Canada's-Economic-Implosion

Crude Awakening: How the Keystone Veto Dashes Canada’s ‘Superpower’ Dreams

Oil prices are crashing and Obama has vetoed Keystone XL. Will Canada double down on its dirty tar sands?

Canada's-Economic-ImplosionBarack Obama’s veto of Keystone XL has placed the export pipeline for Canadian tar-sands crude on its deathbed. Earlier in February, the Environmental Protection Agency revealed that Keystone could spur 1.37 billion tons of excess carbon emissions — providing the State Department with all the scientific evidence required to spike the project, permanently. If the news has cheered climate activists across the globe, it also underscored the folly of Canada’s catastrophic quest, in recent years, to transform itself into a dirty-energy “superpower.”

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In the minds of many American right-wingers, Canada may be a socialist hell-scape of universal health care and quasi-European welfare policies. But it is also home to 168 billion barrels of proven oil reserves, the third-largest in the world. Since ultraconservative Prime Minister Stephen Harper — famously described by one Canadian columnist as “our version of George W. Bush, minus the warmth and intellect” — took power in 2006, he’s quietly set his country on a course that seems to be straight from the Koch brothers’ road map. Harper, 55, has gutted environmental regulation and fast-tracked colossal projects to bring new oil to market. Under his leadership, Canada has also slashed corporate taxes and is eliminating 30,000 public-sector jobs.

Riding record-high oil prices,–$107 a barrel as recently as last June,–Harper’s big bet on Canadian crude appeared savvy. The oil boom had driven a seven percent surge in national income, helping Canada ride out the Great Recession with less anguish than most developed nations. And with fossil fuels swelling to nearly 40 percent of net exports, Harper’s Conservative government was on track to deliver a Tea Party twofer in advance of federal elections this fall: a budget surplus and a deep tax cut for the country’s richest earners.

But today, with the price of oil cut in half, the Canadian economy is staggering. Tar-sands producers have clawed back billions in planned investments and begun axing jobs by the thousands. The Canadian dollar, recently at parity with the U.S. dollar, has dipped to about 80 cents. Instead of a federal budget surplus, economists are now projecting a C$2.3 billion deficit. “The drop in oil prices,” said Stephen Poloz, the nation’s central banker, in January, “is unambiguously negative for the Canadian economy.”

If low oil prices hold, the pain will get worse. Most of Canada’s reserves are locked up in tar sands. The industrial operations required to get the oil from the ground to your gas tank are not only filthy and energy-intensive — generating up to double the greenhouse emissions of conventional oil — they also take years of construction to bring online. Because of investment decisions made during the boom years, tar-sands production is projected to expand by seven percent this year, exacerbating the glut. The collapse of crude is threatening to take Harper’s nearly decade-long rule down with it. Canada’s Liberal party, headed by 43-year-old Justin Trudeau (son of legendary Canadian PM Pierre), is running neck and neck in the polls, and bashing Harper where he used to be strongest — his management of the economy. “It’s not fiscally responsible,” said Trudeau in January, “to pin all your hopes on oil prices remaining high, and when they fall, being forced to make it up as they go along.”

As we, in the United States, consider the fate of our own massive oil reserves and confront the specter of yet another Bush presidency, Stephen Harper’s Canada offers a cautionary tale — about the economic and political havoc that can be unleashed when a first-world nation yokes itself to Tea Party economics and to the boom and bust of Big Oil.

Stephen Harper came of age in Alberta, a land of cowboys and oil rigs sometimes referred to as “Texas of the North.” He began his career in the mailroom of Imperial Oil (today an offshoot of Exxon). He rose through Parliament promising a revolution in federal affairs under the battle cry “The West wants in!” Following his election to prime minister in 2006, he wasted little time unveiling his plan to open up his nation’s vast oil reserves.

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Leading UK Sceptic Group Promotes Koch-Funded Canadian Climate Denier

by Kyla Mandel

Canadian climate denier Ross McKitrick has officially taken over as chairman of the academic advisory council of Lord Lawson’’s controversial climate-denying charity, the Global Warming Policy Foundation (GWPF).

The economics professor is also a Senior Fellow of the Koch- and Exxon-funded Fraser Institute, a libertarian think tank based in Vancouver, British Columbia.

McKitrick succeeds British economist David Henderson, 87 – the man responsible for inspiring Lawson’’s climate scepticism over a decade ago.

Henderson, who stepped down at his own request on 1 January 2015, had been chairman since the GWPF’’s inception in 2009. Prior to that he was the head of the Economics and Statistics Department at the Organisation for Economic Cooperation and Development (OECD) from 1984 to 1992.

A visiting professor at the Westminster Business School, Henderson is also an advisory council member of free market think tank, the Institute of Economic Affairs.

Lawson’’s Inspiration

Lawson and Henderson knew each other long before they started talking about climate change. This fateful conversation would begin at the end of 2004, when Lawson revealed his interest in climate change during a lecture at the London School of Economics.

As Lawson recalls: ““I said there were two issues… that really did not come across my desk at the time I was Chancellor in 1989, which are now two big issues, which were the European Monetary Union and climate change, global warming. And, I made an allusion that I was rather concerned that the climate change issue was not being analysed in economic terms, and this whole dimension appeared to be missing and concerned me.

““After that, David Henderson, whom I had known for many years, who had been taking an interest in the subject for some time, starting talking to me about this,”” he explains.

So much of an inspiration was Henderson that Lawson even dedicated his book, An Appeal to Reason: A Cool Look at Global Warming, to him. It reads: “”To David Henderson, who first aroused my interest in all of this.””

Henderson also knew McKitrick in the lead-up to the GWPF’’s debut. In 2007, he spoke alongside the Canadian at the Fraser Institute’’s launch of their Independent Summary for Policymakers.

McKitrick was also invited by Henderson to speak at small, informal discussion panels in England with other like-minded individuals, including ‘global lukewarmist’ Peter Lilley.

