Tar Sands Assignment

Introduction

1967 was an important year for Canada. In addition to the Expo 67 World Fair in Montreal, it also marked

the beginning of the Tar Sands operations in Alberta. The Tar Sands operations have proven to be one of

Canada’s most controversial and heated subjects. Opponents of the Tar Sands argue it is destroying our

natural environment and that more jobs can be provided in the long run through investing in the low-

impact renewable energy sector.1 Those in favour of the Tar Sands argue it supports the economy and has

provided over 35,000 jobs cumulatively.2 However, should the short-term economic gains accrued from

the Alberta Tar Sands outweigh its detrimental impact on our natural environment? Through assessing the

Tar Sands from five measures of sustainability, it is evident that the damage to our environment far

outweighs the short-term economic benefits.

1. Do the Tar Sands stay within the Earth’s Carrying Capacity?

Humanity uses the equivalent of 1.5 planets to support our current lifestyle as shown in Figure 1.

However, this figure is deceiving as nations like Canada and the U.S. contribute 17.6 percent to global

greenhouse gas emissions while only representing five percent of the global population. In Canada, a large

percentage of the carbon emissions produced come from the extraction and transportation from the Tar

Sands mining operations in Alberta.

Figure 1: Global Ecological Footprint3

1Sven Teske et al., “Energy [R]evolution: A Sustainable World Energy Outlook,” European Renewable Energy Council (2010), http://www.energyblueprint.info/1302.0.html (accessed September 21, 2010) 2 “Oil Sands Jobs,” Oilfield Directory Publication (2009), http://www.oilfielddirectory.com/article/detail.php?id=205

(accessed September 22, 2010) 3 “World Footprint: Do we fit on the planet?” Global Footprint Network (2010),

http://www.footprintnetwork.org/en/index.php/GFN/page/world_footprint/ (accessed September 21, 2010)

Land Use

The Alberta government requires Tar Sands companies to restore the land to "equivalent land capability".4 This means that the ability of the land to support various land uses after reclamation must be similar to what existed before the land was disturbed. However, the land’s state after reclamation does not necessarily have to be identical to its state prior to excavation.

In March 2008, 30 years after opening its first mine in the Athabasca region, Syncrude Canada became the first oil company to receive a reclamation certificate from the Alberta government for restoring 104 hectares of land. Syncrude claims to have restored 22 percent of their disturbed land to date5; however the Alberta government has not given Syncrude a reclamation certificate for this restored land (apart from the 104 hectares). The Alberta government has been criticized by the Alberta Auditor General for its poor record in tracking land reclamation of Tar Sands operators.6 According to the Government of Alberta, only 0.16 percent of the total land disturbed by Tar Sands extraction has been reclaimed. This 0.16 percent represents the 104 hectares of land that was reclaimed by Syncrude in March 2008.7 The 11 companies operating in the oil sands claim to have collectively restored 11 percent of total disturbed land; however, there is no government certification to support this claim.8 The aforementioned statistics suggests that Alberta’s land is being disturbed at a rate far greater than it is

being restored. This is highlighted very clearly in Figure 2 which shows the gap between the disturbance of

land and its reclamation rates. Further, it is important to note that the blue line represents the land that

has been reclaimed by industry, not the land that has been certified by the government.

Figure 2. Disturbance vs. Reclamation 9

4 “Upstream Oil and Gas Reclamation and Remediation Program,” Government of Alberta (2010), http://environment.alberta.ca/01108.html (accessed September 23, 2010) 5 “Land Reclamation,” Syncrude Canada (2010), http://www.syncrude.ca/users/folder.asp?FolderID=5909 (accessed September 23, 2010) 6Nathan Lemphers et al., “Toxic Liability,” The Pembina Institute (2010), http://pubs.pembina.org/reports/toxicliabilityfactsheetfinal.pdf (accessed September 25, 2010) 7 ibid 8 op. cit.

9 ibid

With oil sand deposits lying under 149,000 square kilometres of Boreal forest in Alberta, equivalent to the

size of Florida, the amount of boreal forest and muskeg will continue to decline exponentially as oil

extraction rises at unsustainable levels.10 Figure 3 displays the Alberta boreal region impacted by Tar

Sands development.

