Cracking the carbon emissions conundrum
Oilsands galloping growth is outpacing efforts to reduce greenhouse gas
It’s Alberta’s biggest environmental battle — to reduce the rising greenhouse gases in the oilsands — and former oil executive Eric Newell is running a global search for some silver bullets.
Newell also knows it’s a race against time.
At this critical juncture, while the U.S. and all other industrialized countries are reducing carbon emissions to combat global warming, Alberta’s greenhouse gas emissions just keep rising.
Those emissions are a major reason Canada won’t meet its international target for 2020 requiring a 17-per-cent reduction in carbon emissions from 2005 levels. They are also negating the impact of reductions in other provinces which have moved away from coal-fired electricity.
Federal figures released this October show Canada’s emissions are again on the rise, after six years of decline. By the end of the decade, they will be 20-per-cent higher than the climate-change targets set at the 2009 Copenhagen Summit — in essence, little reduction from 2005.
Newell, chairman of the province’s Climate Change and Emissions Management Corporation, says the situation is growing urgent. As a former CEO and chairman at oilsands giant Syncrude, he also knows what’s at stake if Alberta’s efforts fail.
“If we want to expand oilsands production as planned — and get all those economic benefits for Canada and Alberta — we have to reduce emissions absolutely, not just per barrel,” he says. “That’s the challenge.”
It’s a tall order but under CCEMC’s mandate, Newell takes the long view. By 2050, Alberta must cut a massive 200 megatonnes from the 400 megatonnes of greenhouse gas emissions that will accompany planned expansion of the oilsands in decades ahead.
Critics point out the province isn’t even on track to meet its interim target of a 50-megatonne reduction by 2020; it may achieve one-third of that goal.
Oilsands GHG emissions were 48 megatonnes in 2010, but are set to more than double to 104 by 2020.
So Newell and the CCEMC are searching for silver bullets or, as he calls it, “transformative technology.”
“We are looking for gamechangers, and they do come along.”
NEW TECHNOLOGY GAMBLES
There’s plenty of money to put into the job. Set up in 2009, the CCEMC runs the province’s technology fund fed by the $15-a-tonne levy on excess carbon emissions. About $398 million has been paid into the fund, with more than $217 million invested in 52 clean-energy projects, says Alberta Environment.
This February, Newell’s search for new technology went global. He got more than 340 submissions from 130 countries when CCEMC made its first “grand challenge” — worth $35 million for the winning project — to find new ways of turning carbon emissions into useful material, such as carbon fibre pens.
Three months later, Newell put $50 million on the table in another challenge, this time focusing on transformative technology to clean up greenhouse gases from oilsands extraction and production.
In industry circles, a lot of hopes are riding on a new $35-million project using electromagnetic heat, like a big underground microwave, to melt the bitumen along with solvent to separate sand and oil for in situ or underground extraction. The project — a co-operative effort of Suncor, Nexen and technology owner U.S.-based Harris Co. — could slash greenhouse gas emissions by 40 per cent by reducing the need to burn natural gas to create the steam that’s injected underground to melt the bitumen, says the Canadian Association of Petroleum Producers (CAPP), the industry lobby group. A pilot project is ready to proceed at Suncor’s site, but commercial use is a long way off.
That’s the trouble with gambling on the tantalizing prospect of new technology to cut emissions, says Simon Dyer of the Pembina Institute, an environmental think-tank-and research group.
CARBON CAPTURE
Such technology is usually years away and might not happen at all — as is the case, so far, with the province’s big hopes for carbon capture and storage.
Alberta set aside $2 billion for four projects to store carbon emissions underground. In its plan, the province is counting on carbon capture projects to bury a whopping 139 megatonnes of the 200-megatonne target.
But this year, two major projects were cancelled, including one at TransAlta’s Keephills coal-fired power plant west of Edmonton, partly because neither was economically viable.
That’s a major setback for the province’s plan, says Dyer.
So far, Alberta has only achieved an annual reduction of five megatonnes and it is only expected to hit a 14-megatonne reduction in 2020 — less than one-third of its target, according to Alberta Environment.
“The ball is in the government’s court to deliver on that promise,” says Dyer.
The Shell Quest project to bury emissions from its Scotford oil upgrader in Strathcona County is slated to be operating in 2015. While it will cut emissions there by one-third, that’s still only one megatonne a year. The province put $745 million into the Quest project, which also got $120 million in federal funding.
INTENSITY FALLS, PRODUCTION RISES
In the last decade, oilsands companies successfully reduced what’s known as carbon intensity of the bitumen — emissions per barrel — by about 26 per cent.
In 2007, Alberta became the only province to impose a carbon levy on large emitters, giving them further incentives to reduce greenhouse gases.