Instrumental Feedback

But Benny Peiser, director general of the GWPF, seems a little confused about Henderson’’s role in the charity.

Speaking to Brendan Montague, editor of DeSmog UK, back in 2010, he said: “”David Henderson was heavily involved … The original idea was Lawson’’s but Henderson was instrumental by giving feedback.””

Later, in 2013, he said: “”David Henderson, to my knowledge, had nothing to do with GWPF … He wasn’’t involved in the set up.””

And as Sir Ian Byatt, member of the GWPF’s academic advisory council, told Montague: “”David knows the importance of getting influence on these things, and one of the great things that David did, which has all carried on in the Global Warming Policy Foundation, is the bringing together of science, economics and politics.””

McKitrick’’s Promotion

His successor certainly has some big shoes to fill. While Henderson will continue to remain an active member of the council, what does McKitrick’’s promotion signify for the future of the GWPF?

A member of the council since 2010, McKitrick was chosen from a slew of renowned climate sceptics. Other members include heir to a vast British coal fortune, Lord Matt Ridley, and Richard Lindzen, one of the original sceptic scientists to emerge during the 1980s.

Perhaps McKitrick’s contribution to climate sceptic blogger Steve McIntyre’’s critique of Michael Mann’’s hockey stick graph was one point in his favour. After all, the GWPF has praised McKitrick for being ““instrumental in exposing the fatal flaws of the so-called Hockey Stick.””

McKitrick has also authored a couple reports that have been submitted to the GWPF, including a 49-page report calling for ‘radical reform’ of the Intergovernmental Panel on Climate Change (IPCC) and another arguing for an ‘evidence-based approach to pricing CO2 emissions’.

He has also become a regular speaker at the Koch-connected Heartland Institute’’s annual International Conference on Climate Change. So, whatever the deciding factor, McKitrick’’s climate denial stock has just gone up.

@kylamandel

Photo: Guelph University Wikimedia Commons

Joe Oliver: Al Gore’s Comments On Canada’s Climate Change Record ‘Wildly Inaccurate’

Natural Resources Minister Joe Oliver has accused a former U.S. vice-president of making ‘wildly inaccurate’ claims about Tory record. (CP/Getty)

Natural Resources Minister Joe Oliver has accused former U.S. vice-president Al Gore of making “wildly inaccurate and exaggerated” claims about the Harper Tories’ record on climate change.

In an interview with The Globe and Mail published Saturday, Al Gore said that while he has always respected Canada, he is disappointed with decisions made by the current government.

In fact, Gore said the Alberta oilsands boom and pipeline debate “ultimately… hurts Canada.”

The Nobel Peace Prize winner suggested Canada is suffering from a “resource curse,” where revenue streams are tied to the exploitation of a single resource.

“The resource curse has multiple dimensions and [that includes] damage to some extremely beautiful landscapes, not to mention the core issue of adding to the reckless spewing of pollution into the Earth’s atmosphere as if it’s an open sewer,” Gore said.

The “open sewer” reference struck a chord with Oliver.

“Using words like ‘open sewer’ are unfortunate and an attempt to create an impression which is false,” the minister told the Globe on Monday.

Oliver claims Canada’s oilsands industry has reduced emissions per barrel by 26 per cent, giving Conservatives a solid record on which to stand.

Gore’s comments come at an inconvenient time for the minister who will be in Europe this week to fight what he sees as a discriminatory policy against Canadian crude.

Oliver will make a case against the European Union’s new Fuel Quality Directive, which calls on fuel suppliers to reduce greenhouse gases and singles out oil from Alberta’s oilsands as more polluting than others, The Toronto Sun reports.

Of course, this is not the first time the minister, seen as a pipeline prophet pushing the merits of both the Northern Gateway and Keystone XL proposals, has had to get his back up.

Last month, Oliver had harsh words for renowned NASA scientist James Hansen, who said it would be “game over” for the climate if oilsands development isn’t stopped.

In a much-discussed column in The New York Times, Hansen wrote that “Canada’s tar sands, deposits of sand saturated with bitumen, contain twice the amount of carbon dioxide emitted by global oil use in our entire history.”

Oliver slammed that argument as nonsense and said Hansen should be “ashamed” to be using such “exaggerated rhetoric.”

Hansen recently returned fire by calling the Conservatives a desperate and “Neanderthal” government on CBC Radio’s The House.

“They’re in the hip pocket of the fossil fuel industry, as you can see, but that doesn’t mean that the Canadian people are,” he said.

Oliver also drew controversy last month when he questioned the science of climate change and told Montreal’s La Presse newspaper that “people aren’t as worried as they were before about global warming of two degrees.”

He later clarified in a federal natural resources committee meeting that he does believe climate change is a “serious issue.”

German research institute pulls out of Canadian tar sands project

EXCLUSIVE / Germany’s largest and most prestigious research institute has pulled out of a Canadian government-funded CAN$25 million research project into sustainable solutions to tar sands pollution, citing fears for its environmental reputation.

As many as 20 scientists at the world-famous Helmholtz Association of German Research Centres have ceased involvement in the Helmholtz Alberta Initiative (HAI), after a moratorium on contacts was declared last month.

“It was seen as a risk for our reputation,” Professor Frank Messner, Helmholtz UFZ’s head of staff said stiffly over the phone from his offices in Leipzig.

“As an environmental research centre we have an independent role as an honest broker and doing research in this constellation could have had reputational problems for us, especially after Canada’s withdrawal from the Kyoto Protocol,” he said.

The HAI had been tasked with upgrading bitumen and lignite coal to reduce energy consumption, and finding ways to deal with toxic overspill from the tar sands industry such as ‘tail ponds’- toxic lakes that now cover up to 176 square kilometers of Alberta.

But in reply to a written question from the German socialist MEP Frank Schwabe, a statement from the country’s education and research ministry on February 20 said that a moratorium had been imposed on collaboration, pending an independent assessment into its environmental bona fides which will conclude in June.