Figure 3: Wetlands in the Boreal Region Impacted by Tar Sands Development11

10

Dan Woynillowicz et al., “Oil Sands Fever: The Untold Story,” The Pembina Institute (2009), http://pubs.pembina.org/reports/OSF_Fact72.pdf (accessed September 23, 2010) 11

Jeff Wells et al., “Impact on Birds of Tar Sands Oil Development in Canada's Boreal Forest,” National Resources Defense Council (2008), http://www.nrdc.org/wildlife/borealbirds.pdf (accessed September 20, 2010)

Water

Tar Sands mining operators have been licensed to extract 359 million cubic meters of water from the Athabasca River. This is double the amount of water consumed by the City of Calgary annually.12 What’s more, 92 percent of this water ends up in contaminated tailing ponds and the Government of Alberta does not have any reclamation standards for the 840 million cubic metres of tailing lakes.13 Tailings are a by-product of the tar sands extraction process which involves separating oil from sand. This procedure produces a combination of sand, silt, clay, water, hydrocarbons and toxic chemicals which are pumped into containment sites called tailing lakes.14 Few technologies exist to remediate tailing lakes and those that do exist, are extremely costly: it is estimated that the cost of remediating one tonne of tailings is between $13.09 and $16.40.15 This begs the question of whether these tailing ponds will ever be cleaned, and whether the Athabasca River will be replenished to levels prior to Tar Sands extraction.

Green House Gas Emissions

The Alberta Tar Sands are the single largest contributor to greenhouse gas emissions in Canada.16 Furthermore, Tar Sands companies do not have to pay to neutralize their carbon emissions. This topic is discussed further in later sections.

2. Do the Tar Sands follow Cradle to Cradle design?

According to William McDonough and Michael Braungart, Cradle to Cradle designs are those in which

humans emulate natural systems rather than trying to do more with less.17 The Tar Sands are the

antithesis to Cradle to Cradle design as they transform huge volumes of water into toxic tailing ponds;

disrupt complex relationships between soil organisms; destroy rich areas of habitat such as wetlands and

boreal forests and produce over 40 million tonnes of greenhouse gas emissions annually.18

Water

Under Cradle to Cradle design, all the water used in operating a business should be endlessly recycled.

The Tar Sands are nowhere near recycling 359 million cubic metres of water. In fact, only eight percent of

water does not end up in tailing ponds.19

12 Mary Griffiths et al., “Troubled Waters, Troubling Trends,” The Pembina Institute (2006), http://pubs.pembina.org/reports/TroubledW_Full.pdf (accessed September 23, 2010) 13 op. cit. 14Ricardo Acuña., “Toxic Tailings from the Tar Sands,” Tar Sands Watch (2008), http://www.tarsandswatch.org/toxic-tailings-tar-sands-alberta-environmental-resources-conservation-boards-new-directive-worse-use (accessed September 21, 2010) 15 Nathan Lemphers et al., “Toxic Liability: How Albertans Could End Up Paying for Oil Sands Mine Reclamation,” The Pembina Institute (2010), http://pubs.pembina.org/reports/toxic-liability-report.pdf (accessed September 23, 2010) 16 op. cit. 17 William McDonough and Michael Braungart, Cradle to Cradle: Remaking the way we make things (North Point Press, 2002), http://www.mcdonough.com/cradle_to_cradle.htm (accessed September 23, 2010) 18 “Questions and Answers about the Alberta Tar Sands,” Greenpeace Canada (2007), http://www.greenpeace.org/canada/en/recent/tarsandsfaq/#4 (accessed September 25, 2010) 19

op. cit.

Soil Organisms

Soil organisms are quintessential to biodiversity in Alberta. However, these rich soil organisms are being

removed to make way for Tar Sands mining. According to Nature Canada (2007) 20:

The complex relationships between soil organisms such as bacteria, fungus, plants, invertebrates

and larger fauna (including birds that are the hallmark of the boreal forest) are thousands of years

in the making, but take only a few moments to be destroyed.

Under the Cradle to Cradle philosophy, oil companies would have to find ways to extract oil in a way that

has minimal impact on the natural environment.

Greenhouse Gas Emissions

Companies like PepsiCo, Google and Tesco have all made a commitment to making their business carbon

neutral. They have achieved carbon neutrality through investing in projects that offset carbon emissions

and through purchasing renewable energy credits. With respect to greenhouse gas emissions, these

companies are leading the way in the Cradle to Cradle design realm. What’s more, becoming carbon

neutral is financially feasible for oil companies in Alberta, as the technology to achieve carbon neutrality

could costs as little as $2.82 U.S. per barrel. 21

3. Do the Tar Sands ensure every waste produced is food?

The Tar Sands operations are nowhere near ensuring waste can be used to produce food. In fact, through

turning fresh water into toxic waste, removing billions of tons of soil, and contaminating ground water,

the Tar Sands are reducing Alberta’s ability to grow food.

