Harper’s Shell Game
Why Tar Sands Pipelines Are Not in
Canada’s National Interest
Research and writing
Keith Stewart works on energy policy and green
energy solutions for Greenpeace Canada, building on
14 years of experience as an environmental researcher
and advocate. He has a Ph.D. in political science from
York University and currently teaches a course on
Energy Policy and the Environment at the University of
Toronto.
Acknowledgements
Greenpeace Canada would like to thank our 86,000
Canadian supporters who fund everything we do,
including this report. Without your individual and
ongoing support Greenpeace could not function
independently of government or corporate funding.
We would also like to thank the Oak Foundation for its
support of Greenpeace Canada’s climate and energy
campaign.
About Greenpeace
Greenpeace is an independent, campaigning
organization which uses non-violent, creative
confrontation to expose global environmental
problems, and to force the solutions which are
essential to a green and peaceful future. Greenpeace’s
goal is to ensure the ability of the earth to nurture life in
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Greenpeace is not affiliated with any political party. We
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Design:
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TABLE OF CONTENTS
Executive Summary
4
Introduction
5
Energy Superpower Ambitions
6
A Tar Sands Pipeline to Asia? 11
Shell in the Tar Sands: Fuelling Climate Change
15
Shell in the Tar Sands: New Mines, Old Problems
18
Investing in the Tar Sands: An Act of Desperation?
24
Tar Sands and Democracy: A Caustic Mixture
28
Tar Sands Mines and Pipelines: Not in the National Interest
30
Endnotes
32
3
Executive summary
The proposed Enbridge Northern Gateway pipeline from
Alberta’s tar sands to the British Columbia coast has become
a major political flashpoint because it is vital to achieving
Prime Minister Stephen Harper’s ambition of transforming
Canada into a tar sands–based “energy superpower.”
To realize this vision, the Harper government has teamed
up with multinational oil companies in an unprecedented
assault on nature and democracy. This report uses
documents obtained under Access to Information legislation
and from the public record to explore how and why one oil
company—Shell—has joined with the Harper government in
an aggressive “Oil Sands Advocacy Strategy” that aims to
undermine environmental legislation in Canada, the United
States and Europe.
In sharp contrast to many other oil companies, Shell has
long accepted the scientific consensus on climate change
and publicly called for action to reduce greenhouse gas
emissions. Yet over the last decade, the company has largely
abandoned its investments in renewable energy in favour
of a major expansion of its tar sands operations. These
expansion plans would enable production of enough oil
to fill Enbridge’s proposed Northern Gateway pipeline and
they include two major tar sands mining projects that are
undergoing environmental assessments at the same time as
the proposed pipeline.
In addition to this carbon-intensive investment strategy,
Shell has played a key political role in the Harper government’s
lobbying against low-carbon fuels legislation in the US and
Europe, and has actively supported the planned construction
of the Northern Gateway pipeline.
The Harper government’s energy superpower ambitions may
be in the interest of oil companies like Shell that now rely on
the more expensive and polluting oil from the tar sands to
replace their rapidly declining reserves of conventional oil.
But such a strategy is not in the best interest of Canadians,
because it is the following:
Bad for the environment: Scraping the bottom of the
barrel by increasing production of the more carbonintensive tar sands oil will put us on a pathway to
catastrophic levels of global warming. Tar sands expansion
also increases the regional ecological destruction and
associated health impacts on local communities, while
creating new risks from the inevitable oil spills in British
Columbia from tar sands pipelines and tanker traffic.
4
Bad for the economy: The Organization for Economic
Cooperation and Development, Deutsche Bank, and the
Alberta Premier’s Council on Economic Strategy have all
warned that building Canada’s future on the tar sands is a
risky long-term investment strategy. Further investments
in tar sands infrastructure will lock Canada into a highcarbon economy, at the expense of renewable energy
alternatives. This risks leaving Canada ill-prepared to
prosper in a world that is taking action on climate change.
Bad for democracy: Documents obtained under Access
to Information legislation detail the degree of collusion
between Shell and the Harper government to undermine
clean energy and environmental protection legislation that
would limit the expansion of the tar sands. This behindthe-scenes lobbying strategy is accompanied by public
statements and legislative changes intended to intimidate
environmental and Aboriginal groups, who are labelled as
“adversaries” in internal government documents and as
“radicals” in the government’s public statements.
This attempt to limit free speech is fundamentally
undemocratic, but it is being aggressively pursued in order
to pre-empt a debate on what kind of energy strategy
would be in Canada’s national interest.
The tar sands are not our only option for energy. The latest
research from the Intergovernmental Panel on Climate
Change (IPCC) shows that we have the technology to solve
our climate crisis. The International Energy Agency (IEA) has
detailed how it is much more cost-effective to start deploying
these technologies now than to wait. The worst option of all,
according to the IEA, would be to proceed with business as
usual and hence fail to stop global warming.
Fortunately, we know what kinds of public policies are
necessary to rapidly deploy these climate solutions and bring
about what Greenpeace calls an Energy [R]evolution.
Our challenge is that these policies are opposed by powerful
interests, like Shell and the Harper government. These
players are choosing to pursue the narrow, short-term
interests of oil industry profits over our common interest in
building a green economy that will stop global warming.
