The Fantasy of "Green Bitumen"

Thu, 2009-05-14 22:56Mitchell Anderson
Mitchell Anderson's picture

The Fantasy of "Green Bitumen"

The petro state of Alberta has outdone itself again. The Canadian province best known as home of the tar sands recently named former Syncrude executive Eric Newell to head up a multi-million provincial climate change fund. With no apparent irony, the province apparently felt that someone from the industry with the fastest growing emissions in Canada would be the best choice for this high profile job.

Newell now becomes president of the Climate Change and Emissions Management Corp, a provincial government scheme where companies that release more than 100,000 tonnes of CO2 per year are supposed to reduce their intensities by 12% or pay $15 per tonne above their target.

The program has been slagged by environmental groups since it seen to promote the widely panned concept of “intensity targets” rather than absolute carbon reductions. In the bizarre logic of intensity reductions, carbon emissions can and will go up as long as industries increase overall efficiencies. Imagine someone flapping their arms as they fall from a plane and you will get an idea of the efficacy of this policy.

In any case, the moneys raised by this scheme are so pitifully small they are neither much of an incentive to conserve, or a pool of capital to retool. Annual revenues are estimated to be $177 million or less than 0.1% of provincial GDP. The $15 per tonne penalty is also a joke compared to what is needed to provide disincentives to using the atmosphere as a virtually free dumping ground.

A report released this week by the Canadian Energy Research Institute (CERI) shows that carbon penalties need to be at least four times higher to provide meaningful market incentives to reduce carbon emissions.

CERI recommended carbon levies of at least $65 per tonne, which would add about $4 per barrel to already prohibitive production costs. No wonder that the tar sands boys would rather keep talking than deal with this problem.

The CERI report went much farther, stating that realistically, oil prices would have to be above $90 a barrel to bankroll the very expensive band-aids needed to control massive production emissions. And if construction costs climb as they did five years ago, oil prices will have to top $110 per barrel to make building these band-aids profitable.

Green of course is in the eye of the beholder. Believe it or not, nuclear reactors are towards the top of list to make the tar sands a greener venture. Nukes would help replace the massive amount of comparatively clean natural gas burned every day to pry the tarry bitumen from wet shale. The tar sands squander enough natural gas to heat 2.3 million Canadian homes every day.

Even if all these unlikely planets aligned, such production emissions are only one quarter of the so-called “downstream” emissions. Put another way, the only reason you would ever refine tar it into synthetic crude is so that it can be burnt in a car engine elsewhere in the world.

Unless drivers consent to dragging long hoses from their tailpipes, “carbon capture” technologies will never be able to deal with this often-ignored issue.

These downstream emissions dwarf even the colossal production emissions. There is enough extractable carbon in the tar sands to dump an incredible 122 billion tonnes of carbon into the atmosphere, no matter what shade of lipstick is applied to the pig at the production phase.

The bottom line is the tar sands will never be “green”. The already marginal economics forced most operators to pass on accessing billions in taxpayers dollars to build carbon capture pilot plants. Earlier this year, Shell abandoned plans to reduce emissions to those of conventional oil, even though this humiliating climb-down exposed them to litigation that threatens a $13.7 billion oil sands expansion project.

Even if the Alberta government grew a pair and quadrupled the carbon levy, oil prices would have to be at near historic levels to bankroll this industrial Potemkin Village. And if oil prices were again scraping the stratosphere, the incentives to shift away from the oil economy to renewables would become even more compelling.

The report from CERI is useful in that it outlines the fantasy market conditions that would have to exist, perhaps in an alternate universe, where the tar sands would be considered something other than an ecological catastrophe.

From an investor’s point of view, all of this is a huge red flag of risk for those thinking of throwing money at the Alberta oil “boom” now gone bust. The days of George Bush are receding rapidly in the rear view mirror. Credible carbon pricing is coming and the tar sands are poised to be a very big loser.

Previous Comments

Not at all sarcastically, Mitchell, we do appreciate that readers may discern a few realities underneath your vigourous criticism. One, that Alberta has a carbon charge, and has had one for going on two years (and also has about three years of monitoring and reporting of emissions, to boot). Two, that Alberta’s $15 per tonne charge is precisely $15 more per tonne than anyone else here in North America is charging right now. Yes, we understand that you do not believe our current, active program measures up to planned, potential, future, possible approaches being talked about in other jurisdictions. But perhaps in the days to come you can judge what we do to stay ahead, because that is what we will do. If your readers are interested, the link below outlines the active, on-going climate change startegy that is in place in Alberta. The second link is to the active, on-going effort to commercialize CCS.

http://www.environment.alberta.ca/3293.html

http://www.energy.alberta.ca/Initiatives/1438.asp

- David Sands, for the Government of Alberta

 

Mitchell, a nuclear reactor would be great for the tar sands. And another one would be great for general electical production for Albertans.

Secondly, the oil sands are here to stay, as long as people demand oil. The security value of Albertan oil over Middle East oil is enormous and won’t go away.

