Positive Environment News

Lax CO2 Targets a Boon for Canada Oil Patch - Study

Date: 07-Jun-07
Country: CANADA
Author: Scott Haggett

In a study commissioned by the World Wildlife Fund, the U.K.-based Tyndall Centre for Climate Change Research said emission targets unveiled in April by Canada's Conservative government were below the voluntary commitments and energy efficiency savings already promised by the industry.

The study said the targets set by Ottawa for the rapidly expanding oil sands sector are lax enough to allow producers to end up selling emission credits.

"The oil sands industry may not only incur insignificant costs from the regulation (of the order of less than 5 cents per barrel on average), but may actually make a net profit from trading credits within the new emissions trading scheme that will be established under the new regulations," the study concluded.

That profit could be "in the order of tens of millions to hundreds of millions of Canadian dollars in the period 2010 to 2015," the Tyndall Centre said.

To exploit the world's second-largest supply of oil, behind only Saudi Arabia, oil companies have committed to spend more than C$100 billion by 2015 in the oil sands region of northern Alberta. The projects will nearly triple production to 3 million barrels a day, according to Canada's National Energy Board.

But separating the tar-like bitumen from the sand and converting it into refinery-ready synthetic crude oil is energy intensive. The Canadian government and the oil industry admit emissions of carbon dioxide will increase as new plants are brought on stream.

To accommodate the industry's growth, Ottawa said in April it would use intensity-based targets to govern allowable emissions. Those targets, which mandate cuts on a per-barrel-produced basis rather than fixed goals, will cut emissions by 20 percent per barrel from 2006 levels by 2020, the government said.

The Tyndall Centre study said forecast growth in the oil sands sector would mean the industry will produce more than 15 percent of Canada's greenhouse gas emissions by 2020, up from 3.6 percent in 2004.

Still, the industry says the country's targets are strict enough. Pierre Alvarez, president of the Canadian Association of Petroleum Producers, a lobby group representing the country's largest oil firms, said the targets are the toughest faced by any oil producing nation and unlikely to result in profits.

"None of my members are talking about making a profit under the current rules," he said. "The targets being imposed under the federal plan are the most onerous on the oil and gas industry anywhere in the world."

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