When viewed through the lens of this broader perspective,
it is clear that projects like Shell’s new tar sands mines and
Enbridge’s Northern Gateway pipeline are not in Canada’s
national interest.
Introduction
Prime Minister Stephen Harper and his oil industry
allies are willing to turn the proposal by Enbridge to
build a new tar sands pipeline through northern British
Columbia into “the fiercest environmental standoff ever
seen in Canada”1 for one simple reason: without new
pipelines, the planned expansion of tar sands oil output
will come to a screeching halt.
The looming bottleneck is a problem for the Alberta
and federal governments, who are eager to transform
Canada into a bitumen-based “energy superpower.”
Their ambition to quadruple tar sands output is
facing two major constraints. First, existing pipelines
are near capacity, with some analysts suggesting
that production could outstrip this capacity as soon
as 2015.2 Secondly, the demand for oil has been
dropping in the US and is expected to continue to
decline, thanks to new vehicle fuel efficiency standards.
The solution to both of these problems is, according
to the federal government, to pursue direct access
to growing Asian markets by building new pipeline
capacity that would ship bitumen from the tar sands to
the British Columbia coast, where it could be loaded
onto supertankers.
Enbridge’s proposed Northern Gateway pipeline is
also viewed as a vital piece of infrastructure by the
major multinational oil companies. As they run out
of cheaper, more easily–accessible conventional oil,
they are disproportionately turning to the tar sands to
replace their reserves.
Shell, for example, is looking to triple its output from
the tar sands in the coming years.3 It has two massive
new tar sands mining proposals going through the
environmental assessment process in parallel with
the Enbridge pipeline project, and Shell’s proposed
expansion of production in the tar sands would
produce enough new oil to fill the Northern
Gateway pipeline.
These projects are, however, facing stiff and growing
opposition from diverse groups advocating a greener
energy future.
There are grave concerns over the impact that the
inevitable oil spills from the pipeline or the associated
supertanker traffic will have on the ecosystems and
resource-based livelihoods in the Great Bear Rainforest
and along the BC coast.
There are related concerns over how the proposal
disregards the rights of BC First Nations, who have
publicly and repeatedly stated their united opposition
to the project based on the threat it poses to the
region’s lands and waters—and hence to their culture
and livelihoods.
There are fears over how the federal government’s
apparent determination to push this pipeline through at
any cost will undermine Canadian democracy and the
legal framework for environmental protection.
And beyond the pipeline itself, there are concerns
over how new pipelines would enable the rapid
expansion of the tar sands, fuelling global warming
and overloading regional ecosystems and downstream
communities with the toxic byproducts.
On the technical side, the federal government has
excluded upstream changes, such as increases in
overall production, from the terms of reference for the
review panel assessing the Enbridge pipeline, despite
the fact that pipelines and tar sands expansion are
inextricably entwined.
The failure to consider upstream impacts is not an
oversight. The Harper government is encouraging
oil companies to invest in the tar sands in order to
fulfill the Prime Minister’s political ambitions of turning
Canada into an “energy superpower.” To realize this
ambition, the federal government has teamed up with
what it calls “like-minded allies” from the Canadian
Association of Petroleum Producers (with Shell
undertaking key organizing work) in an aggressive
pro–tar sands campaign that seeks to reshape
Canadian politics and society.
Around the world, oil wealth has proven to have a
negative impact on democracy as corporate interests
take priority over those of citizens. This effect is now
being felt in Canada, with oil companies playing a
key role in the Canadian government’s attempts to
prevent environmental legislation being passed in
Europe and the US that would restrict imports of tar
sands oil to those markets on environmental grounds.
The companies are also supporting the federal
government’s legislative push to fast-track tar sands
infrastructure projects by weakening environmental
laws in Canada.
At the same time, the Harper government is attempting
to intimidate the environmental and Aboriginal groups
which it has labeled “adversaries” in its internal
planning documents by publicly denouncing pipeline
5
opponents as “radicals.” And while the 2012 federal
budget continued to offer over $1.3 billion in tax breaks
to oil companies,4 budgets were cut at environmental
ministries. This occurred even as more than $8 million
in new resources were allocated to the Canada
Revenue Agency to harass environmental charities
critical of the government through audits of their
“political activities.” 5
These types of warnings, coupled with the negative
environmental and social impacts of the rapid growth
of the tar sands, should raise questions as to whether
the Energy Superpower aspiration is truly in Canada’s
“national interest.”
If the Harper government expects its unprecedented
assault on democratic dissent to silence organizations
advocating for the transition to a low-carbon energy
system, it should prepare to be disappointed. For in
the absence of any credible commitment from the
federal government to policies that would reduce
greenhouse gas emissions or address the cumulative
impact of the tar sands on downstream communities,
tar sands pipelines like Enbridge’s Northern Gateway
and the Keystone XL will continue to be a key
battleground in the struggle for a green energy future.
Ambitions
Surprising new voices have emerged to warn
of the economic risks posed by a development
strategy based on the export of high-carbon oil.
The Organization for Economic Cooperation and
Development (OECD) has warned of the negative
impact of a “petrodollar” on other sectors of the
Canadian economy.6 Similar arguments have been
made by Ontario’s Premier Dalton McGuinty7 and
federal New Democratic Party leader Thomas Mulcair.8
Energy Superpower
To grasp the essence of contemporary Canadian
climate policy, one need only turn to Stephen
Harper’s first speech as Prime Minister to business
leaders outside of Canada. Speaking in London,
he announced his intention to build Canada into an
“energy superpower” and invited British oil companies
to help him do it.