“The assessment evaluates whether a project conforms to sustainability principles,” Thomas Rachel, the education and research minister said.

“The purpose of the procedure is to ensure that sustainability criteria are being adhered to and that the research carried out as part of HAI can contribute significantly to the improvement of sustainability outcomes.”

The suspension of research ties follows intense debate within Germany’s scientific and political communities, and will not go unnoticed in Ottawa.

“It’s a clear signal that Canada’s energy and climate policy is not accepted by the international community, especially Germany,” Messner said.

High-polluting tag

The EU is inching forward plans to assign fuel from the controversial tar sands a high-polluting tag under its Fuel Quality Directive, which mandates a 6% decarbonisation of Europe’s transport fuels by 2020, as measured against a 2010 baseline.

Canada has the world’s third largest crude reserves – after Venezuela and Saudi Arabia – overwhelmingly in the form of tar sands.

Mining the sands currently involves the use of huge amounts of water and chemical solvents to extract oil from bitumen, a viscous substance found in sand and clay. The extra energy required by the process of steam injection, strip mining – removing large stretches of overlying soil – and refining is a turbo-booster to carbon dioxide emissions.

Canada’s tar sands deposits contain twice the amount of carbon dioxide emitted by global oil use in human history, according to James Hansen, the head of NASA’s Goddard Institute for Space Studies.

“If Canada proceeds, and we do nothing, it will be game over for the climate,” Hansen famously wrote. It would elevate global temperatures to levels not seen since the Pliocene era, more than 2.5 million years ago, he added.

Environmentalists say that by 2020, a planned expansion in Alberta’s tar sands operation would sprawl to an area the size of Austria, the Netherlands and Switzerland combined.

Punch and Judy

Europe imports very little of the unconventional fuel but Canada fears that an EU ruling will influence other markets, such as the US and China and that has set the scene for a lobbyist Punch and Judy, in which science has often been used as a stick.

A 2011 report commissioned by the EU from Adam Brandt, an Assistant Professor at Stanford University, found that the lifecycle emissions of fuel from tar sands – also known as oil sands – were between 12-40% higher than conventional crude, with the most likely barrel being 22% more carbon intensive.

Brandt wrote that tar sands were “significantly different enough from conventional oil emissions that regulatory frameworks should address this discrepancy with pathway-specific emissions factors that distinguish between oil sands and conventional oil processes.”

That led the Alberta Petroleum Marketing Commission to task a rival paper to Jacobs Consultancy, which found that output from better-performing tar sands was “within 12% of the upper range of carbon intensity for diesel from representative crude oils refined Europe.”

On paper, this should still be enough to have it assigned a high-polluting default value, albeit by slightly less than the 107 grams of CO2 per megajoule – compared to 87.5g for conventional crude – in the EU’s Fuel Quality Directive.

But Canada’s interpretation has been different.

Canada fears persecution

Speaking at a press briefing in Brussels in January, Alberta’s environment minister Diana McQueen told journalists: “We look at the Jacobs study and they said that the oil sands should not be discriminated against and be taken out of that basket [of conventional crudes].”

Canada says it is being discriminated against because emissions from its tar sands operations are more transparent and better-reported than other unconventional fuel sources such as shale gas.

“We ask why the oil sands from Alberta would be singled out and unfairly targeted, especially if the intent is truly about climate change and reducing emissions in the EU,” McQueen said.

Canada has previously threatened to launch a trade suit against the EU at the World Trade Organisation if it proceeds with the Fuel Quality Directive as planned, and has raised the issue in the context of a planned $20 billion EU-Canada Free Trade Agreement.

Within Canada though, it is often climate scientists that say they are being persecuted against.

Atmosphere of patriotism

An atmosphere of patriotism has been stirred around tar sands by a massive PR campaign involving advertisements on national TV and in cinemas.

Environmental and climate science budgets have been axed, and one of the world’s top Arctic research stations for monitoring global warming has been closed.

Hundreds of scientists have lost their jobs, and those that remain have been forbidden from talking to the media without a government minder present.

As such, environmentalists welcomed the pushback from Germany. “A number of high level EU decision makers have stated that the Canadian lobbying effort goes beyond what is considered acceptable,” Darek Urbaniak of Friends of the Earth told EurActiv.

“The fact that a renowned scientific institute from Germany has decided to pull out of cooperation with Alberta is a further blow to this strategy.”

Heading off the bitumen cliff: Staples trap: Canada’s economic dependence on dirty oil threatens global environment

Author
Mel Watkins

Staples trap: Canada’s economic dependence on dirty oil threatens global environment.

by Mel Watkins

Canada is headed for a bitumen cliff and it risks taking the rest of the world along. That’s the chilling forecast from the Canadian Centre for Policy Alternatives and Polaris Institute — who also offered options to avert disaster — in the most comprehensive discussion to date on the “Dutch disease”.

Their new report, called The Bitumen Cliff: Lessons and Challenges of Bitumen Mega-Developments for Canada’s Economy in an Age of Climate Change, broadens the definition of Dutch disease, including an impressive array of collateral damage. The Bitumen Cliff report is far and away the best contribution yet to this important debate, which is coming to dominate our politics.

Canadians, Stanford observes, have moved from being hewers of wood and drawers of water to a new and equally even less flattering status — scrapers of tar. The tar sands have now mired us up to our necks in this latest staples trap.

The report’s authors are heavy hitters from Canada’s progressive community — Tony Clarke, of Polaris, former Parkland Institute research director Diana Gibson, the well-known Jim Stanford of CAW, and rising star public policy researcher Brendan Haley from Carleton University. Together, they raise worrisome questions about what can be done to mitigate the consequences of a bitumen boom promoted by oil-friendly governments. They also set out positive alternatives.

Canadians, Stanford observes, have moved from being hewers of wood and drawers of water to a new and equally even less flattering status — scrapers of tar. The tar sands have now mired us up to our necks in this latest staples trap.

