Transcript What in the World? Canada and GHG Management

What in the World?
Canada and GHG Management
Michal C. Moore
Senior Fellow
The Institute for Sustainable Energy, Environment and Economy
University of Calgary
An emerging, thoughtful, if
hesitant and discontinuous,
approach to carbon impacts and the
future
Canada
Energy and Resource Rich
Major Industries
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Thermal Energy Generation
Oil and gas extraction and processing
Pulp and Paper generation
Cement and lime production
Chemical production
Mining, smelting and refining
Iron and Steel production
Canadian Population Concentrated Near Border
Hydrocarbon Resources e.g. OilSands
Concentrated in non-shield areas
Oil Sands
Western
Sedimentary
Basin
The Oil Sands
an overview
• 174 Billion Barrels of economically recoverable
oil (>$35/bbl US)
• Surface mining and in-situ extraction (SAGD)
• Upgradable to synthetic equivalent of light crude
• Output should exceed SA by 2047 at current rates
• Water, energy, transport intensive
• Bitumen extraction and upgrading produces >2x
GHG emissions per barrel as conventional crude
• Concentration of emissions close to production
site, creating potential sequestration economies of
scale
Oil Sands Unconventional Oil Production
has begun to rapidly increase
Source: US EIA
Initial export focused on US
now increasing to China
& in the future to India
Carbon is the Key for GHG
• Carbon is synonymous with GHG emissions, a
principal catalyst for global warming
• There are six main GHG’s all expressed as a ratio
to CO2
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Methane (CH4)
Nitrous Oxide (N2O)
Hydroflourocarbons (HFC’s, HFC23)
Perflourocarbons (PFC’s)
Sulphur hexaflouride (SF6)
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11,700
Policy Drivers in Canada
• Emerging Evidence
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Glaciers
Temperature
Crop cycles, breeding cycles
Permafrost changes
• Politics
– Kyoto signing
– Lawsuits
– Emergence of alternative markets e.g. enhanced oil recovery
• Uncertainty and risk
– Insurance payments
– Trade disruption
• Basic Science Research
Coincident with Expansion of Oil Sands Activity,
GHG emissions have increased
… and exceeded Kyoto targets
Overall energy demand increased
even with energy efficiency
Changes in air pollution indicators
are regionalized and coincident with population
and political centres
the trend is generally up
Alberta is the Principal Generator
of new supply and of GHG
Official and Unofficial Acknowlegment
of carbon constraints
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Kyoto
Project Green
High corporate responsibility
Still slow on energy efficiency
Missing linkage to corporate finance depts
Emerging Long-term Strategies
(post Kyoto planning was missing or inconclusive)
• Hedging to reduce risk
• Technology investment
• Emblematic trading markets
– European Union Emissions Trading System
(ETS)
– Chicago Climate Exchange
– New South Wales Emissions Trading system
Corporate Actions
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Suncor - published carbon profile
Transalta - emission reduction trading
TransCanada - product transport
EnCana - sequestration
Public Actions
• New Renewables interest
• Developing interest in demand management
• New Carbon trading marketMarket liquidity
– Cdn Federal Gov’t price assurance for compliance $15/tonne
CO2 equiv.
– Companies may find it easiest and least risky to purchase non
tradable credits from govt, since marginal abatement costs
usually in excess of 15/tonne
• Rule change probability
• Credit lifespan
• Post Kyoto
Examples
• Weyburn - sequestration
• New TransCanada Project
Belle Plaine (syngas)
• AICISE - Alberta Ingenuity Centre for Insitu Energy
Challenges That Will Influence Oil
Sands Operations
(and consequent GHG emissions)
Competitive markets
Long term cost of fuel
Transport challenges
Future cost of carbon reduction credits
Difference in domestic v intl markets
Policy uncertainty
Future Commitment
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Morality
Market demand
World actions, primarily US policy
Liability and culpability
– Sarbanes-Oxley and Canadian Equiv.
Advice Given
and beginning to be taken
There are a number of compelling legal and economic
reasons that corporations would be well advised to give
careful consideration to the issue of climate change and
even develop their own climate change action plan in
advance of any regulatory requirement. . . . [T]here is
reason for genuine concern that liabilities may be lurking
for those who neglect the issue now, to the later detriment
of the corporation and its shareholders.
J. Healy and J.M. Tapick, “Climate Change: It’s Not just a Policy Issue for Corporate Counsel - It’s a
Legal Problem,” Columbia Journal of Environmental Law, 29 (2004), pg 93