Canada, he said, was already the fifth-largest producer
of energy in the world, on the strength of its production
of oil, gas, uranium and hydroelectricity. But this was
“only the beginning”:
And while climate scientists have long warned about
the need to transition away from fossil fuels, we are
now seeing financial institutions like Deutsche Bank
argue that just as the explosion of digital cameras
made the cost of film irrelevant, the growth of electric
cars will make the price of oil all but irrelevant for
transportation.9
3
We are even hearing doubts from the panel of
economic advisors handpicked by the Government
of Alberta. The Premier’s Council for Economic
Strategy—which included Stephen Harper’s former
Industry Minister and the former CEO of Shell
Canada—was asked how to ensure the prosperity
of the province in 2040. It came back in May
2011 with the startling advice that “we must plan
for the eventuality that oil sands production will
almost certainly be displaced at some point in the
future by lower cost and/or lower-emission alternatives.
We may have heavy oil to sell, but few or no profitable
markets wishing to buy.” 10
Greenpeace hanging a banner from the top of the iconic Calgary Tower to
highlight the need to sever the relationship between the toxic tar sands oil
industry and the federal and provincial governments. © Greenpeace
6
3
At dawn on the opening day of the 2011 UN climate summit in Durban, South Africa, Greenpeace activists take to Parliament Hill to brand the Harper government
a ‘CLIMATE FAIL’ of epic proportions. © Eye in the Sky / Greenpeace
An ocean of oil-soaked sand lies under the
muskeg of northern Alberta – my home
province. The oil sands are the second largest
oil deposit in the world, bigger than Iraq, Iran or
Russia; exceeded only by Saudi Arabia. Digging
the bitumen out of the ground, squeezing out
the oil and converting it in into synthetic crude
is a monumental challenge. It requires vast
amounts of capital, Brobdingnagian technology,
and an army of skilled workers. In short, it is an
enterprise of epic proportions, akin to the building
of the pyramids or China’s Great Wall. Only
bigger.11
The energy superpower vision he laid out in that
speech—of an economic future for the nation rooted in
the rapid expansion of the tar sands and extending the
oil and gas frontier into the Arctic—has been the key
driver of energy (and hence climate) policy in Canada
ever since.
Shell was an early and eager supporter of this vision.
In a February 2009 letter to Prime Minister Harper,
obtained by Greenpeace under Access to Information
legislation, the President of Shell Canada wrote:
The strength of Canada’s status as an energy
superpower comes in large measure from the role
our country plays as the most significant supplier
of energy (crude and natural gas) to the US.
Given Shell’s significant resources and activities
in Canada, we are committed to long-term growth
of our business here . . . The development of
these [tar sands] resources can help Canada’s
economy to grow and prosper, but it requires
open and accessible markets to provide the US
with the secure, reliable supply of energy it needs
to prosper.12
For Shell, this would require aggressive action to combat
environmental measures in other countries targeting tar
sands imports. In that same letter to the Prime Minister,
Shell Canada President Brian Straub said:
Canada must oppose any moves that could
threaten access to the US, our most important
market, such as the “Section 526” provision
or a Low Carbon Fuel Standard (LCFS)
that particularly disadvantages Canada’s
unconventional resources. As well, it should be
made clear that the responsibility to address
GHG emissions generated from oil sands
7
production rests squarely with Canadian
governments—federal and provincial, and that
such emissions are already well regulated by
the Alberta government and would also be well
regulated under a North American Cap and Trade
program.13
Shell has publicly supported action on climate change
and putting a price on carbon, yet it clearly doesn’t
make such action a precondition for its political
support. Alberta’s regulations have been criticized
as ineffective, as they would allow greenhouse gas
emissions from the tar sands to double or even triple
by 2020, with companies able to avoid reductions at a
cost of roughly 11 cents per barrel.14
There is no North American cap-and-trade system
in place, and Shell is no longer even advocating for
one. According to notes on an October 2010 briefing
by Shell for federal officials that were obtained under
Access to Information legislation, “Shell has moved off
pushing for cap and trade given the bleak prospects
in US Congress – they are now looking for regulation
with flexibility.”15
Shell has tried to build support for measures that
would reduce greenhouse gas emissions—just not
its own emissions. The following is from an internal
government debrief on Shell climate lobbying:
Shell: they called yesterday to brief on a
‘dialogue’ they are organizing, with Bruce Carson
and Pembina, for April in Banff; idea is to bring
academics, ENGOs [environmental groups] and
a range of industry reps together to try to agree
on recommendations for gov’t in areas of the CC
[climate change] debate that are seen as less
controversial—energy efficiency, transportation
demand management, renewable, biofuels.