Haley, in on-going research on his part, brilliantly links this staples trap — Canada’s historic economic dependence on exporting unrefined raw materials — with the carbon trap, in which the carbon emissions from bitumen overheat the planet and escalate the wild weather, to our detriment and the detriment of the world. He gives new life to the famous staples approach of the economic historian Harold Innis, while making Dutch disease a Canadian-made contribution to global catastrophe.

Each trap feeds the other in a frightening way: the more bitumen we produce the more carbon is emitted; the more carbon is emitted the more, for example, the Arctic warms, and the more bitumen we can drill for. And so on, until we’re all toast.

Each trap feeds the other in a frightening way: the more bitumen we produce the more carbon is emitted; the more carbon is emitted the more, for example, the Arctic warms, and the more bitumen we can drill for. And so on, until we’re all toast.

Most of the debate about Dutch disease has focussed, to this point, on its economic effects on the manufacturing sector and jobs therein. This report shows how much more adverse and widespread the impacts are than the conventional wisdom admits.

What is new is evidence of how the bitumen boom has worsened the distribution of income, feeding inequality — above all, surprisingly, in Alberta itself. The reason, as the report demonstrates, is that corporate profits boom while real wages of workers stagnate.

Of course, bitumen exports create economic benefits, but they are weak and badly distributed. The issue is not just economic growth but the quality of that growth. By that standard, the bitumen boom leaves much to be desired — comparing most unfavourably, for instance, with the wheat boom of a century ago.
In Canada, as in Texas, oil brings out the bully boys who smear and dirty us.

If we allowed for all the costs — above all the contribution to global warming for literally centuries to come — it is possible that there is no net economic growth at all but rather that oxymoron called negative growth.

Innis, the great guru of staples, rightly insisted that each staple left its own distinctive stamp, and not only on the economy but on its politics. Our authors compile an impressive list of all the many ways in which the Harper government has worked to further the interests of the oil companies, not only at the expense of the environment but also by the infringement of Aboriginal rights and to the detriment of freedom of speech and dissent, of democracy itself. In Canada, as in Texas, oil brings out the bully boys who smear and dirty us.

How oil has come to drive Canada’s politics and economy is a home-grown example of Naomi Klein’s disaster capitalism. We’ve seen the future — as weather dominates the news — and it doesn’t work.

With the country caught in the two big traps, present politics merely tighten their grip. That pattern must somehow be broken, for politics of a very different kind is the only way out, the only solution.

We all know what the alternatives are. Track 1, as the report calls it, is proper government regulation of bitumen production. Easier said than done, of course, for the fossil fuel industries will fight us at every step. Track 2, the big challenge, the essential leap, is shifting to green energy.

the long view, which is getting shorter by the day, is that fossil fuels will be phased out anyway because of their terrible and intolerable destructiveness. Meanwhile, oil fracking in the US is making our bitumen uncompetitive, that worst of capitalist fates.

Our authors tell us that the long view, which is getting shorter by the day, is that fossil fuels will be phased out anyway because of their terrible and intolerable destructiveness. Meanwhile, oil fracking in the US is making our bitumen uncompetitive, that worst of capitalist fates.

At some point, like it or not, we’ll be wakened, and kept awake and afraid to go to sleep, by the extremes of the weather, and the end of the bitumen boom with no alternative growth path in mind. We’ll have no choice but to act. Better to start now. Let this report be your guide, your diagnosis and your prescription.
About Mel Watkins

Mel Watkins is Professor Emeritus of Economics and Political Science, University of Toronto. He is Editor Emeritus of This Magazine and a frequent contributor to Peace magazine. He is a memer of Pugwash Canada and former President of Science for Peace. Website: http://www.progressive-economics.ca/author/mel-watkins/.

© Copyright 2013, All rights Reserved. StraightGoods.ca

Pipe dreams: A look at Canada’s six leading pipeline proposals

Pipelines are to a landlocked oil economy what supply lines are to invading armies: critical to success but vulnerable to attack.

Canada’s prairie oil producers – led by Alberta but including Saskatchewan and now Manitoba – have been wildly favoured in geology but less so in geography. While the provinces are enjoying a boom in production from oil sands and new light oil prospects, they are located far from the massive refining hub on the U.S. Gulf Coast, and far from ocean ports that would allow them to reach energy-hungry customers overseas.

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Government and industry are now frantically looking for options. Companies are pursuing a series of pipeline projects through the U.S. and moving west and east in Canada. Recently, they have talked about ambitious plans to use rail cars and river barges to get their oil to market – even shipping crude by rail to Alaska to reach the Pacific.

But their pipe dreams have drawn fierce opposition from environmentalists and some first nations communities, and the regulatory process has at times bogged down.

The current lack of pipeline access is exacting an enormous cost on Canada, and especially Alberta, by driving down the price that Canada reaps for its oil, the country’s most valuable export by far. Alberta has long depended on central Canada and the middle of the United States as its oil markets. But those regions are now saturated with crude from booming North American production, and the glut has driven down prices.

That in turn has blown a $6-billion hole in the province’s budget, and will result in lower corporate tax revenues for Ottawa.

As protesters flooded Washington this weekend to demand President Barack Obama turn down a proposal to build a major pipeline through the U.S. heartland to the Houston-area refineries, Alberta politicians and industry officials were scrambling to promote other export pipelines, and even rail links.

KEYSTONE XL

Proponent: TransCanada Corp.

Volume: 850,000 barrels per day, which is about 85 per cent of the capacity of Canada’s existing main export pipeline to the U.S.

Destination: Texas Gulf Coast, home to the world’s largest refining market

State of play: The U.S. government is still considering environmental, economic and security implications after Nebraska approved a new route.

Decision expected: TransCanada had hoped for a ruling by March 31, but it is now not expected before the end of June, at the earliest.