Sand Waste:

By 2010, the Tar Sands industry will have generated eight billion tons of sand waste which contains

naphthenic acid and paraffin: chemicals which can have adverse health effects on mammals leading to

liver problems and brain haemorrhaging.22

Earth and Soil Waste:

According to the Government of Alberta (2007), open pit mining entails “clearing trees and brush from a

site and removing the overburden - the topsoil, muskeg, sand, clay and gravel - that sits atop the Tar

Sands deposit”.23 This overburden is often 75 metres deep and is taken offsite by large trucks. In the end,

it is estimated that four tonnes of earth must be removed for every barrel of oil produced.

20 “How do the Tar Sands Affect Wildlife Habitat?”Nature Canada (2008), http://www.naturecanada.ca/tarsands_habitat.asp (accessed September 24, 2010) 21Jennifer Grant, “Carbon Neutral Oil Sands by 2010,” The Pembina Institute (2010), http://pubs.pembina.org/reports/CarbonNeutral2020_FACT.pdf (accessed September 25, 2010) 22 Dru Oja Jay, “What the Tar Sands Need,” The Dominion 48 (2007), http://www.dominionpaper.ca/articles/1480 (accessed September 19, 2010) 23

ibid

Waste Water

As discussed in the Cradle to Cradle section and section on the Earth’s Carrying Capacity, the Tar Sands

produce an exorbitant amount of waste water called tailing ponds. These tailing ponds reduce earth’s

limited supply of fresh water.

Toxic Seepage from Tailing Lakes into Groundwater

Numerous scientists have pointed to the detrimental impact of toxic seepage caused from tailing ponds. These scientists include: Dr. James Barker, an earth science professor at the University of Waterloo; Dr. George Dixon, Director of the Biology department at the University of Waterloo; and David Schindler, one of the world’s most respected ecologists.24 Dr. James Barker conducted research revealing that tailing ponds leak and seep extensively. His research demonstrated that seepage from Suncor’s Oil island dike into the Athabasca River occurs a rate of 67 litres per second: equivalent to almost six million litres per day.25 The image of Suncor’s Oil island dike is shown in Figure 4.

Figure 4: Suncor Oil Island Dike26

In total, tailing ponds in Alberta leak over four billion litres of contaminated water into the environment per year. According to Price (2008), the ramifications of this leakage are staggering:

Experiments with this water on fish have shown serious reproductive impacts. Studies on birds have found increased mortality rates, and experiments on plants have shown delayed germination and lower seedling weights. The tailings include naphthenic acids, which are acutely toxic and known to persist for many years, making tailings leakage a long-term contamination problem for the Athabasca watershed, the Mackenzie drainage it runs into, and the Boreal forest. 27

24 Andrew Nikiforuk, “Who Killed the Tar Sands Water Report?” Polaris Institute (2010), http://www.polarisinstitute.org/who_killed_the_tar_sands_water_report (accessed September 20, 2010) 25

Matt Price, “11 Million Litres a Day,” Environmental Defence (2010), http://www.environmentaldefence.ca/reports/pdf/TailingsReport_FinalDec8.pdf (accessed September 22, 2010) 26

op. cit. 27

op. cit

4. Do the Tar Sands calculate complete economic costing?

Despite being the most profitable industry in Canada with over $31.1 billion in profit generated in 2006

alone, it is interesting to note the lack of complete costing in the price of a barrel of oil28. The lack of

complete economic costing also results in a negative impact on the renewable energy sector. This sector

has not been able to compete with oil extracted from the Tar Sands in terms of pricing, because Tar Sands

oil is underpriced as it does not include: the cost for Tar Sands companies to offset their greenhouse gas

emissions; the savings accrued from provincial and federal subsidies; and the inaccurate security deposits

for land reclamation. Further, the profitability of the Tar Sands industry comes at the expense of

aboriginal groups who live downstream from the Tar Sands and bear the costs of pollution.

