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What in Tar-­‐nation? Canadian Energy Security without the Tarsands

Gordon Laxer

AFL Magazine

March 20, 2011

En route to his first G-­‐8 meeting as prime minister, held in Russia for the first time, Stephen Harper stopped off in London to proclaim “Canada's emergence as a global energy powerhouse -­‐ the emerging ‘energy superpower’ our government intends to build."


Adding to the hyperbole, he bragged that the oil sands, are “an enterprise of epic proportions, akin to the building of the pyramids or China’s Great Wall. Only bigger.”


Harper’s claim was a sharp departure from the modest, middle-­‐power pretensions of previous prime ministers. It deviated from what pollster Michael Adams called Canadians “low tolerance for macho brashness.”


It was ironic that Harper chose the 2006 G-­‐8 meetings in St. Petersburg to assert Canada’s energy superpowerdom. Russia is a Saudi Arabia with nukes. With just under a quarter of the world’s output of natural gas, Russia is the global gas power. It produces almost 10 million barrels of oil a day, 12 per cent of the world’s total, and exports seven million barrels, second only to the Saudis. Canada will never be in that league.


When you cannot safeguard your citizens from freezing in the dark, nor control how much you export, nor set the price at which citizens buy back their own energy from foreign transnationals, you know you aren’t a superpower.


We’ve all heard the hype about the oil sands as a “game changer,” the main new source of oil that will enable the U.S. to get off Middle Eastern oil and achieve energy security. Are the oil sands that important? What would happen if we took them off the table? Much less than we are led to believe.


Each year, the world needs to replace four and a half to five million barrels a day of new oil to make up for declines in old fields. Impending water shortages, environmental disasters, dead ducks and opposition to “dirty oil,” mean the oil sands are unlikely to ever produce quite that much even if they double from today’s 1.2 to 1.4 million barrels a day (b/d).


Even if oil sands output rose as predicted to more than four million b/d, they would replace at most one year’s worth of world oil depletion. The oil sands will never deliver enough oil to significantly prolong the age of cheap oil, which will likely end in this decade. High world oil prices will curtail globalization – defined as “the death of distance” -­‐ and spark a return to “inwardly-­‐directed development,” something progressive Albertans should embrace for our province.


It is dangerous to place all your eggs in one basket, especially if that basket is a non-­‐ renewable resource. This was a lesson Albertans used to know in the 1970s when Peter Lougheed repeatedly warned of the dangers of not diversifying Alberta’s economy.


“The Stone Age didn’t end for lack of stone, and the oil age will end long before the world runs out of oil,” Sheik Yamani, Saudi Arabia’s former oil minister, wisely said. The danger in sticking with the oil sands is that Alberta will sink into a fossil-­‐fuel belt that could soon resemble the U.S. rust belt of abandoned auto plants.


The world is about to experience severe international oil-­‐supply shocks. Most experts predict that world oil output will peak soon. They disagree on when. But, it will hit soon. Why else would oil corporations scrape the bottom of the barrel in their desperate search for more of the toxic stuff in the oil sands, the Arctic, and the deep ocean, including BP’s Deep Horizon blowout in the Gulf of Mexico? Would oil transnationals be in those expensive and environmentally destructive sites if there were large supplies of easy oil left? No. And those sites will not provide enough new oil to replace declines. The rest of the world will move on. It has to. Will Alberta move with it?


Business as usual is not a viable future for Alberta for environmental reasons and because the U.S. does not really need Canadian oil. On the other hand, Eastern Canadians need domestic oil to replace heavy dependence on imported oil. But, Eastern Canadians don’t need oil sands oil either.

There is enough domestic conventional oil to tide us over as we gradually move off carbon fuels. But, relying on Canadian conventional oil can occur only if we do a U-­‐ turn, and exit from the North American Free Trade Agreement (NAFTA) and its proportionality clause that forces us to export energy even if we are running short during an international oil supply crisis. To get there, we first must cease government propaganda campaigns to promote oil exports.


Last summer, Alberta placed a full-­‐page ad in the Washington Post to support pipeline expansion of more bitumen exports from the oil sands, by pretending it’s not dirty oil. “The oil sands ... produce about 4.6 per cent of Canada’s carbon emissions,” the ad said. Is that all? If so, why worry?

Because they’re growing, whereas CO2 emissions must fall dramatically. Fossil fuel output, mainly from the oil sands accounted for 30 per cent of the growth in Canada’s total emissions between 1990 and 2004.



The main worry about the oil sands is future growth. In 2009, Michael A. Levi wrote a study on the oil sands for the New York-­‐based Council on Foreign Relations. The council is influential. Two weeks after issuing a 2005 report calling for the deep integration of Canada and Mexico with the United States, the heads of governments of the three countries met in Waco, Tex., to launch the Security and Prosperity Partnership (SPP). The latter treated Canadian and Mexican energy as if it were American.


Levi’s 2009 study implies that the oil sands do not have a long-­‐term future:


“Imagine ... that oil sands emissions rose as expected over the next two decades and then stabilized in 2030, while total U.S. and Canadian emissions dropped by 80 per cent by 2050 (an oft-­‐proposed target). Oil sands’ emissions then become equivalent to about 10 per cent of U.S. emissions by 2050, representing almost all emissions from Canada at that point.” (emphasis added).


Unless Canada cuts all other emissions to zero, including for minor things like heating our homes through winter, driving to work and fuelling industry, Canada will become THE world’s great environmental rogue state -­‐ solely because of the oil sands. To avoid that, Canadians would have to cut out all those activities just so the oil sands could give the U.S. addiction to oil its fix.