Opposition: U.S. environmental groups have targeted the pipeline as a litmus test in President Barack Obama’s promise to address climate change. Opponents say it will make U.S. more dependent on a carbon-intensive type of fuel.

Pipe dream: Prime Minister Stephen Harper once called Keystone a “no-brainer,” but handicappers would now give it no better than 50-per-cent chance of approval.

LINE 9 REVERSAL

Proponent: Enbridge Inc.

Volume: 300,000 barrels per day.

Destination: Montreal, home of Suncor Energy’s refinery

State of play: Enbridge wants to reverse a line that had been delivering imported oil to southwestern Ontario, allowing it to send Western Canadian crude to Montreal to be refined. It has filed an application with the National Energy Board, which last year approved Enbridge’s first phase in the project, reversing the flow of the line from Sarnia, Ont., to Imperial Oil’s refinery at Nanticoke, Ont.

Decision expected: Following new federal rules enacted last spring, the regulator has until March, 2014 to make a decision.

Opposition: Canadian environmental groups intervened to oppose Enbridge’s previous reversal of an Ontario portion of the Line 9 pipeline, but new federal rules will limit their involvement in this application.

Pipe dream: Because Enbridge is reversing an existing line, odds are very good the project will be approved.

WEST TO EAST PIPELINE

Proponent: TransCanada Corp.

Volume: 500,000 to 1 million barrels per day

Destination: Quebec, possibly Saint John, N.B., home of the 325,000-barrel-per-day Irving Oil refinery and a deep-water port that would facilitate ocean-bound exports

State of play: TransCanada says the project – which would convert an existing, under-utilized natural gas pipeline – is commercially viable and the company is now looking to line up support from producers who would need to commit to ship oil on the line. An application to the National Energy Board would follow.

Decision expected: Assuming producer support, the company expects to file later this year, and the regulator would then have 18 months to consider the application.

Opposition: Canadian environmental groups are gearing up to oppose the pipeline, and hope for an ally in the Parti Québécois government, but Premier Pauline Marois has so far been neutral to positive on the project.

Pipe dream: So long as oil producers support it, TransCanada is likely to win approval for transforming its natural gas line to oil as far as Montreal. It faces tougher odds to extend the line to Quebec City or Saint John, since it will need to build a new pipeline, which always attracts greater opposition.

NORTHERN GATEWAY

Proponent: Enbridge Inc.

Volume: 525,000 barrels per day of exported oil sands bitumen, 193,000 barrels per of imported diluent, an oil-based solvent used as a thinning agent so the thick, heavy bitumen can be shipped by pipeline

Destination: Kitimat, the small British Columbia town at the head of the Douglas Channel. Super tankers would deliver oil to refineries in Asia and California.

State of play: Enbridge is mid-way through regulatory review, and has received financial support from major oil companies and foreign refiners interested in shipping crude on the line.

Decision expected: The National Energy Board has been mandated to provide a decision by the end of 2013.

Opposition: Environmental groups and first nations in B.C. and across Canada have placed massive emphasis on blocking Gateway. The B.C. government has given the project a cool reception, releasing five conditions for its support of a new oil pipeline. Legal challenges are expected if Gateway gains regulatory approval.

Pipe dream: With implacable opposition from some first nations and the B.C. New Democratic Party – which is favoured to win a May election – Enbridge faces extremely long odds in getting Gateway built.

TRANS MOUNTAIN EXPANSION

Proponent: Kinder Morgan

Volume: 590,000 barrels per day (current pipeline is 300,000 barrels per day; expansion will take it to 890,000)

Destination: Burnaby, B.C., home of Kinder Morgan’s Westridge Marine Terminal, where smaller tankers would take Canadian oil primarily to California, although Asian shipments are also possible

State of play: Kinder Morgan is mid-way through an application asking the National Energy Board to approve commercial tolls for the project. A formal application seeking authority to build the expansion is expected later this year.

Decision expected: Depending on when Kinder Morgan applies, the regulatory review could be completed by 2015, with construction starting in 2016 and operations commencing in 2017.

Opposition: Local forces have begun to marshal against the project, including some first nations and the mayors of Burnaby and Vancouver. British Columbia’s provincial leaders – Premier Christy Clark and Adrian Dix, the NDP Leader expected to gain power this year – have not yet made public their thoughts on the expansion.

Pipe dream: TransMountain hopes its route to approval will be less contentious than the Gateway brouhaha, but the line ends at the waterfront near Vancouver and there is much local opposition to the increased tanker traffic it would bring. 50-50, at best.

ENBRIDGE MAINLINE EXPANSIONS

Proponent: Enbridge Inc.

Volume: 1 million barrels per day by 2015

Destination: The U.S. Midwest, Gulf Coast and possibly eastern seaboard

State of Play: Enbridge carries the bulk of Canada’s oil on its complex Mainline network of pipes. The company is mid-way through a broad expansion of that network to push more oil through. It will come in several stages, as Enbridge adds more pumping stations to a number of existing pipelines. It hopes to add 300,000 barrels per day this year, another 600,000 barrels per day in 2014 and one million in total by 2015.

Opposition: Because the pipelines are already built, the Enbridge plans have generated little profile, and little controversy. However, the company needs a presidential permit to expand one of its larger pipelines, Alberta Clipper, by 350,000 barrels per day, roughly a third of the total increase Enbridge is working toward. Seeking that approval – similar to what Keystone XL requires – could expose the company to the complicated U.S. political machinery.

Pipe dream: Since much of the work involves expanding existing pipelines, these are among the surest bests for Canada’s industry. But the need for a presidential permit does open this project to some of the same political firestorm that has met Keystone XL in the U.S.

