Friday, 8 August 2014

Energy: Consider the global impacts of oil pipelines

Please follow the link to get free access to our Commentary in Nature calling for a moratorium on new oil-sands development and transportation projects until better policies and processes are in place. 

Canadians deserve honest climate talk

In 2007, Prime Minister Stephen Harper’s government asked me and four other economists if we agreed with its study showing huge costs for Canada to meet its Kyoto commitment to reduce greenhouse gas emissions by 2010. We all publicly agreed, much to the chagrin of the Liberals, NDP and Greens, who argued that Kyoto was still achievable without crashing the economy. It wasn’t.

As economists, we knew that the Liberal government of Jean Chrétien should have implemented effective policies right after signing Kyoto in 1997. It takes at least a decade to significantly reduce emissions via energy efficiency, switching to renewables, and perhaps capturing carbon dioxide from coal plants and oil sands. Each year of delay jacks up costs.

Mr. Harper’s government knew this too. Years later, when environment minister Peter Kent formally withdrew Canada from Kyoto, he charged the previous Liberal government with “incompetence” for not enacting necessary policies in time to meet their target.

With the excuse that Kyoto was too expensive, Mr. Harper replaced it with his own emission target for 2020, which he presented in his 2007 policy statement, “Turning the Corner.” Two years later, he reconfirmed it alongside U.S. President Barack Obama and other world leaders at the Copenhagen climate conference.

Just like Mr. Chrétien, however, Mr. Harper failed to immediately implement the necessary policies. Canadian emissions have declined slightly, for which he tries to take credit. But analysts agree that the main causes are the 2008 recession, some decline of heavy industry, Ontario’s reduction of coal-fired power, and climate policies in British Columbia and Quebec. Mr. Harper’s adoption of U.S. vehicle regulations will have a small effect by 2020, not his coal regulations.

But instead of honestly admitting that it won’t achieve the 2020 target, the Harper government still pretends that it will. And it won’t admit that its vigorous promotion of oil sands and new pipelines, such as Keystone XL and Northern Gateway, is a key factor in Environment Canada’s prediction that Canadian emissions in 2020 will exceed the target by at least 20 per cent. Growth in oil sands emissions alone will account for half the overshoot.

Meanwhile, the U.S. will meet a similar 2020 target. And California, with the same population as Canada, will meet a tougher target.

This time, the Harper government has not asked me to comment on the cost of trying at this late date to keep its promise. I doubt it will – at least not before the 2015 election. But as a helpful gesture, I’ve done the analysis anyway, with a model like Environment Canada’s.

My analysis shows that if Mr. Harper had “competently” enacted in 2007 the regulations he promised, the effective price on carbon would have started around $15 per tonne of CO2 in 2008, reaching $100 in 2020. This would not have harmed the Canadian economy. It would have phased-out most coal plants, as Ontario has done. It would have shifted transportation toward natural gas, biofuels and electricity, as is occurring in California. It would have substantially slowed the growth of oil sands, and led to investments in carbon capture, as in Norway. Oil sands jobs would not have grown as rapidly, but would not have declined. And job creation in alternative energy would be substantial, as has occurred with renewables in B.C. and Ontario. There would be no Keystone XL, no Northern Gateway.

My analysis further shows that were Mr. Harper now to seriously pursue his 2020 promise, he would crash the economy. His frantic regulations would be equivalent to shocking the economy with a CO2 price that quickly escalates to $200 – increasing the price of gasoline by 50 cents a litre. Industrial jobs would be lost. Oil sands production would decrease.

Mr. Harper has admitted that he will do nothing for the climate that might slow the growth of oil sands jobs, as he recently confirmed during the visit of Australian Prime Minister Tony Abbott. Yet he won’t admit that this makes his 2020 climate promise false.

Isn’t it time we had some honesty in Canada? Climate change is one of the defining issues of our time. We are being horribly let down by the Harper government.

Mark Jaccard is one of eight scientists who published a commentary in Nature in June calling for a moratorium on oil sands development.

Monday, 4 August 2014

Is B.C.’s LNG another pipe dream?

This blog first appeared as an op-ed in the Vancouver Sun on July 23, 2014:

