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Canadian Gov't Emissions Report Undermines Keystone Pipeline Pitch

The U.S. and Canada are going in opposite directions on CO2 emissions, data reveal, with possible implications for Obama's Keystone pipeline decision.

Oct 31, 2013
Prime Minister Stephen Harper on a tour of CO2 Solutions Inc., a Quebec company

When Alberta Premier Alison Redford came to Washington this year to urge approval of the Keystone XL pipeline, she argued that producing tar sands oil generates much less global warming pollution today than it did two decades ago.

It would be wrong, Redford reasoned, for the U.S. to block the project on climate change grounds.

But a new Canadian government report on the country's greenhouse gas emissions tells a different story. The federal data reveal that the carbon dioxide emissions associated with a barrel of tar sands bitumen have been rising, not falling, in recent years—a trend that may well continue.

The report got scant attention in the United States, but its findings could spell trouble for Canada as government leaders lobby the Obama administration to approve the Keystone, intended to carry growing supplies of tar sands crude to refineries in Texas.

Oil companies are spending millions of dollars on experiments to find a viable way to bring the emissions of tar sands production under control. Some producers say that success may lie around the corner. But the government's annual emissions trends report does not assume that any breakthroughs are coming soon.

Environment Canada, the federal agency that produced the Oct. 24 report, said it now appears unlikely that Canada can accomplish the steep greenhouse gas reductions it promised for 2020—17 percent below 2005 levels, a goal it shares with the United States.

Much of the gap it predicts is due to rising emissions from Alberta's oil patch.

President Obama has said his decision on whether to grant the Keystone pipeline a permit will hinge on the amount of CO2 the project contributes to the atmosphere. And he has urged Canada to do more to rein in its tar sands pollution.

"Our national interest will be served only if this project doesn't significantly exacerbate the problem of carbon dioxide pollution," Obama said in June.

Canada expects its oil sands production to increase to 3.3 million barrels a day in 2020, tripling from 1.1 million in 2005.

To offset the carbon emissions from that growth, the carbon intensity of tar sands production would have to be cut by 66 percent over those years.

The challenge is enormous not just because time is short and the technologies are immature, but also because tar sands extraction has been shifting from strip mining to more carbon-intensive in-situ mining.

"In recent years, some efficiency improvements have plateaued as technological improvements have been negated by shifts to more energy-intensive extraction techniques," the report said.

The agency predicts that Canada's annual emissions will rise to 734 million tons in 2020—a nearly 5 percent increase from 2011 levels and ever further from the government's goal of 612 million tons by 2020.

Tale of Two Carbon Pollution Trends

In 2009 at the Copenhagen climate conference, both the United States and Canada promised to reduce their carbon emissions by 17 percent of 2005 levels by 2020, with steeper reductions expected to follow in later decades.

To meet those ambitious targets, the two countries have to maintain the gains they have made in recent decades in shrinking the "emissions intensity" of their economies—that is, the amount of CO2 emissions per unit of gross domestic product.

That can be accomplished partly by adopting energy-saving technologies, such as more fuel-efficient cars. Gains also occur when economic activity shifts from higher-emission sectors like iron and steel to lower-emission enterprises like writing computer software.

But because so much carbon comes from industries that produce energy, progress also requires moving away from burning the dirtiest fuels.

For the United States, the biggest energy culprit is consumption of coal for electric power—which the Obama administration has moved to control with newly proposed regulations. In Canada, it is production of bitumen, the thick, dirty petroleum in its vast tar sands reserves.

An annual report by the U.S. Energy Information Administration released on Oct. 21, offered encouraging data about recent progress in the United States.

It shows that not only has the United States been reducing its rate of energy consumption—it has also been reducing the carbon intensity of its energy supplies as it gets off coal and turns increasingly to natural gas. (Production of renewable energy such as wind grew, too, but was offset by reductions of hydroelectric power.)

U.S. energy-related emissions of greenhouse gases are now at their lowest levels since 1994 and 12 percent below their 2007 peak. Part of the recent decline was due to the recession and to manufacturing going overseas. But overall, the U.S. achieved a 5.1 percent reduction last year in energy use per dollar of economic output. And the energy it did use was cleaner than before.

Taking all those factors into account, the Obama administration recently said that the nation is "within the range" of meeting its Copenhagen goals, at least if new regulations on power plants and other facets of Obama’s climate action plan take hold. That plan, announced in June, is based on executive actions that don't require Congressional approval.

The picture in Canada is quite different.

The emissions intensity of its economy, too, has been improving because of conservation measures similar to those taken by the United States. Canada cut its greenhouse gas emissions by 4.8 percent between 2005 and 2011, during a time when its economy grew 8.4 percent.

But with economic growth expected to continue, getting emissions down by 17 percent by the year 2020 is "a significant challenge," the government reported.

In particular, carbon intensity has been steadily growing in the tar sands, since at least 2005. The gains that officials cite, dating back to 1990, have long since been overtaken.

