Tar Secret #6: Oilsands pay one dime per barrel for their climate pollution

The "Tar Secrets" series delivers you essential climate facts missing from government and tar sands marketing spin.

The best information I can find shows that Alberta's tar sands industry paid just ten cents per barrel for their climate pollution last year. 

For scale, consider that the industry sells those barrels for 800 times that much: $80.

Environment Canada projects that Alberta's weak climate policies will allow the CO2 from their tar sands industry to increase so much that they will single-handedly wipe out all the CO2 cuts being made by all the rest of Canadians -- for years to come.

Figuring out just how much the tar sands industry actually pays per barrel for their climate pollution required some detective work. I've never seen the figure published. And as anyone who has looked at Alberta's climate policies knows, they are so full of complexities and exemptions that it can be hard to figure out just who is paying how much. Below are the best future and past estimates I could find. (Note: see "Geeky Details" section on page 2 of this article for the data and the math on both future and past estimates.) 

Future CO2 fees

The Canadian Energy Research Institute (CERI) publishes estimates of average costs per barrel over the next 35 years for new projects.

  • 37 cents for SAGD. CERI calculates that the most climate-damaging method of extracting bitumen – SAGD – will pay a net average of just 37 cents per barrel for their climate pollution over the next thirty five years. That assumes Alberta will raise its carbon price from $15 to $40 per tonne of CO2 (tCO2). So far, Alberta has never increased their carbon price.
  • 20 cents for mining. Mining bitumen is much less climate polluting than SAGD. CERI estimates that bitumen mining projects will pay a net cost of only 20 cents per barrel over the next thirty five years. Again that assumes an ever rising carbon price.

Past CO2 fees

CERI's future projections are for a typical tar sands project built in the future under a rising carbon price. But how much did the industry actually pay last year under Alberta's current policies? I couldn't find this information anywhere so I did my own calculations based on published data from the Alberta government.  

  • 10 cents last year. My calculations show that last year the net cost to the tar sands industry was just 10 cents per barrel for their climate pollution. Possibly a lot less.
  • $1 per tonne of CO2. To put it in more familiar terms, that works out to around a $1 per tonne of CO2 (tCO2) pollution. Alberta says they charge their tar sands industry $15 per tCO2. But their climate policies are so full of exceptions and loopholes that they only charge that $15 to a tiny fraction of the tar sands industry's CO2 pollution. Around 96% of CO2 gets to pollute for free. As a result, the average net cost to the oilsands industry was just $1 per tonne of their CO2 last year.

BC charges 30 times more

Next door, BC charged its oil and gas industry thirty times more: $30 per tCO2.

In fact BC charges everyone from industry, to schools, to governments, to soccer moms filling up the minivan, the same $30 per tCO2. There are almost no loopholes or exceptions for burning fossil fuels in BC. If you burn coal, oil or natural gas inside BC you pay $30 per tonne for the climate pollution that causes.

In contrast, Alberta exempts 96% of the CO2 in their province from having to pay anything. For the remaining tiny percentage, Alberta charges only half as much as BC does per tonne.

Studies show that BC's Carbon Tax policy is working. BC's climate pollution is declining while the BC economy is growing faster than the nation's economy as a whole. The Harper government has repeatedly vilified carbon taxes claiming they will destroy the economy. BC's multi-year successful experiment shows this is not true.

Alberta's climate policies, on the other hand, show that charging only a dollar or two per tCO2 is ineffective at reducing climate pollution. Alberta's climate pollution is soaring and the main reason -- bitumen extraction -- is in fact becoming ever more carbon-polluting per barrel. The result of Alberta's weak policies is spectacular climate failure for both the province and our nation.

Alberta driving national climate failure

Environment Canada projects that the rapid expansion of climate pollution from Alberta's tar sands industry will cause the province to fail to meet its own climate goals. More troubling, the climate failure driven by the tar sands pollution will spill far beyond Alberta's own borders.

Environment Canada says that by 2020 the surge in tar sands industry's pollution will nullify all the CO2 cuts made by all the rest of Canadians. Take a look:


Dirtier by the barrel

One of the drivers for the projected surge in oilsands climate pollution is the fact that the industry has been rapidly switching to a much more climate polluting method of extracting bitumen: SAGD.

According to Environment Canada, SAGD emits twice as much CO2 per barrel compared to traditional bitumen mining.


Alberta's "dime a barrel" climate policies are much too weak to prevent the rush into ever-more-climate-damaging extraction methods. CERI shows that the industry has been rapidly shifting to the twice-as-climate-polluting SAGD for new projects for a few years now. They project that three-quarters of all new tar sands projects in the coming decades will be SAGD under current climate policies.

The result of the rush to SAGD, according to Environment Canada, is that the industry's average carbon-intensity has already increased 8% per barrel of bitumen in just the last six years. They project the industry average will grow to 16% more climate polluting per bitumen barrel by 2020.

For years, the tar sands industry has pointed to their declining carbon-intensity per barrel as evidence that they are working to reduce their climate impact. Now federal government data shows that even that isn't true anymore.

Federal government remains on the sidelines

Canadian Prime Minister Stephen Harper has repeatedly promised the world that Canada – the world's ninth largest climate polluter -- would cut our national climate pollution levels. Most recently he signed the Copenhagen Accord that pledged Canada to cut emissions to 17% below 2005 levels by the year 2020.

With Alberta's climate policies proving to be far too weak to prevent a national climate failure, it falls to Mr. Harper's federal government to do something about it.

For seven years his federal government has promised to regulate climate pollution from Alberta's tar sands industry. So far, nothing. Just a few days ago, Prime Minister Stephen Harper announced that once again his promised federal regulations would be put off -- indefinitely.

There is not much you can buy for a dime anymore. But Alberta appears to consider it a reasonable amount to charge their oilsands industry for an average bitumen barrel's worth of climate pollution. As CERI concludes, the impact of Alberta's current climate policies on tar sands climate pollution levels will be "minimal" for decades to come.

(note: the next page contains "Geeky Details" and two bonus charts...)

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