Proposal looks good on paper but could fail in practice

During B.C.’s 2013 election campaign, at a conference of energy economists in Washington, D.C., I spoke about how one of our politicians was promising huge benefits during the next decades from B.C. liquefied natural gas exports to eastern Asia. These benefits included lower income taxes, zero provincial debt, and a wealth fund for future generations. My remarks, however, drew laughter. Later, several people complimented my humour.
Why this reaction? The painful reality is that my economist colleagues smirk when people (especially politicians) assume extreme market imbalances will endure, whereas real-world evidence consistently proves they won’t. For B.C. Premier Christy Clark to make promises based on a continuation of today’s extreme difference between American and eastern Asian gas prices was, to be kind, laughable.
For many years, natural gas prices differed little from one region to another. But the shale-gas revolution in the U.S. in the past decade created a glut, causing rock-bottom prices in North America. Meanwhile, prices in eastern Asia were pegged to the price of oil, which has risen. These two trends led to a price divergence starting in 2008. By 2012, Japanese gas prices were more than four times higher than North America’s.
If that difference were to hold for several decades, producers could earn sufficient revenues from Asian sales to cover shale gas extraction, pipeline transport, cooling to liquid in LNG plants, shipment across the Pacific, healthy profits, and billions in royalties and corporate taxes. That’s an attractive image in an election. But it can quickly become a mirage as gas markets behave like – well – markets.
In competitive markets, a price imbalance triggers multiple profit-seeking actions, which work to eliminate the difference — usually sooner than expected — by those hoping to benefit from it. In this case, there are many potential competitors for the gas demands of China, Japan and their neighbours. China can invite foreign companies to help develop its massive shale gas resources. It can buy from Russia, which has enormous gas resources. It can also buy from other central Asian countries, such as Kazakhstan. It can also encourage a bidding war between prospective LNG suppliers from many parts of the world, some of which will have lower production costs than B.C.
The result will push down the price in eastern Asia. As was easily predicted by my smirking colleagues, it’s already happening. Unofficial reports put the price of a recent gas contract between China and Russia at $10.50 per million British Thermal Units, far below the peak Asian price, and close to (if not below) the cost of sending B.C. gas to China. At this price, there will be no government royalties, no lower income taxes, no debt retirement, no wealth fund. Maybe no LNG plants.
If any LNG plants are built in B.C., they will likely be constructed and operated as cheaply as possible, which will put the lie to another promise of Clark’s. In a province with legislated targets for reducing carbon pollution, she promised B.C. would have “the cleanest LNG produced anywhere in the world from well-head to waterline.”
As it turns out, this promise is easy to verify. Experts know the cleanest LNG in the world is the Snovit project in Norway, which emits 0.35 tonnes of CO2 per tonne of LNG. The under-construction Gorgon facility in Australia will match it.
But, public documents indicate British Columbia’s proposed LNG industry will be three times worse, producing one tonne of CO2 per tonne of LNG. Were three such facilities built as proposed, they would bring oilsands-scale carbon pollution to B.C., doubling our current emissions and making it impossible to meet our legislated targets.
We could build the cleanest LNG systems in the world. This would require reducing methane leaks from processes and pipelines, capturing and storing carbon pollution, and using renewable energy to produce electricity for processing and cooling natural gas, as Clean Energy Canada has recently shown.
But this is unlikely, especially as those Asian gas prices fall. So brace yourself for another barrage of Orwellian doublespeak from government and industry, in which cleanest means dirty, great public wealth means modest private profits, and revised climate targets mean missed climate targets. No doubt my economist colleagues will be amused. But should they?

Wednesday, 25 June 2014

Our Comment in Nature calling for oil sands moratorium

Here is the press release for our Nature paper, released June 25, calling for a moratorium on oil sands expansion. This means no loss of current jobs in the oil sands. But it does mean a return to sanity from this selfish rush to accelerate global warming, ocean acidification and ecological destruction - events that will lead to huge economic and social costs according to a just-released study by the World Bank. It does mean that we should not build new pipelines like Keystone XL, Northern Gateway and others.

Press release:

Scientists call for a Halt to Oil Sands Expansion Until Policies Address True Costs and Global Impacts.

A Comment published today in the journal Nature calls for a moratorium on new oil sands projects in Alberta, Canada due to flaws in how oil sands decisions are made. The authors are a multidisciplinary group of economists, policy researchers, ecologists, and decision scientists. They argue that the controversy around individual pipelines like Keystone XL in the US or Northern Gateway in Canada overshadows deeper policy flaws, including a failure to adequately address carbon emissions or the cumulative effect of multiple projects. The authors point to the contradiction between the doubling of the rate of oil sands production over the past decade and international commitments made by Canada and the US to reduce carbon emissions. “The expansion of oil sands development sends a troubling message to other nations that sit atop large unconventional oil reserves,” said lead author Wendy Palen, Assistant Professor at Canada’s Simon Fraser University. “If Canada and the United States continue to move forward with rapid development of these reserves, both countries send a signal to other nations that they should disregard the looming climate crisis in favor of developing the most carbon-intensive fuels in the world.” The authors point out that oil sands development decisions (e.g. pipelines, railways, mines, refineries, ports) made in isolation artificially restrict public discussions. Debate in the news media and during hearings for individual projects are limited to evaluating the short-term costs and benefits to the local economy, jobs, environment and health, and do not account for the long-term and cumulative consequences of multiple projects or of global carbon pollution. Co-author Joseph Arvai, Professor and Research Chair in decision science at the University of Calgary, explained the problem. “Individual projects – a particular refinery or pipeline – may seem reasonable when evaluated in isolation, but the cumulative impacts of multiple projects create conflicts with our commitments to biodiversity, aboriginal rights, and controlling greenhouse gas emissions. Though we have the knowledge and the tools to do better – to more carefully analyze these tradeoffs and make smarter long-term choices – so far governments have not used them.” A moratorium would create the opportunity for Canada and the United States to develop a join North American road map for energy development that recognizes the true social and environmental costs of infrastructure projects as well as account for national and international commitments to reduce carbon emissions. Anything less “demonstrates flawed policies and failed leadership”, the authors state.


