Taking action in support of our vital natural resource sector

The federal government’s decision on whether or not to approve the new Frontier oil sands mine is coming soon. No less than a global perspective must be taken by our government when choosing. Shutting the project down has the potential to hurt the global environment through carbon leakage, resulting in the transfer of oil output and market share to less environmentally responsible producing nations around the globe.

Fact is that oil will be a large part of the world’s energy mix for a very long time despite what any white-knuckled environmentalist tells you. Decades at least will pass before peak oil happens says the International Energy Agency (IEA), perhaps the most reputable establishment of its kind around.

Global oil demand is growing 🛢 pic.twitter.com/XAMvaRvOqc

— Canada Action (@CanadaAction) January 8, 2020

Forecasts from other credible organizations like our very own Canadian Energy Regulator (CER) project that Canada’s oil sands will have a large part to play in meeting some of the rising global demand in 10, 20 to even 30 years from now and beyond. The CER says our national oil output will increase by nearly 50 per cent to around 7 million barrels per day (bpd) by 2040.

With 260,000 bpd of production at full capacity, the new Frontier oil sands mine in northern Alberta – if approved by the federal government in February 2020 – will be just a small part of Canada’s future energy puzzle, and it’s important that it be approved come next month from an environmental perspective. Here’s why.

GHG Emissions are Global: Fact

Consider that the greenhouse gas (GHG) emissions intensity of the Frontier project will be about 50% less than the oil sands current industry average, and less than half of the oil currently refined in the United States. Those two facts alone should give pause to anyone interested in this new oil sands mine, even opposing environmentalists, because our atmosphere is shared with the rest of the world.

GHG emissions don’t respect national boundaries. Emitted carbon dioxide (CO₂) from Canadian industries will transcend regional borders and eventually cross oceans. And vice versa.

Upstream GHG emissions from production of the Brass crude blend in Nigeria, for example - which is more than four times higher than Western Canadian Select (based off 2010/11 data) largely due to the uncontrolled release of methane gas during operations - do not respectfully stay put in Nigeria.

Another study published in the Proceedings of the National Academy of Sciences with authors on both sides of the Pacific Ocean confirms our environment is in fact global – like there was any doubt in the first place. It found that industrial emissions from Asia were at times drifting across the ocean and affecting the air quality on the west coast of North America.

Carbon Leakage from Canada to Elsewhere: Example

A global environment perspective is a key aspect of carbon leakage, which is probable from Canada to less environmentally friendly oil producers if the new Frontier oil sands mine is not approved. This also means a transfer of wealth away from Canadian families and governments to elsewhere.

> Learn about economic benefits - Teck Frontier Mine: 8 Must-Know Facts

Take Canada’s aluminum industry, for example. A 2018 report by Navius Research shows how climate policies - while an important aspect of environmental, social and governance (ESG) investor criteria - were affecting the competitiveness of Canada’s primary aluminum production by increasing the cost of doing business. When Canadian aluminum companies are out-competed by countries with cheaper production rates, emissions relocate themselves – also known as carbon leakage.

The report found that Chinese primary aluminum production had about four times the emissions as Canada. That in the Middle East, slightly less.

Greenhouse gas emissions intensity in China are 4x greater than Canada - Navius Research

Greenhouse gas emissions with carbon leakage - Navius Research

1 Tonne Emission Decrease = 4 Tonne Emission Increase - Navius Research

Another finding was that the end result of displacing aluminum production to more competitive nations was an increase in global emissions by 1.6 megatonnes (1,600,000 tonnes) and along with it the expulsion of thousands of Canadian jobs and hundreds of millions in economic activity from our borders to elsewhere.

Carbon Leakage and the Frontier Mine

Oil demand is growing and will for many years to come. Canada’s production is also projected to grow by 50% or more by 2040. It’s only logical that growing demand is met by the most leading-edge, low-carbon oil producing projects the world has to offer. Hence, shutting down the new Frontier oil sands mine will very likely result in carbon leakage similar to that described above in the Navius report.

The new Frontier mine is projected to have a GHG emission intensity that's 50% less than the oil sands industry average, and less than half the oil currently refined in the United States. Teck is also a member of Canada’s Oil Sands Innovation Alliance (COSIA) which works towards accelerating the pace of environmental performance and has done so over the past several years by collectively:

> Reducing water use from the Athabasca River at mining operations by 18% between 2012-2018

> Reducing GHG emissions intensity at mining operations by 9% between 2012-2018

So, the question remains: As a Canadian, do you want an oil producing project with less GHG emissions intensity to account for some of the world’s growing global demand for years to come, while our country bears the social and economic fruits it will bring? Or would you have those emissions multiply elsewhere, and the jobs and revenues to be expunged along with?

We choose Canada. For obvious reasons the federal government should also, and so should you.