IT’S EASY TO POINT OUR FINGERS AT OIL INDUSTRY
End users more to blame for emissions than producers, says Richard Neufeld.
The Senate Committee on Energy, the Environment and Natural Resources released its fourth of five interim reports last month as part of its ongoing study on Canada’s transition to a lower-carbon economy. The report focuses on Canada’s oil-and-gas sector. Our committee wants to find out how, and at what cost, the industry can reduce its greenhouse-gas (GHG) emissions while remaining competitive, stimulating our economy and providing goodpaying, family-supporting jobs.
The oil-and-gas sector represents 7.7 per cent of Canada’s gross domestic product and is worth $142 billion. It directly and indirectly employs 700,000 Canadians. However, according to Canada’s 2015 emissions profile, the upstream oil-and-gas sector (extraction and production) was responsible for 168 megatons of GHG emissions, which represented 23 per cent of our overall emissions. Government projections indicate the sector will emit 175 megatons in 2020 and 193 in 2030.
For accounting purposes, the government has divided Canada’s emissions profile into six sectors. About threequarters of our emissions are attributed to other spheres of our economy beyond the oil-and-gas sector, including transportation, electricity, buildings and agriculture. Obviously, these sectors rely heavily on fossil fuels to exist. For example, some Canadian jurisdictions burn coal to produce electricity or use diesel generators, most people drive cars powered by gasoline or diesel, many commercial and residential buildings heat their homes with natural gas. Emission-intensive, tradeexposed industries (cement, aluminum, petrochemical producers) rely on fossil fuels for their feedstock to produce high-quality products.
But as our committee’s report suggests, “if the global community achieves its Paris Agreement targets, overall demand for oil and gas commodities will decrease.” The key word here is “if.” Two years into this study, I am not convinced Canada (or the world for that matter) will achieve its climate-change goals. The reality is the world continues to consume fossil fuels at a growing rate. Renewable alternatives have been making some breakthroughs into the market, but at a pace that barely makes a dent in the overall demand for fossil fuels.
As Peter Tertzakian recently wrote, “the percentage of fossil fuels in the world’s energy mix — coal, oil and natural gas — is still lingering well above 80 per cent, a figure that has changed little in 30 years. … We’re in an era of energy diversification, where alternative sources to fossil fuels, notably renewables, are growing alongside — not at the expense of — the incumbents.”
In light of this reality, as our report submits, “Canada’s oil-and-gas industry faces challenges to cost-effectively reduce emissions while retaining and competing for market share in a carbonconstrained world.”
So what is Canada to do about its rich and vast oil and natural gas plays? Some environmental activists would suggest to keep it all in the ground. That Canada should, for the greater good of humanity, opt out from developing these resources and forgo billions of dollars in tax revenues and royalties.
In fact, when you consider our emissions profile, we could almost achieve our 2030 Paris Agreement targets by completely shutting down our oil-and-gas sector. While this outcome would have David Suzuki performing cartwheels and activists claiming victory, I can assure you that this scenario is short-sighted, unrealistic and practically unachievable, unless we are wiling to completely destroy our economy and way of life as we know it today.
Many people fail to understand that producing and upgrading the average crude oil represents a small portion of overall GHG emissions when considering a well-to-combustion scenario. According to ARC Financial, using the average crude oil refined in the United States for example, “on average, the upstream activities that a producer of crude oil is responsible for constitute 11.6 per cent of all the well-tocombustion emissions.” More than 80 per cent of emissions take place at combustion.
In other words, emissions from the extraction and production of oil and gas accounts for a fraction of the total GHGs attributed to the average barrel of oil.
What does that mean in practical terms?
It means that Fred and Martha, your everyday Canadians, are ultimately responsible for a considerable portion of emissions from fossil fuels when they drive their cars to work, heat their homes or hop on a plane.
In most Canadian jurisdictions, including the territories, turning on the lights, watching television, charging electronic devices, could also result in direct emissions.
Once more, the energy end-user is responsible for those emissions and yet we are often quick to point the finger at the oil-and-gas industry for being the major culprit when in fact, we are.
Further, I think it’s important to remind Canadians that only about half of the 97 million barrels of oil used every day around the world is for road-transportation fuels, such as gasoline and diesel. What is more, some 6,000 everyday products are made from petroleum, from soap, to eyeglasses and sports equipment and pharmaceuticals.
In light of this reality, Canada has a huge challenge to overcome if it wants to get anywhere close to meetings its GHG targets. Keeping fossil fuels in the ground is not an option.
While options to displace fossil fuels exist in many areas, such as electric vehicles and renewable feedstock in the production of plastics for example, the bottom line is that the use of fossil fuels will continue to be widespread until alternatives are affordable, scalable, equitable and both practically and realistically achievable.
Renewable alternatives have been making some breakthroughs into the market, but at a pace that barely makes a dent in the overall demand for fossil fuels.