canadian energy and the u.s. - a mutually beneficial partnership: economics, security and the...
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CANADIAN ENERGY AND THE U.S. - A MUTUALLY BENEFICIAL PARTNERSHIP:ECONOMICS, SECURITY AND THE ENVIRONMENT
Oil Sands, Keystone Pipeline and the Environment
David McLaughlin,President and CEONational Round Table on the Environment and the Economy
February 21, 2012
TABLE OF CONTENTS
• About the NRT• Canada-U.S. energy / emissions
relationship• Oil sands & pipelines• Canada-China• Oil sands image and risks
Finding Sustainable Pathways 3
NRT: BRINGING THE ENVIRONMENT AND THE ECONOMY TOGETHER
Through the development of innovative research and considered advice,
our mission is to help Canada achieve sustainable development solutionsthat integrate environmental and
economic considerations to ensure the lasting prosperity and well-being of our
nation.
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MELTDOWN
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CONVENE
We convene opinion leaders and experts from across Canada around our table to share their knowledge and diverse perspectives. We stimulate debate and integrate polarities. We create a context for possibilities to emerge.
RESEARCH
We rigorously research and conduct high quality analysis on issues of sustainable development. Our thinking is original and thought provoking.
ADVISE
We generate ideas and provide realistic solutions to advise governments, Parliament and Canadians. We proceed with resolve and optimism to bring Canada’s economy and environment closer together.
THE NRT PROCESS
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Finding Sustainable Pathways 7
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CANADA’S OIL RESERVES
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CANADA AS AN ENERGY SUPPLIER
Source: CAPP(2011) Canada’s Oil Sands: Creating U.S. jobs and business opportunities. Pg 6. ANDNRCan (2011) Oil Sands: A Strategic Resource for Canada, North America and the Global Market
“Canada is the largest supplier of crude oil and petroleum products to the U.S., safely delivering 2.5 million barrels per day in 2010, making up 21 percent of U.S. imports” (NEB)
Finding Sustainable Pathways 10
ENERGY, ECONOMY, EXPORTS
Share of Canadian GDP, 2010
Low Emission-IntensiveManufacturing
29%
Agriculture, Forestry,Fishing and Hunting 4%
Services
15%
Other Sectors
3%
Emission-Intensive Industries
49%
Share of Canada Exports, 2010
Source: Industry Canada and Statistics Canada (2011)
Finding Sustainable Pathways 11
U.S. ECONOMIC IMPORTANCE In 2010 energy products including oil, natural
gas and electricity, accounted for $103 billion worth of trade between the two countries. 97% of Canada’s energy exports went to U.S. markets. Source: NRCan; * All monetary values are American dollars based on February 2011 conversion rates.
According to estimates by the, development of the oil sands has the potential to generate more than $483 billion in royalty and tax revenues for Canada’s federal and provincial governments over the next 25 years. Oil Sands Developers Group
On average, U.S. output of goods and services will increase by $45 billion/year from 2011 – 2035 due to increased demand from oil sands activity. Source: CERI 2011
Finding Sustainable Pathways 12
CLIMATE & EMISSIONS
• Canada and U.S. have aligned (GHG) emissions reduction targets: 17% below 2005 levels by 2020
• Canada represents 2% of global emissions, the U.S. represents 18% (2005 Mt CO2e)
• Canada and U.S. emissions per capita are about the same: 22.04; U.S. emission per capita are 22.74 (2008 Tonnes CO2e)
• Climate change could cost Canada $43 billion per year in 2050
Source: UNFCC, 2010 and Environment Canada, 2011
Finding Sustainable Pathways 13
CANADA’S EMISSIONS PROJECTIONS
Source: EC. 2011
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2020 EMISSIONS GAP
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GHG EMISSIONS BY ECONOMIC SECTOR (MT CO2E)
There is an estimated 30% growth in the oil and gas sector from 2005 to 2020
Source: EC. Canada’s Emissions Trends, 2011
Finding Sustainable Pathways 16
SHARE OF TOTAL ELECTRICITY GENERATION BY SOURCE FOR CANADA AND THE U.S., 2006
HARMONIZING ON CARBON PRICE AND ON TARGETS HAVE DIFFERENT IMPLICATIONS
OIL SANDS AND PIPELINES
Finding Sustainable Pathways 19
OIL PRODUCTION DRIVEN BY OIL SANDS
Source: NEB (2011) Canada’s Energy Future: Energy Supply and Demand Projects to 2035
Finding Sustainable Pathways 20
U.S. ENERGY SECURITY RISK INDEX, 1970-2035
Source: Institute for 21st Centre Energy, U.S. Chamber of Commerce. Index of U.S. Energy Security Risk (2011 Edition)
Finding Sustainable Pathways 21Source: CAPP (2011) Canada’s Oil Sands: Creating U.S. jobs and business opportunities. Pg 11-12.