Carbon Offsetting

As discussed in the Cradle to Cradle section on greenhouse gases, none of the companies extracting oil

from Alberta are required to offset their carbon emissions. From an economic standpoint, this means the

price of oil is underpriced as it does not reflect the cost of environmental degradation. The cost of carbon

capture is estimated to be between $2.82 and $8.55 assuming each barrel of oil produces 188lbs of C02.29

Federal Subsidies

Under the Accelerated Capital Cost Allowance (ACCA) program, the Tar Sands are allowed to defer 100

percent of provincial and federal income tax until all capital costs are absorbed. This is a more attractive

subsidy than typically received by other Canadian corporations who are able to deduct only 25 percent of

their costs until capital costs are paid off. In addition, Tar Sands companies are also able to: fully deduct

exploration expenditures compared to 25 percent deductions for other Canadian companies; and deduct

development expenses at 30 percent per year compared to 25 percent for other companies.30

Provincial Subsidies

The Alberta government charges a royalty of just one percent on gross revenue from Tar Sands projects

until they recover all capital costs. Once Tar Sands companies recoup their capital cost, they are required

to pay only a 25 percent royalty on their net earnings. Apart from taxation, this royalty is the main

payment made by the Tar Sands companies to cover the destruction of the boreal forest, obliteration of

rich soil organisms and wildlife, and the extraction of 359 million cubic metres of water from the

Athabasca River.31 Canada’s royalty fee on oil is far below that of other nations. In Russia, once the price

of oil exceeds $25 U.S. per barrel, the Russian government charges a 90 percent royalty and similarly,

28 op. cit. 29Frederic Beauregard-Tellier, “The Economics of Carbon Capture and Storage”, Parliamentary Information and Research Service Library of Parliament (2006), http://www2.parl.gc.ca/Content/LOP/ResearchPublications/prb05103-e.pdf (accessed September 24, 2010) 30John Dillon et al., “Pumped Up: How Canada subsidizes fossil fuels at the expense of green alternatives,” Kairos http://www.tarsandswatch.org/files/PumpedUpInsides3.pdf (accessed September 25, 2010) 31

op. cit.

Ecuador recently introduced a 99 percent royalty. Further, Canadian royalties are significantly lower than

other jurisdictions such as Norway and Bolivia.

Inaccurate Security Budget for Land Reclamation

There is currently a poor understanding of the environmental liabilities associated with the mining of Tar

Sands operations.

As mentioned earlier, Tar Sands companies are required to reclaim land disturbed during the mining

process. To ensure companies adhere to this requirement, the Government of Alberta requires Tar Sands

companies to post a security deposit to fund land reclamation in the event the operator cannot pay in the

future or refuses to pay. Though great in theory, this deposit is nowhere near the actual costs of land

reclamation. The Environmental Protection Security Fund established in 2009 was only $820 million for

68,574 hectares. The Pembina Institute conservatively estimates that the cost of reclaiming 68,574

hectares of disturbed land is between $10 billion to $15 billion which is 12 to 18 times higher than the

$820 million collected in the security deposit. The Alberta auditor general has raised concerns of the

inadequate security deposit four times in the last 11 years, most recently in 2009.32

In addition, security deposits are paid on individual mining projects. This means the security deposit can

only be used to reclaim the mine it was initially intended for.

Cost of Government Officials Spending Time to Reclaim Land

Given the shear land mass of Tar Sands operations, it is evident that there would be significant costs

incurred by the Alberta government to certify the reclaimed land. The considerable time commitment and

cost is well evidenced by the fact that it took the government almost 30 years to certify the 104 hectares

of land that was reclaimed by Syncrude in the early 1980s.33

5. Do the Tar Sands create no negative externalities?

The Tar Sands produce numerous negative externalities that will have irreparable consequences.

Canada Will not Meet Its Kyoto Targets

In 2002, Canada made the commitment to reduce emissions by six percent below 1990 levels. However,

given the Tar Sands represent the largest emissions in Canada and that there will be increasing levels of oil

extraction, it is evident these targets will not be met. In fact, in order to meet Kyoto requirements, Canada

has to reduce emissions by 280 million tonnes annually. As of 2008, the Tar Sands emitted approximately

40 million tonnes of greenhouse gases and this number is projected to increase to 80 million tonnes by

2011.34

32 op. cit. 33

op. cit. 34

op. cit.

Toxic Waste

Tar Sand operations produce large amounts of toxic waste called “tailings”. Tailings are a combination of water, clay, sand, silt, contaminants and hydrocarbons. Tailings contain contaminants including naphthenic acids, polycyclic aromatic hydrocarbons, phenolic compounds, ammonia, mercury and other trace metals. 35 The combination of water and tailings is extremely dangerous to mammals and aquatic species as evidenced by the deaths of 1,600 migrating ducks in March 2008 who were killed when they landed in a syncrude tailing pond. Further, tailing ponds are increasing at a rate equivalent to 80 Olympic sized swimming pools each day!

