Canada Embracing Climate Control Measures to Support Oil Sector

Environmental advocacy groups put Canadian oil sands on the same footing as a weapon of mass destruction. With limited trade options on hand, provincial leaders are now trying to recast the Canadian oil sector's image with a green hue.

Apr 21, 2014 at 9:02AM

This article was written by Oilprice.com -- the leading provider of energy news in the world. 

Environmental advocacy groups put Canadian oil sands on the same footing as a weapon of mass destruction. With limited trade options on hand, provincial leaders are now trying to recast the Canadian oil sector's image with a green hue.

The processes involved in exploiting the more viscous form of crude oil found in the Athabasca region of Alberta are viewed as detrimental to human health and the global environment.

A government report last week found the emissions tied to oil sands means the Canadian energy industry passed the transportation sector as the country's largest source of pollution. Oil and natural gas production now account for about 25 percent of all of the country's emissions.

Last month, Canadian Natural Resources Minister Greg Rickford met with provincial leaders in Alberta to express his support for responsible resource development. Environmental stewardship and increased market access, he was told, went hand in hand.

Canada last year signed a free trade agreement with Europe that it sees as potentially opening the door to new markets for its crude oil. Currently, nearly all of Canada's oil exports head to the United States, where the shale boom is diminishing the needs for more imports.

Rickford's predecessor, Joe Oliver, in November tried to woo European investors wary of the emissions associated with oils sands. Last week, the Canadian government was met with opposition from the likes of former U.S. President Jimmy Carter and Archbishop Desmond Tutu, who said U.S. President Barack Obama should "do the right thing" and oppose the Keystone XL oil pipeline planned from Alberta.

Now, Alberta Energy Minister Diana McQueen said the provincial government had set aside more than $130 million in its annual budget for capture and storage technology for the oil sands industry.

"The Alberta government is committed to carbon capture projects," she said. "With them we are showing the world we take the responsible development of our resources seriously and we're becoming a world leader in CCS technology."

The Alberta government says it will invest more than $1 billion total on oil sands-related CCS projects, an investment level it says is unprecedented. Two CCS projects planned for Alberta will be able to store more than 2.75 million tons of carbon dioxide per year, which the provincial government said is the equivalent of pulling more than half-a-million cars off the road each year.

Environmental advocates say Canadian oil sands development is undermining efforts to curb global warming at a time when the Intergovernmental Panel on Climate Change is warning time is running out to keep climate doomsday from approaching.

For fiscal year 2011-12, the Alberta government brought in more than $4 billion in royalties from oil sands projects. For the nation as a whole, oil sands contribution to gross domestic product is expected to almost double to more than $150 billion by 2025.

Alberta and the federal government say responsible resource development is the right step to take amid growing environmental concerns. Given the fiscal stakes involved for Canada, it may be more of a business decision than one of environmental stewardship.

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Written by Daniel J. Graeber at Oilprice.com.

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