Finding Sustainable Pathways 22
KEYSTONE PROPOSAL
NEW PROPOSAL: TransCanada Working with State of Nebraska and Department of State to Finalize New Route for Keystone XL through Nebraska
Source: CBC. Canada's main pipeline network; Leach (Nov 2011) Keystone XL: Game Over
• The original proposal would have seen the pipeline run from Alberta through several states to the coast of Texas. It raised concerns in Nebraska because it would pass through an area that supplies drinking water to millions of people. The XL pipeline is an extension of an existing Keystone pipeline.
• In November 2011, TransCanada agreed to change the proposed route so that it wouldn't pass through the environmentally sensitive Sandhills area of Nebraska, a move that would add up to 65 kilometres of pipeline and another pumping station to the project.
• Last fall, U.S. officials said they would defer a final decision on the pipeline until the end of 2012 — after the next presidential election
Finding Sustainable Pathways 23
EXISTING PIPELINES OPERATIONS + TRANSCANADA KEYSTONE XL PIPELINE + ENBRIDGE NORTHERN GATEWAY PIPELINE
U.S. GDP – Potential Additions, 2010-2020
US employment totals are expected to grow from 80,000 jobs to 200,000
jobs in 2020
Employment in Canada (direct, indirect, and induced) is expected to grow from 390,000 jobs to a peak of
800,000 jobs in 2020
• Total Canadian GDP impact as a result of the investment shocks is estimated at close to $1,178 billion over the 20-year period. US GDP impact from 2010-2020 as a result of the investment shocks is estimated at close to CAD$138 billion
• In Canada, the oil sands development affects Alberta more than any other province. The oil sands development also affects, in order, Ontario, B.C., Quebec, and Sask.
• In US, the oil sands development affects , in order, Illinois, California, Texas, Wisconsin, and Ohio
CERI (2011) A decade of staged oil sands growth (2010-2020). Pg XV
Finding Sustainable Pathways 24
“WE ARE AT THE WRONG END OF MULTIPLE DISCOUNTS” said Mike Tims, chairman of Peters & Co., the Calgary-based energy investment dealer.
Source: Financial Post. Canada loses in oil discount. Feb 9, 2012 http://business.financialpost.com/2012/02/09/canada-loses-in-oil-discount/?__lsa=a5e4079a
CANADA AND CHINA
Prime Minister Stephen Harper shakes hands with Chinese President Hu Jintao before their meeting in Beijing on Feb 9, 2012.
Finding Sustainable Pathways 26
PRIME MINISTER HARPER IN CHINA We are an emerging energy superpower," Harper
said. "We want to sell our energy to people who want to buy our energy. It's that simple.“ (Feb 10, 2012)
"It is increasingly clear that Canada's commercial interests are best served through diversification of our energy markets," Harper said.