Lastly, the Albera oil economy has not gone “bust”. It continues to employ hundreds of thousands of Canadians in high paying jobs providing a resource society still demands … oil.

Great read, will add to digg.

Prediction: They will just pay the fine.

100,000 tonnes over the limit? Big deal, it is only a $1.5 million fine, and depending on the price of a barrell of oil that much money will be recovered by noon of the next day for the big Tar Sands corps.

  Anything But Lower Emissions… that is their motto: ABLE - because after denying GW exists for so long they have come to believe that climate change is good for Alberta - I KNOW!! IT DOESN’T MAKE ANY SENSE!! 

  Electric cars, renewable energy, home producers of power… spells the end for the fossil fools. They are trying to stall the new world as long as possible so they will be ABLE to sell more oil. They don’t have to make sense, they just have to delay change.

  Listen to the Alberta Govt. Spokesperson [who posted here] chat like he is being sincere about Alberta’s progressive attitude to reducing emissions!! LOL. What a farce - and I bet he keeps a straight face the whole time, a real professional oilman. These guys are not yet aware that we all live on the same planet.

 

Why blame the Alberta oilsands when no one else is reducing their own CO2 emissions?  BC isn’t. Ontario isn’t. Quebec isn’t.

‘Electric cars, renewable energy, home producers of power… spells the end for the fossil fools.’

LOL. We’ve been hearing this for years. Except the cost of your electricity would impoversish most Canadians. Good luck with that one.

So, you ask why some people aren’t reducing their CO2 emissions and then ridicule those who are doing this by tapping into clean and renewable energy?  Are you so obnoxious and callous as to do this?

GET A LIFE AND STOP YOUR IDIOCY!!!

If someone is tapping into green energy on their own, more power to them. But when green advocates and other provinces demand Alberta reduce CO2 emissions while increasing their own CO2 emissions year after year, I say forgeddaboutit.

Nuclear power for the tar sands!  Somebody’s trippin’.  See my comments at the Foreign Policy Assn. blog on climate change.  Not incidentally, is somebody calculating the massive GHG output from the land use changes in devastating the forests? 

The only ones trippin’ Bill are the ones who believe the tar sands are going to disappear.

From a CO2 perspective, using nuclear power instead of natural gas makes sense.

Secondly, as the size of the land mass disturbed by the tar sands is small, there is no “massive” GHG output.

“Secondly, as the size of the land mass disturbed by the tar sands is small, there is no “massive” GHG output.” -paul s

One-third the increase of GHGs nationally since 1990 can be accounted for in the Tar Sands operation.  So, if Canada’s national GHG emissions have risen 30% since 1990 (though it is likely more than that), 10% of this rise can be attributed to the Tar Sands operation process.  It is the single largest source of GHG pollution worldwide and is a blight on our nation’s reputation!

“One-third the increase of GHGs nationally since 1990 can be accounted for in the Tar Sands operation.” 

That is factually incorrect Stephen.

In 1990, Canada produced 596 Mt of GHG’s. In 2005, it was 747 Mt of GHG’s. This is a total increase of 151 Mt of GHG’s for all of Canada. (Page 36)

In 1990, all fossil fuel production (not just tar sands production) produced 58 Mt of GHG’s. In 2005, it produced 88 Mts of GHG’s. (Page 43) This is an increase of 30 Mt of GHG’s.

http://www.ec.gc.ca/pdb/ghg/inventory_report/2005_report/2005_report_e.pdf

So, the increase in GHG’s emitted by industries involved in conventional oil/tar sands/natural gas and its extraction and refinement, even adding all these together, resulted in less then 20% of Canada’s increase in GHG’s. If only tars sands was reported by the Govt of Canada, their contribution to GHG increase would be even less.

 

“It is the single largest source of GHG pollution worldwide and is a blight on our nation’s reputation.”

You’ve been drinking the Kool Aid again I see Stepen. Foot in mouth Again, factually incorrect. Government of Canada statistics bear me out.

Several other industries in Canada alone produce more GHG’s the the tar sands.

Tar sands: 40 Mt GHG’s

Electrical generation: 129 Mt GHG’s

Manufacturing: 46 Mt GHG’s

Agriculture: 57 Mt GHG’s

Residential heating: 42 Mt GHG’s

http://www.ec.gc.ca/pdb/ghg/inventory_report/2005_report/2005_report_e.pdf (Page 43)

You were wrong on your previous ‘facts’ Stepheen. Why not address those mistakes first? Frown

I have read one article that talks about nuclear elements, such as thallium(if I can still remember it right), being studied to become sources of energy that will fuel up electric cars. I have not yet seen any concept or any proposed blue print engine assembly of this but I do hope that it will work.

Wooow.. great information. You have done a good job. 

Kindly post similar this one. 

Jobs for 18 year olds

[x]
Oil by rail

In 2009, Matt Taibbi wrote a piece in Rolling Stone in which he described the investment bank Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” 

Apparently tar sands oil smells like money. And thus the vampire squid has found another target. As Reuters reported on August 29:

... read more