THE DREAMIEST OF PIPELINE DREAMS

Proponent: The Alberta government

Volume: Unknown

Destination: Churchill; Alaska via the NWT

State of Play: Desperate for more money – and equally desperate to show a restive public that it’s working to fix pipeline problems – the Alberta government has taken an unusual role as pipeline dreamer-in-chief. In recent weeks, ministers have come up with an array of new pipeline ideas. They have suggested a pipeline to Churchill, Man., which has the virtue of not crossing either B.C. or Quebec – but the significant downside of shipping oil through waters that are heavily choked with ice much of the year. And they’ve suggested pumping oil north through a small existing pipeline out of Norman Wells, NWT, then building a new pipeline along the Second World War-era Canol pipeline route through Yukon, and on to Alaska. This idea uses existing pipeline rights-of-way, but is unlikely to be celebrated by northern first nations groups.

Pipe dream: These are ideas generated by a government with no ability to actually build a pipeline, and therefore the latitude to toss out suggestions with little regard to their degree of craziness. Take them more as evidence of political desperation.

Empowered green groups gain upper hand in pipeline battle

WASHINGTON — Meet the people on the winning side of Canada’s oil discount — the U.S. environmental activists who have wreaked havoc in the oil sands industry by trashing its practices and shutting it out of new markets by stalling proposed pipelines such as Keystone XL.

They include Susan Casey-Lefkowitz, Danielle Droitsch, Anthony Swift of the Natural Resources Defense Council (NRDC), which bills itself as the United States’ most effective environmental action group backed by 350 lawyers; and Jason Kowalski and Ben Wesser, with 350.org, a grassroots organization that uses protests and social media to stop climate change.

They are uncompromising, empowered and feel good about their progress in capping the growth of fossil fuels — particularly those from Canada.

Agree with them or not, their record is astonishing: They have outmanoeuvred the powerful oil lobby and stalled the Keystone XL pipeline from Alberta to Texas; they have managed to blame emissions from oil sands’ fuels for U.S. climate disasters such as Super Storm Sandy; and they believe they are on the cusp of strangling oil sands growth.

Yuri GripasNRDC’s Danielle Droitsch speaks next to advisor and lobbyist Susan Casey-Lefkowitz at their office in Washington in early February.
In interviews in the slick downtown Washington base of the NRDC, the activists were unapologetic about the distress their campaign is causing in Canada — and particularly in Alberta, where pipeline bottlenecks are depressing the price of oil, cutting into company revenues and forcing provincial budget cuts.

“The economic distress that we see right now is nothing compared to the economic distress that we will see in the future from the impacts of climate change,” said Ms. Casey-Lefkowitz, director of the international program at the NRDC.

The lesson to take away with what is happening with the shortfalls in Alberta is that diversification of the economy is critical
“The lesson to take away with what is happening with the shortfalls in Alberta is that diversification of the economy is critical … the way forward in terms of our economic and national security is building a world where we depend on clean energy.”

Their energy answer for Alberta? Forget the petrostate and switch to wind.

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Never mind that Canada is a sovereign country with the right to make its own decisions.

“This is not an issue of borders anymore,” she said. “And we are seeing that with a lot of our environmental work. Most of the environmental problems are global challenges. And that is why we work so closely with colleagues in Canada.”

How did groups like NRDC, 350.org, and their close partners the Sierra Club, the Community Environmental Legal Defense Fund, Friends of the Earth, become so powerful they believe they alone have the right answers on the climate and on energy?

James Vines, a partner in Washington at King & Spalding LLP, a top law and lobby firm representing major international energy players, said environmental organizations have been empowered by deep pockets and the U.S. legal system, which provides many avenues that allow private parties to challenge energy project.

While the fight against Keystone XL has garnered a lot of attention because of its size and because it crosses the Canada-U.S. border, he said it’s just one of hundreds of fossil fuel projects opposed by environmental non-governmental organizations during the permitting process.

If a permit for a project is granted, Mr. Vines said the fight moves to the courts, where the activists routinely challenge its validity and the validity of the environmental impact studies.

Even when NGOs don’t win, lengthy delays often frustrate proponents and some times cause them to give up.

The Albertans are simply not fighting back hard enough
“The Canadians are not experiencing in Keystone something that other oil producers aren’t facing,” Mr. Vines said. “The Sierra Club and others have very, very deep war chests to challenge all these projects and they win some and they lose some. From their perspective, if they keep one of those projects from being completed, that is a victory.”

The attacks are so common that project proponents are now building years of delays and lawsuits into their business strategies, he said.

Mr. Vines said it is disappointing that Keystone XL proponent TransCanada Corp. wasn’t able to contain the controversy by doing what other U.S. energy project proponents commonly do — use the legal system as aggressively as the NGOs, with the goal of keeping the permitting process based on fact and science.

Using basic public relations, the strategy largely employed by the oil sands sector, “just doesn’t get the job done when the opponents are as well-funded and determined as those who oppose K-XL,” he said. “Successful energy project proponents usually must use the legal system to create a rigorous and defensible formal record on the scientific and legal merit of their project, one that will withstand rhetoric-based counter arguments in the trial and appellate courts.”

Indeed, the decision on Keystone XL itself boils down to whether it can cross a border, he said.

But TransCanada has “allowed cumulative impacts under the [U.S. National Environmental Policy Act] to not just mean a couple of hundred yards from the border, and then what happens in the surrounding communities, they have allowed the cumulative effects to be the border to the Gulf, the whole 1,300 miles of the project.”

Even the messaging was late and poor, making Canada easy to pick on and a “soft target,” said policy advisor Fred Cedoz, vice-president with GWEST in Washington, who has represented Canadian interests including the Alberta Enterprise Group, an Edmonton-based public policy advocacy group.

“The Albertans are simply not fighting back hard enough,” Mr. Cedoz said. “In the U.S., in order to keep our energy sector alive, we know how to push back on these, we know all the processes to use.”

President Obama is expected to rule in the next few months whether to give a permit to Keystone XL, after twice rejecting it because of environmental movement opposition.

Indeed, environmental organizations opposing Keystone XL are planning to use available processes to the fullest.