Current bilateral trade is modest and in 2010 was less than $60 billion, around a tenth of combined Canada-U.S. two-way trade. (Vancouver Sun)
Finding Sustainable Pathways 27
WEST COAST PIPELINE PROPOSED ROUTE
The proposed Northern Gateway Pipeline would run from Bruderheim (near Edmonton) to Kitimat with a return condensate pipeline for importing oil sands diluent material. Given heavy crude production profile forecast, Canadian producers require additional pipeline capacity to export incremental production volumes of heavy crude oil to key demand centres. Canadian pipeline companies are considering a myriad of projects to provide potential solutions for Canadian crude oil producers to have sufficient access to appropriate refining markets. In assessment of adding West Coast crude oil export capacity results in the following substantive findings:• Additional export capacity connected to heavy crude refining markets is needed to place growing Canadian oil production by 2017;• Tidewater access provides an important link to the significant and fast-growing Asian market;• Asia is an attractive market for Alberta production on a netback basis• Canadian producers not having sufficient access to premium heavy crude 29 refining markets could lose about $8/bbl for every Canadian heavy crude barrel, with a revenue impact averaging C$8 billion per year for 2017 to 2025.
Source: Wood Mackenzie, inc. (For Alberta Government) Dec 2011. A netback impact analysis of West coast export capacity.
Finding Sustainable Pathways 28
GATEWAY PROJECT
Of the Asian markets, China would be the most attractive for the disposition of heavy Canadian crude oils. The projected price for gasoline and diesel in Asia are expected to rise in this region as emerging deficits support the increase in oil product prices. This would support Synbit and Dilbit to have a sustainable netback in Asia competitive against that of PADD II and PADD III, respectively.
Source: Wood Mackenzie, inc. (For Alberta Government) Dec 2011. A netback impact analysis of West coast export capacity.
OIL SANDS: IMAGE, RISKS, & REALITIES
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UNEP. Keeping Track of our Changing Environment. 2011
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CLIMATE CHANGE IS REAL: GLOBAL MEAN TEMPERATURE INCREASED BY 0.4°C BETWEEN 1992 &2010
http://www.cccma.ec.gc.ca/diagnostics/cgcm3-t47/cgcm3.shtml
http://www.google.com/gadgets/directory?synd=earth&preview=on&q=climate+change
http://www.epa.gov/climatechange/effects/polarregions.html
UNEP. Keeping Track of our Changing Environment. 2011
Finding Sustainable Pathways 32
Arctic sea ice losses during 2011 were the second-greatest in the satellite record dating back to 1979, according to an official NSIDC report…. However, ice loss in recent years has been proceeding faster than the models predicted. EarthSky 2011
Headline: 2011 already costliest year for natural disasters. Expert: 'We are rewriting the financial and economic history of disasters on a global scale‘ MSNBC, July 2011
Australia, Queensland
Arctic Sea Ice
Despite an increase in conservation efforts, the state of biodiversity continues to decline, according to most indicators, largely because the pressures on biodiversity continue to increase. Secretariat of the Convention on Biological Diversity (2010)
Australian Rainforest
UNEP, 2011
Brazil Rainforest
ENVIRONMENTAL CHANGES HERE & NOW
Finding Sustainable Pathways 33
RISKSJuly 2008 issue: Alberta’s oil sands
Oilsands pipeline protestors arrested near White House-
Aug 2011 (CBC)
Celebrity protesters blur the Canadian oil sands message -
Sept 1 (the Star)
EU fuel directive targets oil sands unfairly: CAPP
NGO PERSPECTIVE: OIL SANDS
Keystone XL in context: oilsands and environmental managementTwo decades of ineffective management have left their mark on the Canadian landscapeThere is a growing debate in the United States about the environmental impact of oil sands and the related issue of whether there are effective legal and regulatory frameworks in place in Canada to address these impacts. Filling the proposed KXL pipeline with oil sands will result in nearly a 50 per cent increase in oil sands production. Until environmental management of the oil sands is improved, KXL will cause significant environmental harm due to increased oil sands production.
It will take more than rebranding to make tar sands oil "ethical“ by David Suzuki with Faisal MoolaOn “ethical oil”. Oil has never been about "ethics". It has always been about money. Those who argue the case for "ethical oil" should work to ensure that our energy needs are met in a truly ethical way, now and into the future. In the end, the only truly ethical solution is to phase out oil. The black eye that tar sands oil is sporting can't be remedied with meaningless phrases such as "ethical oil".