Initiative is being driven by Royal Dutch Shell,
and draws on experience with the Climate Group
in UK. I had to point out (nicely) that the initiative
seems to sidestep the gorilla in the room of
emission reductions from O&G [oil and gas],
but that otherwise it seems like a great idea.16
In spite of its support for action on climate change
in general, Shell remained eager to help with the
campaign against cleaner fuel legislation in the US
and Europe. In a May 2009 letter to Canada’s top civil
servant (the Clerk of the Privy Council), Shell Canada
President Straub wrote:
8
I would like to thank you and Mr. Paquette for
taking the time to meet with me on Thursday,
April 23 in Ottawa. [sentence redacted]
I appreciated your thoughts on industry’s role in
leading oil sands advocacy efforts in the U.S. and
Europe. As we discussed, Shell Canada has been
and will continue to be active in this area, both
with CAPP and on our own, and we appreciate
the government’s efforts in helping to facilitate
this work. As we proceed with these advocacy
initiatives, we will keep your department apprised
of their outcomes. Also, as discussed, Shell will
be conducting an oil sands workshop in Ottawa
in early-June, and will be in touch with your staff
with further details.17
Shell clearly has the ear of the federal government.
While environmental group requests for meetings are
routinely ignored, Shell lobbyists met 100 times with
senior federal officials between January 2009 and
December 2011, according to the federal Registry
of Lobbyists. This included 18 meetings with federal
Ministers within a 15-month period.18 This does
not include any of the lobbying done by industry
associations or organizations which Shell is a member
of, such as the Canadian Association of Petroleum
Producers (CAPP), which has been lobbying against
greenhouse gas regulations for the oil industry.19 Shell
is, however, represented on CAPP’s Oil Sands CEO
Communications Task Group,20 which has worked with
the federal and Alberta governments to coordinate
lobbying efforts in the US and Europe.21
Government documents show that Shell played a key
role in the Harper government’s “Pan-European Oil
Sands Advocacy Strategy,” by organizing workshops,
hosting lobbying events and participating in the
government’s advocacy training sessions for Canadian
diplomats.22, 23 Shell’s lobbying of the UK government
has also been credited with helping convince the
Cameron government to lobby against the Fuel Quality
Directive within the European Union (EU).24
The goal of this strategy was to prevent the EU from
implementing the Fuel Quality Directive. The Directive
would assign a default value to oil derived from
bitumen (tar sands), that recognizes it as having a
higher carbon content than conventional oil, due to
the extra energy required to extract and process the
bitumen. While there is very little tar sands oil exported
to Europe, the Canadian government and oil industry
have mounted an “unprecedented” campaign to
block the measure for fear that it would be copied by
other jurisdictions and hence reduce the market for
tar sands–derived products or discourage European
investment in the tar sands.25
According to the federal government’s documentation
of its Pan-European Oil Sands Advocacy Strategy,
this strategy targets “National and European level
Politicians (especially from the ruling and influential
parties),” and divides Canadians into two camps:
“Allies” include the Canadian Association of Petroleum
Producers and individual firms like Shell and BP, and
business groups. Also appearing on the allies list is
the National Energy Board, which is surprising, given
that it is supposed to be an independent agency
which decides whether infrastructure projects are in
the ”national interest.” Environmental and aboriginal
groups, along with an unidentified subset of media
(the adjective was redacted when the documents were
released), are identified as “adversaries.”26
This kind of allies/enemies list has become an expected
part of partisan politics in Canada, but it is unusual to
see it in a document prepared by and for Canadian
diplomats. Yet, in the pursuit of energy superpower
ambitions, Canada’s diplomatic corps has been drafted
into a campaign to undermine domestic climate
policy measures in other countries, even though the
Government of Canada is (at least formally) in favour of
dramatic reductions in greenhouse gas emissions.
The depth of the governing party’s commitment to
taking action on climate change is, however, suspect.
Prior to becoming Prime Minister, Stephen Harper
authored a 2002 fundraising letter to members of the
Canadian Alliance party (which subsequently became
the Conservative Party) in which he attacked the Kyoto
Protocol and climate change science. The letter stated:
We’re gearing up for the biggest struggle our
party has faced since you entrusted me with
the leadership. I’m talking about the “battle of
Kyoto”—our campaign to block the job-killing,
economy-destroying Kyoto Accord. It would take
more than one letter to explain what’s wrong
with Kyoto, but here are a few facts about this
so-called “Accord”
n
It’s based on tentative and contradictory
scientific evidence about climate trends.
n
n
n
n
It focuses on carbon dioxide, which is
essential to life, rather than upon pollutants
Implementing Kyoto will cripple the oil and
gas industry, which is essential to the
economies of Newfoundland, Nova Scotia,
Saskatchewan, Alberta and British Columbia.
Workers and consumers everywhere in
Canada will lose. THERE ARE NO CANADIAN
WINNERS UNDER THE KYOTO ACCORD
Kyoto is essentially a socialist scheme to suck
money out of wealth-producing nations.27
Once he became Prime Minister in 2006, it quickly
became clear that action on climate change was not
a priority. The Harper government’s first budget saw
the elimination of fifteen climate-related programs.28
In response to the 2008 recession, only eight per
cent of Canada’s economic stimulus package was
dedicated to “green” measures, a level well below the
comparable green share of stimulus packages in the
US (12 per cent), China (38 per cent), the European
Union (59 per cent), and South Korea (81 per cent).