Besides, the U.S. does not need Canadian oil. With 4.6 per cent of the world’s people, it produces 10 per cent of the world’s oil and uses 23 per cent of it. But, its oil dependence hides its bountiful energy supplies. When all forms of energy are considered -­‐ oil, natural gas, coal and energy to produce electricity -­‐ America is the world’s greatest energy producer. It’s second in natural gas and coal, and first in electricity. U.S. oil output is third, not that far behind that of Saudi Arabia and Russia. America is an energy superpower.


It is only Americans’ super wasteful oil appetite that makes it seem like an energy also-­‐ran. Sooner or later, the U.S. obsession with security will force it to realize that only by going green can it gain energy independence.


When he was president, Jimmy Carter went on television to say: “Ours is the most wasteful nation on earth. We waste more energy than we import ... We simply must balance our demand for energy with our rapidly shrinking resources.”


Carter’s solution was to “reduce the demand through conservation” -­‐ tying energy security with environmental protection. “Our energy problems have the same cause as our environmental problems -­‐ wasteful use of resources. Conservation helps us solve both at once.”

The imminent run up to very high world oil prices will force the United States to soon heed the words of Jimmy Carter. When they do, Alberta could start to lose its major oil sands market. Proximity to a neighbour notwithstanding, the U.S. will havebto pay for Alberta bitumen with tens of billions of extra U.S. dollar as oil prices escalate.


If the oil sands and energy exports are not the long-­‐term answers for Alberta and Canada, what is? A Canadian energy-­‐security strategy combined with a turning toward an inwardly-­‐directed economy and society.


The world is at the brink of peak oil and many other non-­‐renewable resources, but is nowhere near peak equality, peak social justice and peak real-­‐democracy, the kind that comes “from below” by active citizens. We are nowhere near peak in living in tune with nature, nor near peak in deriving happiness from what matters most. Once basic needs are met, most of us get much more satisfaction from valuing each other and nature than from more stuff. I believe that we can develop that kind of society. I’m an optimist.


To get to that future, we must make a cultural turning, an economic turning and a political turning. Business as usual is a death economy, where it’s considered acceptable to drill in the deep ocean, including the Canadian part of the Arctic Ocean, even if it risks exterminating whole species of life, in return for perhaps of generation of fleeting riches.


In a country where the dominant season is winter, energy security matters for Canadians. Energy shortages can literally mean freezing in the dark.

Most Canadians are unaware of the risk because their governments don’t tell them. Canadians have naïve beliefs about unlimited resources. Alberta’s oil sands are said to hold the world’s second largest amount of oil. Despite this, Canadians are very energy insecure. Two thirds of Canada’s oil output is exported to the U.S. If the six new export pipelines are not stopped, the share will rise. Meanwhile, Canada imports more than half its oil. Quebec imports 92 per cent; Atlantic Canada 75 per cent; and Ontario, over one-­‐third. Half of Canada’s oil imports come from OPEC (Organization of the Petroleum Exporting Countries) countries, a proportion which tops the 44 per cent share the U.S. imports from OPEC countries.


Canada is too intent on providing for U.S. energy security to provide for its own citizens. If their own governments don’t look after Canadians, no one else will. This must be our demand. Energy security for Canadians, using conventional Canadian oil, conservation and quickly moving to renewable forms of energy.


Why must we have a Canadian energy security strategy to cut carbon emissions? Canada can’t cut carbon emissions if we export a lot of oil. The more oil Canadians conserve, the more would be exported to the U.S., and the bigger the share that NAFTA will oblige us to export. That’s a negative feedback loop. A positive loop is possible. The key is to tie domestic oil output to domestic use. Cut oil exports to the U.S. We did this before. By 1981, Canada had cut oil exports to the U.S. to 14 per cent of their 1973 level. The U.S. did not invade.



Once we supply the Canadian market, when people cut gasoline use, domestic oil output will fall accordingly, and so will carbon emissions. Canadians can be motivated to make energy lifestyle changes only if they know it’s within their collective grasp to control oil output and emissions.

It will be hard to convince Canadians to substantially cut fossil-­‐fuel use, buy Smart cars or cycle, so more Americans can drive sport-­‐utility vehicles and Hummers.


The perversity of proportionality is that if the U.S. cuts energy consumption, it boosts their energy independence. If Canadians cut energy use, we export more to the U.S.


Stats Canada puts Canada’s annual conventional oil output at 1.39 million b/d, while CAPP puts it at 1.84 m b/d. Canadians use about 1.7 m b/d a year. Thus, Canada produces about as much as we consume. As domestic conventional oil output slowly dwindles, Canada can live off it as we reduce use, without touching any oil sands oil. If Swedes and Britons can thrive at about the Canadian standard of living while using 50 per cent and 40 per cent respectively as much oil as we do, so can Canadians.


Our challenge is to convince more people that phasing out the oil sands is pro-­‐ Alberta, and pro-­‐Canada. The sooner Canada stops being a tar-­‐nation, the better.


‘Shut down the tar sands’, says Greenpeace. It’s a good slogan, but it would be a disaster for Alberta and Albertans. The oil sands are too central to the economy and the lives of workers and families in Alberta to just shut them down abruptly.


We must present a vision and plan of what to do instead. I’ve been working on a Canadian energy security and conservation plan. When I presented it as an invited expert witness to the Parliamentary committee on International Trade in 2007, the Conservative committee Chair, cut me off. It’s not relevant he said. Too dangerous to the powers that be is more like it.


The first step is to cap oil sands output at current levels and phase them out over 10 to 15 years, starting with the oldest plants that have already more than paid off their capital costs. At the same time, new industries and jobs must be created around a green economy that builds upon Alberta’s highly educated and skilled work force.


There are far better alternatives than to let Alberta stick with the oil sands and sink into a fossil-­‐fuel belt. The oil sands must be phased out for the good of Albertans, Canadians and the planet.

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