Due to its sheer scale, all Canadians are affected by the tar sands, no matter where they live. Canada's fastest-growing source of global warming pollution is TARnishing the maple leaf.
Tar Sands Pipelines Safety RisksTar sands crude oil pipeline companies may be putting America's public safety at risk. Increasingly, pipelines transporting tar sands crude oil into the United States are carrying diluted bitumen…raising risks of spills and damage to communities along their paths.
The Dirty Truth about Canada’s Tar Sands Industry
Finding Sustainable Pathways 35
OIL SANDS VS. COAL
Nature magazine – “The Alberta oil sands and climate”
Andrew Weaver, Neil Swart “if entire Alberta oil sand resource
were to be used…would induce a global mean temperature change of 0.36 Centigrade
Using all world coal reserves would lead to temperature change of 15 degrees Centigrate
Finding Sustainable Pathways 36
Water use is found predominantly in nonconventional oil and gas extraction, including the oil sands subsector. The overall oil and gas sector’s water intake showed an uneven trend between 2001 and 2005, with both increases and decreases.
Overall, the water-use intensity of the oil and gas sector has been dropping over time, The oil and gas sector as a whole has the lowest water-use intensity of the sectors covered in this study due to its relatively large economic output (23% of output of all sectors) compared with a relatively small amount of water use (0.6% of water intake of sectors covered in this study)
Finding Sustainable Pathways 37
Oil & Gas rises from 0.6% to 1.1%
Finding Sustainable Pathways 38
EXISTING MONITORING
Source: Government of Canada and Government of Alberta (2012) Joint Canada-Alberta Implementation Plan for Oil Sands Monitoring
Finding Sustainable Pathways 39
PROPOSED MONITORING BY 2015
Source: Government of Canada and Government of Alberta (2012) Joint Canada-Alberta Implementation Plan for Oil Sands Monitoring
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NO HARMONIZED OPINION
Source: NSAPOCC and Public Policy Forum – Sustainable Prosperity Survey (February 2011)
Views of Americans and Canadians on the Existence of Global Warming
There is solid evidence of global warming
There is no solid evidence for global warming
Not sure
Americans 58% 26% 16%
Canadians 80% 14% 6%
Question wording: From what you’ve read or heard, this there solid evidence that the average temperature on Earth has been getting warmer over the past four decades?
Perceptions of Government Roles in Addressing Global Warming in the United States and Canada
A great deal of responsibility
Some responsibility
No responsibility
Not sure/ refused
Federal US 43% 30% 22% 5%
Canada 65% 24% 8% 3%
State/Province US 35% 37% 23% 5%
Canada 52% 36% 9% 2%
Local US 29% 36% 30% 5%
Canada 42% 42% 13% 2%
Question wording: For each level of government that I mention please tell me if it has a great deal of responsibility, some responsibility or no responsibility for taking action to reduce global warming
Finding Sustainable Pathways 41
OIL AND THE ENVIRONMENT
No matter where we get oil, there will be some environmental risk
27%
26%
59%
66%
5%
5%
3%
1%
0% 20% 40% 60% 80% 100%
USA
Canada
Strongly agree Agree Disagree Strongly disagree
Source: Harris Decima (2010) Modern Environmentalism
Finding Sustainable Pathways 42
CAN OIL SANDS DEVELOPMENT BE ACCEPTABLE?
83% 17%Total
Possible to develop oil sands in environmentally satisfactory way
Not possible to develop oil sands in environmentally acceptable manner
Source: Harris Decima (2010) Modern Environmentalism
Finding Sustainable Pathways 43
IDEAL GOAL FOR OIL SANDS DEVELOPMENT
22% 70% 8%Total
Ensure full economic benefits of the oil sands resource
Oil sands developed with greater effort to limit environmental impacts
To stop the development of the oil sands altogether
Source: Harris Decima (2010) Modern Environmentalism
Finding Sustainable Pathways 44
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That said, I
WHAT IF…
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