These tailing ponds are an additional threat because they leak into groundwater; this is evidenced by research indicating that as much as four billion litres of tailings leak into the groundwater supply annually. In addition to the detrimental effects of tailings, Aboriginal communities in Fort Chipewyan have reported growth in cancer rates as oil production increased upstream from their community. This claim is backed by the International Agency for Research on Cancer, the National Toxicology Program, and the U.S. Environmental Protection Agency. These institutions have conducted research demonstrating that certain polycyclic aromatic hydrocarbons found in tailings can have definite, probable or possible cancer-causing agents in humans.36 The Aboriginal communities in Fort Chipewyan also reported significant deterioration in water quality and an increase in the number of mutated and inedible fish.37 A study led by Dr. Erin Kelly and Dr. David Schindler at the University of Alberta (2010) found that “levels of cadmium, copper, lead, mercury, nickel, silver and zinc in water and snow downstream from oilsands development exceeded federal and provincial guidelines for the protection of aquatic life”.38 Dr. Kelly and Schindler collected water samples from over 35 sites along the Athabasca River, its tributaries, and Lake Athabasca.

Reduction in Canada’s supply of Fresh Water

As mentioned in the section on whether the Tar Sands stay within the earth’s carrying capacity, Tar Sands operations have been licensed to divert 359 million cubic metres from the Athabasca River.39 The problem with this is that only eight percent of the fresh water from the Athabasca River ends up being reused; the remaining 92 percent ends up in toxic tailing ponds. Since only one percent of water available on earth is drinkable, as shown below, the Canadian government needs to preserve water from the Athabasca River and surrounding bodies of fresh water.

35

Kenny Bruno et al,. “Tar Sands Invasion: How dirty and expensive oil from Canada threatens America's new energy economy,” National Resources Defense Council (2010), http://www.nrdc.org/energy/files/TarSandsInvasion-full.pdf (accessed September 26, 2010) 36

op. cit. 37 “Aboriginal Rights,” Tar Sands Watch (2010), http://www.tarsandswatch.org/aboriginal-rights (accessed

September 20, 2010) 38

Jeffrey Jones, “Oil Sands polluting Canadian river: study,” Reuters Canada (2010), systemhttp://ca.reuters.com/article/domesticNews/idCATRE67T3H920100830?pageNumber=1&virtualBrandChannel=0 (accessed September 22, 2010) 39

op. cit.

Figure 5: Global Water Supply40

Greenhouse Gases Emissions

Greenhouse gas emissions absorb the radiation emitted from the sun rather than reflecting the excess radiation back into space. Therefore, as atmospheric concentrations of greenhouse gas emissions increase, the earth absorbs more heat from the sun. This leads to increased global temperatures which is detrimental to our natural environment. 41

By 2015, Fort McMurray will emit more greenhouse gas emissions than all of Denmark, a country with over 5.5 million inhabitants.42 Further, it is estimated that Tar Sands oil produces at least three times more emissions per barrel than conventional crude oil. 43

Conclusion

Canadian athletes made history this year at the Winter Olympics, when they set the record for winning

the most gold medals. It is time for the Government of Alberta to follow the audacity of Canadian athletes

and set strict environmental legislation that will ensure the price of oil is reflective of the negative

externalities it produces. Further, the Alberta government must impose deadlines for land and tailing

ponds to be reclaimed by, and eliminate all government subsidies to Tar Sands companies. These

strategies will increase the price of Tar Sands oil causing companies to invest in more efficient

technologies, or leave the market due to reduced profitability.

40James E. McWhinney, “Water: The Ultimate Commodity”, Investopedia (2006), http://www.investopedia.com/articles/06/Water.asp (accessed September 27, 2010) 41 “Greenhouse Gases, Climate Change and Energy,” U.S. Energy Information Administration Independent Statistics and Analysis (2008), http://www.eia.doe.gov/bookshelf/brochures/greenhouse/Chapter1.htm (accessed September 21, 2010) 42“Denmark in Brief,” Denmark: The Official Website of Denmark (2010), http://www.denmark.dk/en/menu/About-Denmark/Denmark-In-Brief/ (accessed September 21, 2010) 43

op. cit.