Can Canada reduce greenhouse gas emissions while still supporting western Canada’s oil industry?
Last week, the Trudeau government announced a new carbon pricing system and ratified the Paris Climate Agreement. Having demonstrated a commitment to addressing climate change, the federal cabinet may approve a new pipeline next.
The most likely project to be approved is Kinder Morgan's Trans Mountain Pipeline expansion, which would triple the capacity of the existing pipeline transporting bitumen from Alberta to Burnaby, British Columbia.
Before a decision on that project is made, the federal government needs to get the greenhouse gas emissions numbers straight. Otherwise, the pipeline and climate change debate will rage on for years.
The Environment and Climate Change Canada review of the Trans Mountain Pipeline expansion, commissioned by the Trudeau government, calculates the “upstream” emissions associated with production of bitumen that would be transported by the additional pipeline capacity (14-17 Mt of CO2 equivalent per year).
However, the review then concludes that the real-world or “incremental” upstream emissions would be negligible.
The reason given is 'global markets': “if oil sands production were to not occur in Canada, investments would be made in other jurisdictions and global oil consumption would be materially unchanged.”
We’ve all heard this argument, whether at the dinner table, in the media, or in formal assessment of energy projects: if we don’t do it here, it will happen elsewhere anyway.
The argument sounds logical. But it suffers from a “tragedy of the commons” fallacy.
Imagine for a moment that every proposed fossil fuel project in the world were to be independently subjected to the same analysis. In each case, the economic modelling would conclude that as long as prices were sufficient, the fossil fuels would be extracted and burned somewhere on the planet, regardless of whether that particular project were constructed.
Each assessment would, on its own, appear correct. Yet if the results of all these individual assessments were added together, the conclusion would be that the net greenhouse gas impact of all new fossil fuel projects on the planet would effectively be zero.
Obviously, this is wrong. If the world constructed new fossil fuel extraction projects, they would certainly produce greenhouse gas emissions.
The analysis in the Environment and Climate Change Canada review is therefore mathematically inconsistent if applied broadly. It is structured, whether accidentally or not, in a way that it will always provide a net greenhouse gas emission answer of close to zero.
The mistake is forgetting that climate change is a collective action problem. The atmosphere is a global commons, to which every country contributes greenhouse gas emissions. If every country uses the existence of other emitters as an argument against reducing emissions, then emissions can never be reduced.
This dilemma is the foundation of most environmental policy. Rules, regulations and taxes surrounding pollution, whether in our waterways, in the atmosphere, or inside buildings, are necessary to address the “tragedies of the commons.”
The rules create a framework with which governments can evaluate whether individual actions are detrimental to the common good.
On climate, Canada still lacks that critical regulatory framework. We don’t actually evaluate the compatibility of new carbon-intensive projects like pipelines or natural gas facilities with the federal climate targets.
Yet, it can be done. Using data from the Intergovernmental Panel on Climate Change, my colleague Kirsten Zickfeld and I have calculated Canada’s share of the carbon the world can burn without passing the 1.5°C and 2°C warming limits in the Paris Climate Agreement.
Combining that analysis with emissions data from Environment and Climate Change Canada data shows that approving the Trans Mountain Pipeline expansion would commit a substantial fraction of the remaining carbon “budget” to the oil sands.
Over just 20 years of operation – the length of time for which Kinder Morgan advertises economic benefits of the expansion – oil sands emissions would consume between 9% and 46% of Canada’s portion of the 2°C carbon budget, depending on how we divide up the world’s “remaining” carbon budget.
Over 50 years of operation, oil sands emissions would comprise from 25% to 100% of Canada’s budget.
The implications are clear. If the federal government is serious about its climate commitments, approving the pipeline expansion would require either tremendous, arguably unrealistic, emissions reductions by other sectors of the economy, or a large investment in purchasing emissions credits from overseas.