Under the levy, companies had to reduce per-barrel emissions by 12 per cent from a 2005 baseline or pay $15 a tonne for emissions above that level into the CCEMC technology fund.
But emissions overall keep rising because production has gone up dramatically and will continue with more mines and in situ projects already approved.
There are two ways to keep emissions in check in the short term, until new technology is ready — slow down expansion plans temporarily, and promote the use of clean, renewable energy, says Dyer.
“The oilsands can continue to grow but much more slowly under carbon constraints, not the uncontrolled growth we have now,” he says.
Newell is dead set against decelerating expansion because that would send a negative signal to investors, who might go elsewhere.
“If we slow it down, no one will notice the GHG loss, but they will notice the loss of energy,” he says.
Dyer a rg ues Newel l’s CCEMC just doesn’t have the tools to do its job. At $15 a tonne, the price of carbon is far too low to give oil companies a financial incentive to cut emissions. A study by the Pembina Institute shows fewer than half the companies actually reduce emissions; mostly, they pay into the fund because it’s cheaper.
The price should be raised gradually to $100 or higher, says Dyer, noting the cost to build carbon capture into a project is around $200 a tonne.
Dyer also says Alberta’s reduction targets are weak compared with international targets.
To avoid the worst of global warming, carbon emissions have to be reduced by 80 per cent by mid-century, he says, citing the long-established Intergovernmental Panel on Climate Change.
IN-SITU EMISSIONS
Meanwhile, there’s a new red flag in the federal government’s 2012 report on greenhouse gas emission trends.
“Specifically, emissions from oilsands mining are projected to double while emissions from in situ production are expected to increase more than five times from 10 megatonnes in 2005 to 55 megatonnes in 2020,” says the federal report.
In situ or underground production will eventually be used in 80 per cent of the oilsands.
That’s creating a potential problem, says Greenpeace researcher Keith Stewart.
It’s difficult to put carbon capture and storage technologies in place on in situ operations which include deep wells and pipelines that stretch many kilometres through the boreal forest, he says.
Alberta’s rising oilsands emissions are already offsetting reductions achieved in other parts of Canada’s economy, Stewart notes.
For instance, the country’s biggest single drop in emissions, from Ontario’s decision to phase out coalfired electricity, was negated
by the increase in oilsands emissions.
WHAT ABOUT COAL ?
Newell gets irked by the fingers pointing constantly at the oilsands when the coal industry in Alberta is also responsible for major emissions. Yet there’s not much fuss about coal, which has another 50 years to phase out its plants under federal rules.
Syncrude — the largest oilsands producer, with its mine and upgrader on-site — pumped out 12.9 million tonnes of GHG emissions, while two coal-fired plants — TransAlta’s Keephills and Capital Power’s Genesee — produced 11.5 million tonnes and 9.4 million tonnes respectively, according to 2011 figures.
Looking at coal on a global scale is one place where Greenpeace’s Stewart and Newell might find themselves on the same page.
In a recent report, Greenpeace docu mented the global sites with the fastest-growing GHG emissions. Alberta’s oilsands are fifth on the list, while at the top are expanding coalfired plants in Australia and China. By 2020, the Australia plants are expected to produce another 720 megatonnes and those in China, another 1,400 megatonnes.
Newell also points out that Alberta oilsands emissions are less that one per cent on a global scale, so they are not significant, especially given the world is demanding more fossil fuel, not less.
While Stewart agrees “coal is the biggest threat globally,” that doesn’t let Canada or Alberta off the hook, he says.
The oilsands is one industrial site and it has emissions equal to a small country such as Portugal. “It is one of the largest pools of carbon in the world, so it is a globally significant source.”
ATTITUDES CHANGING
In the 1990s, the oil industry fought the need to reduce greenhouse gases, resisted a carbon levy and supported Alberta’s battle to derail the defunct Kyoto accord in 2001.
But times have changed, says CAPP, whose website notes: “Canadians expect the oil and gas industry to do its part to fight climate change.”
“As an industry we account for 23 per cent of Canada’s emissions and 0.5 per cent of global emissions. It’s a big number and industry understands it must improve its performance.”
There are some hints the province is reviewing its climate policy now. The $15-atonne levy is up for review in 2014, and already behind-thescenes discussions about increasing it are underway.
Meanwhile, Prime Minister Stephen Harper has written U.S. President Barack Obama to call for discussion of a joint GHG strategy in his effort to get TransCanada’s Keystone XL pipeline approved. So far, there’s been no response from Washington.
Newell says he’s aware that the industry’s social licence to exploit the resource partly depends on making sure Alberta and the oilsands are ready for a low-carbon future.
“We’re not in a PR campaign, we will be judged by our actions, so we’d better get on with it,” he says.