Wendy J. Palen
Department of Biological Sciences
Simon Fraser University
Burnaby, BC, Canada

Thomas D. Sisk
Landscape Conservation Initiative
School of Earth Sciences and Environmental Sustainability
Northern Arizona University
Flagstaff, Arizona

Maureen Ryan
School of Resource and Environmental Management
Simon Fraser University
Burnaby, BC, Canada

Joseph L. Árvai
Department of Geography
University of Calgary
Calgary, AB, Canada

Mark Jaccard 
School of Resource and Environmental Management
Simon Fraser University
Burnaby, BC, Canada 

Anne Salomon
School of Resource and Environmental Management
Simon Fraser University
Burnaby, BC, Canada

Thomas Homer-Dixon
Balsillie School of International Affairs
University of Waterloo
Waterloo, ON, Canada

Ken Lertzman
School of Resource and Environmental Management
Simon Fraser University
Burnaby, BC, Canada

Wednesday, 29 January 2014

My review in Science of Nordhaus' new book

Stay tuned for a link to soon appear (awaiting approval) of my just released review in Science of Bill Nordhaus’ new book, The Climate Casino.

Monday, 18 November 2013

New unabated coal is not compatible with keeping global warming below 2°C

I have written frequently to explain how dramatic expansion of unconventional oil like bitumen in Canada is found by all leading international analysts to be inconsistent with the 2 C limit our political leaders promise to strive for. The same is true for any expansion of coal-fired power plants. For this reason, I agreed to sign my name to this statement by leading researchers on the urgent need for no new coal plants, anywhere in the world, unless they capture and store the carbon pollution. We can no longer allow the construction of new, unabated coal plants. Our press release is below. Click here to see the full report.

Scientists expose coal industry’s false claims about "high efficiency" coal: No more room for new unabated coal

Wednesday, 16 October 2013

It’s the climate, not the oil spill

Sorry, folks, but if you care about the environment – the planet for that matter – your strategy to stop oil pipelines is futile if its only focus is oil spills on land and sea. You may stop one or two poorly conceived projects, but you won’t stop industry expansion. There is too much money to be made in a world that allows carbon pollution to remain largely unpriced and unconstrained.

Difficult as it is to get the attention of enough people to influence our political process into acting on climate, there is unfortunately no other way to win this long-term battle than to focus on the fact that carbon pollution changes the climate – for the worse – and so we must stop the expanding extraction of fossil fuels from the earth’s crust. No expansion of oil sands. No new coal mines. No new delivery infrastructure like pipelines and coal ports. No aiding and abetting of the carbon pollution that will wreak havoc on the environment everywhere – not just the environment in the path of pipelines, tankers and trains.

Curiously, one environmental activist sort-of acknowledged this when she said to me, “We have to focus on local environmental impacts from oil spills because that’s all the public is interested in. But, yes, I don’t think we have slowed down fossil fuel expansion – if anything it is accelerating.” My response? “How can you expect enough people to talk about climate if even you aren’t talking about it?”

(Note that I keep saying “enough people.” We don’t need 50% of the population demanding action. If 10% really care and get vocal, then politicians, ever in pursuit of the swing-voter, have to pay attention – their survival instincts kick-in.)

While I have been saying this for a long time, the urgency of the message got stronger this past week with the launch of National Energy Board hearings into Enbridge’s proposed reversal of an oil pipeline (Line 9) to move more oil from Alberta’s oil sands east through Ontario and Quebec – again to aid and abet oil sands expansion. The NEB – and the government, and the oil industry – only wants to hear evidence and testimony about local impacts. They don’t want anyone mentioning the fact that the impacts of climate change are local – everywhere!

Forest Ethics and Donna Sinclair are challenging in court the rules that the NEB has for allowing evidence and testimony and asked me to provide an affidavit on the direct causal relationship between oil sands, pipelines, climate change and environmental impacts everywhere, which obviously includes people living near the pipeline – and far from the pipeline. In it I explain how all of the world’s leading, independent energy-economy modeling institutes show that the promise of Stephen Harper and other global leaders to not allow temperature increases greater than 2 C is completely inconsistent with expansion of oil sands, coal mines and other fossil fuel projects that lead to carbon pollution. Take a look and if you like it, please pass on to others.