From 2005 to 2011, production of bitumen rose 64 percent, the trends report shows. The associated emissions of CO2 went up 76 percent.  

Bitumen production is on course to rise by another 90 percent between 2011 and 2020, and its CO2 emissions will grow even faster, by 105 percent, it forecast.

Reacting to the two reports, which came out within days of each other, the Pembina Institute, a Canadian think tank, noted that Canada was not keeping up with the United States.

Canada's new report "means we're even farther from our national goals than we were" a year ago, the institute's statement said. "In contrast, U.S. government projections show that the United States can achieve its identical 2020 national commitment if it implements the actions outlined in the President’s Climate Action Plan."

Can New Technologies Save Day?

To offset the rise in emissions between now and 2020, the carbon intensity of tar sands production would have to drop radically in the next few years.

The new report holds out some prospect of future improvements in emissions intensity, but it does not assume they will occur in time.

"Development of new technologies has ... reduced the emissions intensity of oil sands production over the last 20 years," the report said. "And further technological advances could play an important role in mitigating greenhouse gas emissions growth from the rapidly expanding oil sands sector."

But the report takes the conservative approach of not counting any carbon-savings from unproven new technologies in its emissions forecasts.

Several new technologies that might be around the corner—such as carbon capture or novel uses of solvents—are still being developed and they are likely to be costly. And so far, they are not required by regulations.

P.J. Partington, a climate change policy analyst at the Pembina Institute, said in an interview that the agency’s cautious assumptions about carbon intensity might reflect that "they don’t expect these technologies to see widespread adoption in the absence of regulations."

While Canada has repeatedly said it plans to issue new rules governing CO2 emissions for each industrial sector, including oil and gas, the regulations have not yet been proposed.

"Getting Canada back on track toward its emissions goal depends on these missing regulations," said Partington.

Rising Carbon Intensity of the Tar Sands

Both Redford and Prime Minister Stephen Harper have recently cited the past declines in carbon intensity in lobbying for the Keystone line during visits to the United States this year.

"We're bringing our emissions down as far and as quickly as possible," Redford declared, citing the comparison to 1990 while lobbying for the Keystone project in Washington. She claimed a 29 percent average decline in emissions intensity. In a later appearance, Harper claimed a 25 percent reduction "over the past decade or so."

Experts say there are several reasons that per-barrel carbon intensity has, in fact, hit a plateau in recent years.

One is that the efficiencies adopted by the industry in its early years were easily affordable—things like switching to natural gas from dirtier fuels. Those steps have already been taken.

Another is that after digging up the easily accessible bitumen from surface deposits, the industry had to shift to deeper deposits that required more energy to exploit.

Because of that, there's been a steady shift of production from strip mining with bulldozers and trucks to the "in-situ" methods that inject steam into deeper underground deposits, melting them so they can be drained through pipes. That requires enormous amounts of energy and gives off lots of greenhouse gases.

In recent years the Canadian oil and gas industry has conceded that its overall carbon intensity has stalled.

"A shift to more energy intensive production methods, such as ... expanding in-situ oil sands production, means reducing greenhouse gas intensity will continue to be a challenge in the near term," the Canadian Association of Petroleum Producers said in its latest annual report on the industry's environmental performance.

The Environment Canada report describes in detail the greenhouse gas implications of increasing in-situ production, especially using the widespread technique called SAGD, for steam-assisted gravity drainage.

Emissions of CO2 from in-situ production of bitumen are projected to more than double from 2011 to 2020, rising from 23 million tons to 55 million tons, it said.

Some Possible Solutions?

The new Canadian report does give several examples of the kind of "promising technologies" that it says could have the potential to bring down greenhouse gas intensity.

The main goal is to clean up the SAGD process, the fastest-growing method for extracting tar sands. According to the report, the emissions intensity of SAGD production hasn't really changed since its introduction at the turn of the century.

One way to reduce emissions, the report suggested, would be to inject oxygen into the natural gas that fuels the big generators that produce steam for injection into bitumen deposits. The result would be much purer emissions of CO2, making it easier to capture the greenhouse gas and store it underground.

But the costs of carbon capture and sequestration have kept it from becoming commercially viable so far.

Another experimental approach is to use solvents to help loosen the underground deposits, cutting the need for heat. Depending on how and where it is done, this could save as much as 25 percent or even 95 percent of the greenhouse gas emissions, according to industry estimates.

Pilot tests are underway. Among the crucial questions, according to industry presentations, is to find out how much of the solvents, or diluents, are left underground and how much can be retrieved and reused. They are similar to those used to dilute bitumen for shipment by pipeline, and they are expensive.

According to Pius Rolheiser, a spokesman for Imperial Oil, which has pioneered the use of solvents, the company sees a "double benefit" from solvents: reducing energy consumption and reducing greenhouse gases.

But he could not say whether the energy savings would be enough to make the expensive process economically viable—or whether the Canadian government would ever require industry to use solvents to reduce greenhouse gas emissions.

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