Because they helped Barack Obama get re-elected, they will be watching for specifics on his climate change intentions when he delivers his State of the Union address Tuesday evening.

And to ensure he stays on plan, they are behind the mass demonstration at the White House planned for Sunday, the day before President’s Day, when 20,000 people are expected to converge from across the continent to demand rejection of the Canadian pipeline project once and for all.

With the regulatory process on Keystone XL still under way, they said they will keep working on Capitol Hill and on the Administration to ensure a “robust” discussion on the oil sands’ impacts on the climate.

Even if Keystone XL is approved, they’ve got a litigation strategy in their back pocket to dispute the permit and cause further delays.

The upshot? Keystone XL will not be built by 2015, as TransCanada anticipates, because they will have barely finished the first phase of litigation on the permit, Mr. Vines predicted.

U.S. environmental activists, lead by 350.org and the Natural Resources Defense Council, don’t believe a word that Canadian governments, the Canadian oil sands industry and myriad analysts and researchers are saying about environmental improvements, Canada’s plans to build pipelines West and East to sell the oil to other markets if the U.S. doesn’t want it, that producers are using rail, trucks and barges to move their product in the absence of pipelines.

They believe a rejection of Keystone XL will go a long way to capping oil sands growth, but they are hedging their bets by also working with “Canadian partners” to stop Northern Gateway, the reversal of Line 9 and any other oil sands pipelines that would enable oil sands exports.

Here’s what they are saying about Keystone and the oilsands in general:

On Keystone XL: “The Keystone XL pipeline, by virtue of its size, by virtue of the fact that it’s opening up the Gulf Coast, has grown to be a very significant issue. The NRDC has identified that pipeline to be a very significant decision that signals both the expansion [of the oil sands] and where the U.S. is going on its clean energy policy.” — Danielle Droitsch, senior attorney at the NRDC focusing on Canada.

On why Keystone XL is not needed: “We made a major stride with car efficiency standards, and Keystone XL is not just about what our energy mix is today, it’s a 50-year piece of infrastructure that would increase the carbon intensity of the oil we do use, and once its built, we are stuck with it.” — Anthony Swift, attorney for the international program at NRDC.

On rail transport: “There is no question that … marginal barrels are being moved to the Gulf Coast, but the fact of the matter is that rail doesn’t support a model that justifies dramatic tar sands expansion.” — Mr. Swift.

On continuous improvement in the oil sands: “We are not convinced, from the outside looking in, that the environmental impacts are really being addressed. The issue is on the ground, and that includes expanding at these phenomenal rates. Right now the impacts on land, air and water are significant, and the technological improvements are microcosmic compared to what the impacts are.” — Ms. Droitsch.

On China’s investment in the oil sands: “Right now China doesn’t have the refining and upgrading capacity to take the bitumen. We have a large program in China and an office in Beijing. As far as we can tell, there is no intent by the Chinese government to take that capacity. We treat them more as investors than we do as consumers,” Susan Casey-Lefkowitz.

On Keystone XL’s contribution to U.S. energy security: “We don’t believe at all this is going to help energy security. We think this is an export pipeline.” — Ms. Droitsch.

On the U.S. relation with Canada if Keystone XL is rejected: “I don’t think that a rejection of Keystone XL would be a huge blow to Canada, or a huge surprise necessarily. The public concerns from Americans have been very clear, but also concerns in Canada have been very clear, about tar sands development, about the rate of expansion, about what it means climate change within Canada.” — Ms. Casey-Lefkowitz.

On the fossil fuel industry: “The fossil fuel industry has had their way with the world for a century and needs to be on the way out,” Jason Kowalski, policy director, 350.org.

‘Canada Is Being Outplayed’ at Oil Wealth Game

[Editor’s note: The Tyee sent veteran energy issues journalist Mitchell Anderson to Norway to learn how it amassed a $600 billion oil savings fund for its population of under 5 million, a stark contrast to Canada. To finish the series we invited him to share his views on how those lessons could be applied here. With input from economist Robyn Allan, here they are.]

Why do we tolerate homelessness and poverty in Canada? Underfunding for our schools and health care system? Why is our government eliminating 20,000 public sector jobs in a supposed effort to balance the books?

Imagine instead if Canada was a country capable of developing a national oil strategy similar to what has been achieved in Norway. This tiny nation enjoys full employment and enviable social programs, has no public debt, $600 billion in the bank, and remarkable public buy-in about their petroleum industry. Could we do it here? Do we have the guts to seize our economic destiny?

Such a system might seek to maximize employment, tax revenues and environmental protection — exactly the opposite motivations of most extractive industries. There is another public policy goal that is of no interest to private companies: the energy security of our nation.

Seen through this lens, how is Canada doing? Abysmally, by four measures:

1. Dependency. Even with our vast oil wealth, Canada currently relies on other countries for about 50 per cent of our supply — so-called “unethical oil” from the volatile Middle East. Proposals to pipe unrefined bitumen from western Canada to Asia will increase this dangerous dependence since Alberta will have to import vast amounts of condensate from the Middle East to dilute thick bitumen enough for pipeline transport.

2. Staying in the red. Alberta has been unable to balance the books since 2007, burning through $17.7 billion of past oil wealth, with another $3 billion deficit forecast for the coming budget.

3. Draining at full tilt. Labour and production costs are through the roof, at least until the next employment bust. Both the Alberta Federation of Labour and the late premier Peter Lougheed have both called for slower the pace of oil sands growth. Ten proposed upgraders have been cancelled since the 2007 recession, replaced instead with pipeline proposals for unprocessed diluted bitumen. With resource values rising relative to global currencies, what’s the rush?

4. Getting global black eye. The oil sands have such a credibility problem the Alberta government spends $25 million a year countering “baseless” criticism from environmental groups.