And of the 8 per cent “green” component in Canada,
the largest component (41 per cent) was for carbon
capture and storage projects—a direct public subsidy
for coal-fired electricity and the tar sands.29
Furthermore, the International Energy Agency’s (IEA)
2009 country review found that even though Canada
is of one of the highest emitters of greenhouse gases
per capita in the world, and has a higher energy-use
intensity than any other IEA country, the largest part
of government research and development spending
is for fossil fuels (27 per cent) and nuclear power (38
per cent), while energy efficiency (14 per cent) and
renewable energy (11 per cent) are short-changed.30
The 2010 federal budget eliminated the principal
federal programs for supporting energy efficiency31
and renewable energy,32 while putting in place new
measures to fast-track approvals for fossil fuel and
nuclear infrastructure.33 At the same time there are
federal subsidies worth at least $1.3 billion annually for
the oil and gas sector in Canada, with the bulk of these
captured by the tar sands.34
Once they finally won a majority government in 2011,
the Conservatives removed any doubts as to their
intentions when, one day after returning from the
United Nations climate conference in Durban, South
9
Africa, Environment Minister Peter Kent announced
that Canada would withdraw from the Kyoto Protocol.
Risk Act; and made changes to the Income Tax Act
governing political activities of charitable organizations.
The 2012 federal budget subsequently included
an announcement that the legislation governing
environmental approvals of energy projects would be
changed to speed up the process, and the government
indicated that these changes would apply retroactively
to the review of the Enbridge Northern Gateway
pipeline. The budgets of key environmental ministries
were also cut, which will likely have the effect of limiting
enforcement of remaining laws, and the government
disbanded an advisory body, the National Roundtable
on the Environment and Economy, that had been
offering advice on how the government could achieve its
stated greenhouse gas reduction targets.35
Furthermore, the budget included $8 million in new
resources for tax inspectors to increase surveillance
and enforcement of environmental charities.
Greenpeace is not a charity, but many environmental
groups are and these measures are clearly intended
to send a chill through the environmental community
and stifle democratic debate. In the words of a Globe
and Mail editorial, “The Conservatives are continuing
their dishonourable attack meant to intimidate
environmental groups, in a budget item that stands out
for adding a needless new cost . . . Witch-hunts don’t
come cheap.”37
Prior to unveiling the 2012 budget, the Harper
government indicated that it intended to change
other major pieces of environmental legislation, such
as the Fisheries Act, to make it easier for energy
projects to be approved, leading over 600 scientists
to send a letter opposing the proposed changes.36
These changes were nonetheless included in the
budget implementation bill that: revoked the Kyoto
Protocol Implementation Act; revoked the Canadian
Environmental Assessment Act and replaced it with
a weaker version that allows for greater ministerial
discretion; made major changes to the Species at
The funds for this “witch-hunt” were justified in the
budget documents on the grounds that “concerns have
been raised that some charities may not be respecting
the rules regarding political activities. There have also
been calls for greater public transparency related to the
political activities of charities, including the extent to
which they may be funded by foreign sources.”38
Revealingly, in a fine example of the echo-chamber at
work, these “concerns” had been expressed by Ethical
Oil,39 a pro-industry group with close ties to the Harper
government itself.
Shell and “Ethical Oil”
Ethical Oil is a pro-industry group, with close ties to
both the oil industry and the Harper government, that
promotes tar sands oil as more “ethical” than what
it calls “conflict oil” from places like Nigeria and the
Middle East. It maintains a website, ethicaloil.org,
and has run pro-tar sands advertising campaigns on
television and radio as well as billboards, including ads
in support of the Northern Gateway pipeline.
The organization has its origins in a book of the same
name by Ezra Levant, a conservative media pundit
who has previously worked as communications staff
person for the Conservative party and as a lobbyist for
the tobacco industry. It was founded as a pro-industry,
nonprofit corporation in May 2011 by Levant and
Thomas Ross, a Calgary-based lawyer who specializes
in working for the oil sands industry, with Alykan Velshi
as the primary spokesperson and Executive Director.40
Velshi was previously a communications officer for a
10
Conservative cabinet minister, Jason Kenney, and has
since left Ethical Oil to become the Director of Planning
in the Prime Minister’s Office. The new Executive
Director of Ethical Oil, Jamie Ellerton, also used to
work for Jason Kenney on Parliament Hill.
The close relationship between Ethical Oil and the
Conservative Party has been well documented,
with key figures working for both either consecutively
or even simultaneously.41 The “ethical oil” label has
been adopted as a key communications frame by
the federal Environment Minister Peter Kent,42 Natural
Resources Minister Joe Oliver43 and Prime Minister
Stephen Harper.44
Less clear is Ethical Oil’s relationship to the oil industry.
It has indirectly acknowledged that is receiving some of
its funding from oil companies, but has refused to say
how much.45
A Tar Sands
Pipeline to Asia?
Eliminating policy measures designed to reduce
greenhouse gas emissions while increasing political
support and fiscal support for the oil industry are
consistent with achieving Harper’s vision of Canada as
an energy superpower. Yet other observers have called
Canada an “energy superstore”47 because it is selling
into only one market: the United States. This market
involves risks.
So it is interesting to note the Shell has been
advocating for the creation of an energy security index
(similar to Ethical Oil’s characterization of “conflict oil”)
for various sources of oil, as a counterpoint to the
European Union’s indexing of oil, the latter being based
on carbon-intensity through the Fuel Quality Directive.
