, homes and offices to low-carbon alternatives is expensive and would take decades.

Extra emissions cuts from manufacturing or agriculture would have its own economic impacts.

“Barring an economic collapse, therefore, Canada will have to reconsider its planned oil and gas production growth and demand real emissions reductions from the oil and gas sector in order to have any hope of meeting its … commitment,” Hughes writes.

Alex Ferguson, a vice-president of the Canadian Association of Petroleum Producers, said technological change in the oilsands is likely to prove Hughes’s assumptions wrong.

“You’re going to see something in the next three, four, five years or so in terms of proving some of that out,” he said. “We, collectively, need to make a conscious bet that technology is going to help us in this challenge.”

Hughes also argues against the need for new pipelines.

He assumed oilsands production will be limited by Alberta’s 100-megatonne emissions cap and compared that with industry figures on pipeline and rail capacity. He found current infrastructure meets needs with a 15 per cent cushion.

As well, the difference between the world oil price and what Alberta gets has been shrinking and was barely a dollar a barrel on Wednesday.

“The reason for (the price differential) has been eliminated, so it’s unlikely that differential will resume.”

Ferguson disputed both statements.

Upcoming estimates of oil production will clearly show new pipelines are needed, he said.

“What you’ll see from us soon is more up-to-date information and data that would certainly tell us we need more pipeline capacity.”

As well, he said, a pipeline to the coast would allow Canada to take advantage of markets specifically looking for heavier crude.

The International Energy Agency says the world will still need 67 million barrels of oil a day by 2040.

“Why wouldn’t we want Canada to have a reasonable share of that demand?” Ferguson asked.

Hughes agreed oil will be in the energy mix for a long time. The point, he said, is that Canada faces tough choices and serious challenges.

“Industry will probably say there will be a silver-bullet solution. I think it’s unlikely and we better do the math with the figures we have and put that long-term plan together.”

 

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