Robyn Allan’s prescriptions

Robyn Allan thinks we can do better. She is a British Columbia economist, former CEO of the provincial insurance corporation and outspoken critic of the Northern Gateway proposal to pipe diluted bitumen to Kitimat. She also believes the recent retreat from value-added processing in Alberta is not only a threat to the B.C. coastline, but to the entire Canadian economy. In an interview for this series she told The Tyee:

“Canada has an energy strategy, but it is being developed in a handful of boardrooms of multinational oil companies and national oil companies of foreign governments. And that strategy seems to be to extract oil sands bitumen as quickly as possible, mix it with distillate imported in increasing amounts from the Middle East, and move it down pipelines to Asia and the U.S. Gulf Coast. And that strategy is going to hollow out Canada’s oil sector, move us away from creating jobs and value-added refining, and increase pressures on our exchange rate and the non-oil sectors of our economy. And when the boom becomes a bust, we won’t have a strong economic fabric to fall back on.”

So why does she feel so many state-owned oil companies now clamouring for a piece of the oil sands?

“More than 80 per cent of global oil reserves are controlled by state own oil companies, and there’s good reason for that. Canada is the only major oil-exporting country in the world without a national oil company. Of the remaining global oil resources open for private sector investment, Canada has the majority. That’s why national oil companies from China, Korea and Norway, and now maybe Kuwait and India, are coming here to buy up our resources — it’s the last big game in town.”

Allan believes our country is becoming dangerously exposed in a world increasingly short of energy, especially as we allow state-owned interests from other nations to snap up our globally-strategic resources.

“Canada is being outplayed. We are losing control of our natural resources. We’re losing control of our environmental standards. And we’re losing the ability to upgrade and add value in Canada. We’re not even beginning to use the leverage in this country that we have to control and manage the pace of our development and ensure that oil resource returns come to the people of Canada.”

So what can we do about it? Allan feels one of the key problems is that our petroleum continues to be sold in American, not Canadian currency.

“When the price of oil goes up, the value of our dollar goes up and this creates problems not only for the manufacturing sector but for our oil industry as well. Because we trade our oil in U.S. dollars, any Canadian oil producer finds that their profits fall when they sell their product in U.S. dollars and have to repatriate those revenues into Canadian dollars. The ability of the oil industry to expand and grow is hamstrung by an appreciation of the Canadian dollar. The oil sector itself hurts, it not just manufacturing, tourism, forestry and other sectors.”

She also sees a linkage between our inflated currency and the cancelled upgrading facilities in Alberta.

“We need to address the issue that maybe because our currency has appreciated in value, it’s not as economic to build upgraders in Canada. We have a natural resource in Canada that’s traded in U.S. dollars. Why? When Russia decided to trade their oil with China they elected not to do it in U.S. dollars, but their own currencies. We have to start thinking about what is in the long-term interest of Canada, not what is in the best interests of a handful of oil companies.”

Upgrade here first, then ship

By choosing Canada instead of China, Allan believes Albertans would benefit from higher prices and greater economic stability. Nation building through such mutually profitable arrangements might prove far more productive than past interprovincial posturing.

“One of reasons that bitumen is not capturing the value that western producers want is that its not good enough quality. So if we upgraded it in Alberta into a product that North America wants, we might solve so many problems. Everybody in Canada could win if less expensive western Canadian crude got to eastern Canada.

“At the recent Northern Gateway Hearings in Edmonton, the Joint Review Panel was told by Enbridge’s expert witnesses that right now Eastern Canada is buying imported crude at $20 to $30 more than the price of western Canadian crude. If that’s the case, that works out to about 15 cents a litre at the pump. Western producers could get a price premium of five cents a litre over what they are getting now, the refiners in eastern Canada could save five cents a litre on their crude supply and consumers could save five cents a litre when they fill up at the pump.

“So if that happened, producers and refiners would make more money and consumers would spend less money. That’s got to have a stimulative effect on our Canadian economy.”

Allan points out that shipping upgraded crude rather than bitumen would also require half as much pipeline capacity since we would not need to build supply lines for imported condensate. And most importantly, upgraded Alberta crude should be moving east rather than unrefined bitumen moving west.

“TransCanada Pipelines have said they are looking at converting one of their natural gas pipelines to ship Western Canadian crude to eastern Canada. That could be up to 800,000 barrels a day and would be a tremendous boost to the Canadian economy. We should be focusing everything we can to get that to happen. And the way to get that to happen is to say no to the Northern Gateway pipeline. The best thing that British Columbia could do is restrict bitumen from coming into this province, period. That would essentially be a little bit of tough love to Alberta.”

The late premier Peter Lougheed urged Albertans to “think like an owner.” That determination to do what’s in the interest of Canadians rather than companies is what Allan seems to be championing as well.

“I would hope that the real issue here is what can we do to support and develop the future health and long-term growth of the Canadian economy. We need to stop responding to the preferences of corporations that don’t have the Canadian national interest at heart. They don’t. They’re not meant to.

“Every single time issues are raised such as energy security in Canada, value-added and upgrading, concerns over the appreciation of our dollar — the oil industry goes crazy. And the reason they do is because these are serious issues that need to be addressed and they could be addressed relatively easily for our long-term benefit. What the oil industry doesn’t yet understand is that many of these changes would be for their long-term benefit as well.”

A challenging question

The Enbridge and Kinder Morgan pipelines will obviously benefit China and the shareholders of private oil companies, but what is in Canada’s interest? Are we even asking that question?

At the end of this series I’m left reflecting on the blunt advice of Norwegian petroleum engineer Rolf Wiborg: “You have to leave the feudal thinking and leave the idea that people coming to exploit you have the right to tell you what to do…. It can be done, but do the Canadian people have the power and the will? Do they have the collectiveness and guts to do it?”

How about it Canada? Do we?

Mitchell Anderson is a Vancouver-based journalist and frequent contributor to The Tyee. This article is one in a series on Norway’s Petro-Wealth Prudence which is part of a larger project, “Canada’s Transition to a Better Energy Future,” produced by The Tyee in collaboration with Tides Canada Initiatives Society.