In a July 2010 e-mail from Susannah Pierce, Shell
Canada’s Head of Government Affairs, to Canada’s
Minister of National Defence, Peter MacKay, that was
obtained by Greenpeace under Access to Information
legislation, Ms Pierce wrote:
Was a pleasure to meet you at Brett Wilson’s
party in support of Boomer’s Legacy. It turned
out to be a great event for Boomer’s family
and memory and your attendance was much
appreciated. Would like to follow up with you at
your next convenience on the Energy Security
Tar sands–derived oil is already trading at a significant
discount due to a glut of oil in the US Midwest.48 But
even if new pipelines are built, the US market for oil
is projected to get smaller in the future thanks to the
impact of the new, tougher vehicle-fuel efficiency
standards that President Obama has already put in
place. In addition, there is also a risk that other parts of
the US might follow California in adopting regulations
to limit the access of high-carbon oil from the tar sands
to their market.
Fears over being “landlocked in bitumen”49 (in the
words of Alberta’s former Energy Minister and current
Benchmarking Project—how to assign a premium
or energy security factor on world energy
supplies.
As you are aware, world energy supplies are
not assigned values based on security risk/
democratic process/independent vs national
oil company control. Would like to explore with
you the government’s support for developing
such a study that would factor in security factors
and assign to world basket of crudes. (A similar
approach is being taken to assign default CO2
values to crudes).46
Such an index would be a useful public relations tool
for tar sands proponents, but would likely be a doubleedged sword for the oil companies, as investments
such as Shell’s in Nigeria would likely fare poorly.
11
Finance Minister Ron Liepert) became more urgent
in the face of the successful campaign against
the Keystone XL pipeline. This has led oil industry
executives to call for speedier approvals for new
pipelines to reach new markets because, in the words
of Shell Canada’s new president Lorraine Mitchelmore,
“[o]ur increased access to our next-door neighbour,
the US, is not a given any more.”50 Tar sands companies are understandably nervous
about being captive sellers in a declining market as
they contemplate spending up to $379 billion to triple
production from the oil sands over the next 15 years.51
“It’s time for Canada to play the energy card and
announce the fast-tracking of a new pipeline to the
Pacific, and to encourage Asian investment in our
oil patch,” wrote former Canadian diplomat Colin
Robertson in a July 2010 Globe and Mail op ed.
“The Americans, especially those charged with national
security, will get the message.”55
The Canadian Association of Petroleum Producers
(CAPP) has been equally blunt: “As growth in
production from the oil sands resources is expected
to continue, there is the potential that these traditional
markets become saturated over time. Growing Asian
oil demand, particularly in the economic powerhouses
of China, Japan, South Korea and India, represent a
potential future market for Western Canadian crude
oil production… Market diversification via west coast
exports is not intended to detract from the importance
of the US market and may in fact provide additional
leverage to assist in approvals for pipeline projects
(e.g. Keystone XL) that would increase export volumes
to the US market.”56
In October 2010, the new President and Country Chair
of Shell Canada Lorraine Mitchelmore summed up
the “liabilities” standing in the way of Canada’s energy
future as follows:
12
3
Their solution, promoted as early as 2008, is to push
for the government to approve a new pipeline across
the Rockies that would enable direct access to the
Asian market.52 Although the idea of a pipeline to the
port of Kitimat in northern BC has been around for
years (Greenpeace first organized a protest against it
in 197753), it has been revived as a way to flex those
energy superpower muscles and counter both possible
US climate regulations and a declining US market
for oil.54
Farmer Wayne Groot stands in his wheat field, near the
Shell Scotford upgrader, outside of Fort Saskatchewan, Alberta.
© Ian Willms / Boreal Collective / Greenpeace
Environmental activists are increasingly targeting
the oil sands, demanding that, among other
things, CO2 targets be met. The energy industry’s
workforce is aging. We are hampered by the
existing infrastructure and must find a timely
way to build major new infrastructure projects
that are needed to open up new markets for
Canadian energy. These include Enbridge’s
Northern Gateway project, TransCanada’s
Keystone Pipeline, Mackenzie Valley Pipeline and
potentially Liquid Natural Gas terminal off the
west coast of BC57 [emphasis added].
Enbridge, for its part, has acknowledged that
Gateway is important for enabling additional tar sands
production. Responding to concerns that Enbridge’s
proposed new US pipelines would undercut the
business case for Gateway, Enbridge’s Stephen Wuori
told The Globe and Mail that “the company doesn’t
believe new pipes will ‘cannibalize’ that project.
Instead, Enbridge believes Gateway will be used to
spawn production that might not otherwise happen,
by providing an avenue to markets with more stable
pricing.”58
In October 2011, as the debate over Transcanada’s
proposed Keystone XL pipeline heated up, federal
Natural Resources Minister Joe Oliver responded to
the possibility of the US government turning down the
application for a new pipeline by saying, “if they don’t
want our oil… it is obvious we are going to export it
elsewhere… As a broad strategic objective we have
to diversify our customer base… [and] China has
emerged as the largest consumer of energy in the
world, so it is utterly obvious what we must do.” 59
The federal government joined the battle in earnest
following President Obama’s decision to delay the
Keystone XL pipeline. In a January 2012 open
letter, Joe Oliver attacked pipeline opponents as
“environmental and other radical groups”61 and
promised to change the regulatory system to make
it easier to get pipelines approved. Prime Minister
Stephen Harper subsequently pledged to push a
pipeline through BC as a “national priority,” during his
February 2012 trip to China.62
Gateway is not the only proposed pipeline: Kinder
Morgan is interested in twinning its existing pipeline
from Alberta to Vancouver in order to increase export
capacity, while Enbridge has a separate proposal
to reverse the flow of an existing pipeline so that it
would take oil from Alberta to Maine. But the Enbridge
Northern Gateway pipeline is the furthest along in the
approvals process and hence is receiving the bulk of
the attention.
