Enbridge oilsands pipeline's economic damage could exceed $100 billion

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Why the big range?

First, there is uncertainty in just how strongly our climate will react to CO2, and how much humanity will be able to adapt to these effects. Different economists run a different range of scenarios. Most then pick the middle values from their results. If you think climate impacts will be towards the high end of predictions then your views would be best represented by a higher cost per tonne SCC.

Secondly, much of these damages will occur in the future. The farther into the future, the more the economists “discount” these damages (reduce the present value of them). The choice of how much to discount future damages turns out to be one of the largest factors in the SCC. As the survey points out, this is at heart an “ethical judgement based on intergenerational impacts … Given that the present generation bears responsibility for carbon emissions, some argue that it should incur the cost of carbon abatement, not future generations who bear no responsibility.” So if you believe our generation should minimize the harm we do to future generations then your views would be best represented by a higher value per tonne SCC.

Thirdly, there is a broad range of opinions on the economic value of human life. New Scientist reports that the “Global Humanitarian Forum, an organisation led by former secretary general of the United Nations Kofi Annan, concludes that climate change kills an estimated 300,000 people per year, equivalent to the number of deaths caused by the 2004 Indian Ocean tsunami. Ninety per cent of them are in the developing world.” More recent studies predict climate change deaths topping a million people a year in a few years. If you are a person that puts a high value on human life then your ethics would be best represented by a higher value per tonne SCC.

As you can see, the amount of economic damage caused by vaporizing an extra 8.5 billion barrels of tar sands depends in part on your ethical and moral values. But even if your ethics and morality lead you to pick a low value, it still adds up to tens of billions of dollars in economic harm to humans.

Damages under-estimated

The Sustainable Prosperity study points out that each new tonne of CO2 will do more economic damage than the previous one. The SSC therefore will be higher for CO2 emitted next year than CO2 emitted this year. It will continue to rise until humanity brings climate pollution under control.

This can be seen clearly in the warnings coming out of the staid International Energy Agency (IEA):

"the world is perfectly on track to six degrees Celsius increasing the temperature, which is very bad news. And everybody, even school children, know this will have catastrophic implications for all of us."

 “Delaying action is a false economy: for every $1 of investment in cleaner technology that is avoided in the power sector before 2020, an additional $4.30 would need to be spent after 2020 to compensate for the increased emissions.”

"The world will have to spend an extra $500 billion to cut carbon emissions for each year it delays implementing a major assault on global warming."

As the Guardian newspaper summed it up:

"World headed for irreversible climate change in five years, IEA warns. If fossil fuel infrastructure is not rapidly changed, the world will 'lose for ever' the chance to avoid dangerous climate change."

Given that the SCC will likely rise over time and that the Enbridge pipeline will be pumping out tar sands carbon for decades, the total economic damages are probably under-estimated in the table above. It all depends on whether humans decide to phase out climate pollution or keep going “pedal to the metal” with projects like this pipeline.

We pay and they don’t?

So far, neither Enbridge nor the tar sands corporations are willing to pay for these billions in economic damages that their product will cause others. These corporations prefer the higher profits they make by not paying for it.

This is the tactic the tobacco corporations tried for a long time as well. Eventually society forced them to pay a tax on every cigarette to help cover the economic damages created by burning their product.

The question at hand for the people of BC is whether we should help the tar sands corporations continue to avoid paying for their damages by allowing them to build their “damage others for free” pipeline across our province.

All of us in BC, businesses and everyday folks, have to pay $25 for every tonne of CO2 when we burn tar sands oil. Why would we help others to burn tar sands without paying a similar amount?

As pointed out in my previous article, the climate damage pumped every year through the proposed Enbridge “Northern Gateway Pipeline to our Atmosphere” would be eight times the climate damage we in BC are obligated to cut by 2020. We will pay billions in carbon taxes to make those cuts. Why help someone else wipe them out eight times over?

Will our BC government charge us billions of dollars to cut climate pollution and then turn around and help a few wealthy oil corporations (now 40% foreign controlled) wipe out all our expensive efforts and sacrifices?

Maybe these oil corporations will find a way to profit off China vaporizing billions of tonnes of our tar sands without paying for the economic damage the CO2 causes. Maybe not. I certainly hope not.

But I will personally be appalled if our own Premier Christy Clark charges our own BC families billions of dollars while helping outside corporations and other nations escape paying those billions on the same product.

Building this pipeline is equivalent to doubling the number of cars and trucks on the road in Canada. It is equal to deciding to nearly tripling Canada’s coal-fired power plants. We know that doing this would cause great harm. Our Prime Minister has even passed laws to force Canadians to cut climate pollution from both vehicles and coal power plants. Is there a reason that Stephen Harper is pushing Canadians to make big cuts while helping China to increase their climate pollution? Why the double standard on our own resource?

What isn’t counted in the Social Cost of Carbon?


The Sustainable Prosperity survey says SCC estimates are probably too low:

“The major unknown is the actual impact of climate change, in terms of frequency, timing, location and magnitude, and possible catastrophic effects, and how these will impact society and the economy. Most of these unknowns are left out of studies that make SCC estimates, because they cannot be predicted with any degree of certainty. They also omit, due to uncertainty, the role of technological change. Or, they assume that future technological improvements favour delayed action. The omission of these factors also contributes to a SCC estimate being lower than it probably should be.”

In addition, some low SCC estimates leave out costs that are not monetized into the GDP such as damaged human health and loss of biodiversity.

The bottom line: climate damages that have no dollar cost to humans get excluded from SCC estimates. For example, recent research showing that ocean acidification can cause clown fish to lose their sense of smell; sea bass to lose hearing; and cod larvae to develop “severe damage to their liver, pancreas, kidney, eye and gut about a month after hatching” just wouldn’t be counted in the social cost of carbon estimates. Personally, I care about this stuff. It seems immoral to inflict harm like this for centuries on the earth’s creatures because we don’t want to clean up our act. To me it is just plain wrong.

And finally, of course, the estimates of economic damage above exclude any liquid-oil spills, either from the pipeline itself or from an Exxon-Valdez-type supertanker rupture along the coastline.

Are there any limits on how fast we allow climate damages to explode out of the tar sands? And just how much damage to ourselves and others are we willing to let multi-national oil corporations profit from without paying for?


Endnotes: The calculations for total climate emissions from crude pumped through proposed pipeline are based on the following data. Enbridge lists the final capacity of “Northern Gateway” at 800,000 barrels a day and the pipeline lifetime of 30 years. Data from Environment Canada data shows the wells to wheels emissions per barrel for tar sands oil averages at least 0.513 tonnes of CO2. This doesn’t include emissions from refining and transport outside Canada or from producing the energy used in tar sands operations.


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