Tar Secret #2: What percentage of Canada's GDP comes from the tar sands?
The "Tar Secrets" series delivers you essential climate facts missing from government and tar sands marketing spin. Last week we compared tar sands climate impact to US coal. This week we hunt down one of the most elusive facts of all: what percentage of GDP comes from tar sands. Any guesses?
In a nutshell
What the tar sands industry says -- Rapid expansion of bitumen extraction from the tar sands should be a "nation-building" priority. The many thorny climate, environmental, social-license and First Nations issues should not be allowed to significantly impede the industry because rapid expansion offers hundreds of billions of dollars to Canada's GDP over the next 25 years.
What they leave out -- How do the tar sands compare to other industries? Missing from the discussion is this needed piece of information: the percent of GDP that comes from the tar sands.
In years of researching the tar sands I've only seen this basic data point published once. Seven years ago the Canadian Energy Research Institute (CERI) estimated that the tar sands and related activities were around 1.5% of GDP in 2000. Since then...radio silence.
If the Canadian public can't compare the economic impact of different industries how can they possibly make informed decisions on which -- if any -- deserve priority status, "nation-building" trump cards and special exemptions?
In an effort to provide you with this essential "tar secret" I dug into several data sources and made my best effort at calculating it. (Note: for details on data sources and calculations see the "geeky details" section at the bottom of this article).
My calculations show the tar sands provide roughly 2% of Canada's GDP today. For every province outside Alberta the impact is less than one half of one percent of their GDP.
What about the future?
CERI estimates that if the tar sands industry is allowed to triple carbon extraction it could provide up to $2,106 billion in GDP over the next 25 years. But, again they don't tell you how that compares to the other parts of our huge economy. My calculations show that this would represent ~3.7% of Canada's $57 trillion dollars of GDP over that time. The province that would see the largest percentage impact outside Alberta would be BC at ~0.4% of our provincial GDP.
At a glance
My two charts below let you quickly see the relative contributions of the tar sands to our national and provincial GDPs.
- Statistics Canada data shows that "non-conventional oil extraction" provided 1.6% of Canada's GDP in 2012. Hey, did you guess the correct slice?
- In addition, "support activities" for all mining, conventional oil and gas, and non-conventional oil extraction added another 0.7%.
- So perhaps 2% of GDP is a good ballpark estimate from tar sands extraction and support activities
- Over 90% of the economic benefit goes to Alberta. For provinces outside Alberta the tar sands contribute an average of 0.2% of GDP.
What about the future impact from a "nation building" effort to push past all the objections and roadblocks and thereby triple bitumen extraction? My next chart shows the percent of GDP resulting from the $2,106 billion that CERI's estimates could result from this over the next 25 years.
- A tripling of tar sands could contribute ~3.7% of Canadian GDP over those 25 years.
- According to CERI, around 94% of benefits would go to Alberta, producing perhaps a third of their province's GDP.
- The remaining 6% of benefits would be spread out over the rest of Canada, producing less then one half of one percent of GDP for any other province.
- CERI says "Ontario, British Columbia, and Quebec receive the highest impact" outside Alberta. BC would see the highest percent of GDP from tripling bitumen extraction: 0.4% of GDP.
Here are some comparisons. In Norway the oil and gas sector produces 23% of GDP. In the UK the financial services sector produces 10% of GDP. In Canada, a sector like "Professional, scientific and technical services" produces 5% of GDP.
An effort that results in less than one half of one percent of GDP in all provinces outside Alberta just doesn't say "nation-building" to me.
There will be costs and benefits to Canadians from a rapid tripling of tar sands extraction. These need to be weighed against each other if we are to make informed decisions.