The 1,172 kilometre–long Northern Gateway pipeline
is designed to carry 525,000 barrels a day of bitumen
from the tar sands from a terminal near Edmonton
and across the Rockies to Kitimat on the northern BC
coast, where about 200 supertankers annually would
dock to take on the petroleum for export to the US
and Asia.63
Much of the opposition to the pipeline has focused on
the threat that the inevitable spills would pose to the
environment and the livelihoods of tens of thousands
3
A similar sentiment was coming out of Alberta, but with
an investment twist. Energy Minister Ron Liepert told
Bloomberg News that “[i]f we don’t soon figure out
how to get the product to Asia, the investment is going
to dry up. The Chinese want to see things happen.
If we want to continue to be open to Asian investment,
there comes a quid pro quo in their mind and that’s
coming up fast… Clearly we need to diversify. If we get
to where we’ll be [sic] in 10 years, we’re going to need
several Keystones and Gateways.” 60
An Enbridge oil pipeline ruptured and sent more than a million gallons of oil into the
Kalamazoo river in Michigan around July 26, 2010. © Rebecca Cook / Greenpeace
of people, as the line would cross hundreds of
rivers and streams and pass through the Great Bear
Rainforest—a region renowned for its salmon, wolves,
bears and other wildlife. Meanwhile, the tanker traffic
in dangerous northern waters endangers coastal
fisheries.
The social, economic, and environmental costs to
British Columbia of a tar sands pipeline and the
associated oil supertanker traffic would be enormous,
and include the following:
n
n
n
n
Compromising the lifestyles of First Nations who
depend on the region’s lands and waters for their
livelihoods, culture, and health.
Threatening the economic well-being of the
communities of British Columbia that depend on
fisheries and forests.
Potential devastation from a major oil spill from
the pipeline or an oil supertanker, which could
destroy economically important salmon habitat,
as well as the habitat of Spirit Bears and grizzlies,
and whales, orcas, and other marine life that
depend on these rich coastal waters.
Harm from an oil spill to the Great Bear
Rainforest, which the province and First Nations
have worked hard to protect from unsustainable
forestry practices and to shift to a conservationbased economy.64
The opposition to the Gateway pipeline has been led
by BC First Nations, who have been joined by other
First Nations so that there is now “an unbroken wall of
opposition from the US border to the Arctic Ocean,”
with leaders like Chief Jackie Thomas of the Yinka
Dene Alliance (representing First Nations along the
13
3
An Enbridge oil pipeline ruptured and sent more than a million gallons of oil into the Kalamazoo river in Michigan around July 26, 2010. © Rebecca Cook / Greenpeace
pipeline route) saying they will physically block the
project if regulators allow it to proceed.65
First Nations have a special legal status under Section
35 of the Canadian constitution, which grants them
greater influence over projects within their traditional
territories. Their concerns over tar sands pipelines and
tankers have been summarized in the Save the Fraser
The Save the Fraser
Declaration
WE THE UNDERSIGNED INDIGENOUS NATIONS OF
THE FRASER RIVER WATERSHED DECLARE:
We have inhabited and governed our territories within
the Fraser watershed, according to our laws and
traditions, since time immemorial. Our relationship
with the watershed is ancient and profound, and
our inherent Title and Rights and legal authority over
these lands and waters have never been relinquished
through treaty or war.
Water is life, for our peoples and for all living things that
depend on it. The Fraser River and its tributaries are
our lifeline.
A threat to the Fraser and its headwaters is a threat to
all who depend on its health. We will not allow our fish,
animals, plants, people and ways of life to be placed
at risk.
We have come together to defend these lands and
waters from a grave threat: the Enbridge Northern
Gateway Pipelines project. This project which would
link the Tar Sands to Asia through our territories and
the headwaters of this great river, and the federal
process to approve it, violate our laws, traditions,
14
Declaration66 (see box), launched by the Yinka Dene
Alliance in 2010 and now supported by over 130 First
Nations from BC, Alberta and the Northwest Territories.
Even on the days that the pipeline doesn’t spill, there
would be huge environmental, social and economic
costs from the upstream expansion in tar sands
production that this pipeline would enable.
values and our inherent rights as Indigenous Peoples
under international law.
We are united to exercise our inherent Title, Rights,
and responsibility to ourselves, our ancestors, our
descendants and to the people of the world, to defend
these lands and waters. Our laws require that we do this.
Therefore, in upholding our ancestral laws, Title, Rights
and responsibilities, we declare:
We will not allow the proposed Enbridge Northern
Gateway Pipelines, or similar Tar Sands projects, to
cross our lands, territories and watersheds, or the
ocean migration routes of Fraser River salmon.
We are adamant and resolved in this declaration, made
according to our Indigenous laws and authority. We
call on all who would place our lands and waters at
risk—we have suffered enough, we will protect our
watersheds, and we will not tolerate this great threat to
us all and to all future generations.
Declared at T’exelc (Williams Lake), Secwepemc
Territory, and Vancouver, Coast Salish Territories, and
affirmed by the following Indigenous nations…
[The Declaration had been signed by more than 130
First Nations. It is available online at:
http://savethefraser.ca/
Shell in the Tar
Sands: Fuelling
Climate Change
Her speech acknowledged the challenge of ensuring
“a future of secure, sustainable and affordable
energy with a lower carbon footprint.” For the oil that
comes out of the tar sands isn’t like the oil we grew
up with. As the world starts to run out of so-called
“easy” or conventional oil, the rising demand for oil is
forcing companies to both exploit more expensive,
and environmentally more damaging forms of
unconventional oil like the crudes derived from the tar
sands, shale gas, or coal-to-liquids and to pursue oil
from riskier and more challenging locations such as the
deep ocean or the Arctic.
This “dangerous abundance” poses huge risks to the
planet, according to David Keith, a professor of both
physics and public policy at Harvard, as well as a
prominent analyst of Canadian climate policy:
Come when it may, the end of easy oil will not
signal a shortage of coal, gas and unconventional
oil to power our fossil-driven civilization at
twice our current burn rate for more than two
centuries… High prices and oil scarcity will not
solve the carbon problem; on the contrary, the
high-carbon emissions associated with a shift to
ultra heavy oil and coal-to-liquids as we ‘scrape
the bottom of the barrel’ will counterbalance the
demand reduction spurred by high prices.68
The billions of barrels of bitumen locked up in Alberta’s
tar sands are the first of these unconventional forms of
oil to be exploited at a large scale. Unlike conventional
crude oil that is found in liquid form, the tar-like
bitumen is mixed with sand and clay. It is too thick
to flow naturally or to be pumped out of the ground
unless it is heated or diluted with a solvent, and the
3
In a speech to the Calgary Chamber of Commerce
celebrating 100 years of Shell’s operations in Canada,
Shell’s top Canadian executive, Lorraine Mitchelmore,
acknowledged that 2010 had been “a tough year, with
the tragedy of the Deepwater Horizon explosion and its
heavy impact on the US Gulf Coast, plus the Michigan
pipeline spill and the anti–oil sands campaigns being
waged in North America and Europe.” 67
Greenpeace activists place a giant banner and block Shell’s open-pit tar sands mine
outside of Fort McMurray, Alberta, Canada on September 15, 2009.
© Greenpeace / Colin O’Connor
bitumen must be upgraded before it can be refined like
conventional crude oil.
Melting the bitumen out of the ground and upgrading
it into synthetic crude requires a lot of extra energy
compared to pumping out a liquid, which means that
there are much higher greenhouse gas emissions
per barrel of oil from the tar sands than from
conventional oil.
To determine how much more, the European Union
commissioned an independent, peer-reviewed study
from Stanford University. This review found that the
most likely, or “average,” value for oil from the tar
sands is 23 per cent more greenhouse gas–intensive
than the average for conventional crude used in the
EU.69
Shell’s planned switch to carbon-intensive
unconventional oil poses a dilemma for a company
that has long acknowledged that climate change is a
serious problem, in marked contrast to companies like
Exxon-Mobil or Koch Industries.
Shell puts its corporate logo on letters calling on
governments to take action to keep global warming
below 2 degrees Celsius and openly advocates for a
price on the pollution that causes climate change.
It’s even gone a step further and published a
sophisticated political and economic analysis of
possible energy futures, along with their associated
implications for climate change, poverty reduction,
human security and freedom.70
Shell was also putting at least some of its money
where its mouth is: the company invested over a billion
dollars in wind power between 1999 and 2006, was at
one time the second-largest solar power company in
15
that Shell announced in 2009 that there would be no
“material amounts of investment”73 in wind or solar
power going forward. It said it would continue with
modest investments in biofuels, but the company
made it clear that Shell would stay in the business of
selling hydrocarbons. In April 2012, however, Shell
cancelled its investment in a large-scale cellulosic
ethanol plant in Canada even as it proceeded with
plans for new tar sands mines.74
At the same time, the company was touting Canada’s
high-carbon tar sands as possessing “the potential
to become a major production heartland for Shell for
decades to come.”75
3
Shell Scotford refinery in the Alberta tar sands. © Jiri Rezac / Greenpeace
the world, and had a massive ad campaign touting its
commitment to renewable energy.
This green push was at least in part an attempt to
recover from its public relations disasters of the mid1990s. Shell faced mass public protest in Europe in
1995 that forced it to cancel the deep sea disposal
of the Brent Spar oil platform, and spent the latter
part of the decade trying to make the case that it
really didn’t have anything to do with the death of
Nigerian activist Ken Saro-Wiwa, who was executed
for protesting its operations in that country.71 These
concerns haven’t disappeared, as a recent report by
the oil industry watchdog Platform found that “Shell’s
close relationship with the Nigerian military exposes the
company to charges of complicity in the systematic
killing and torture of local residents.”72
Yet many saw its investments in renewable energy,
while modest with respect to its overall budget, as a
sign that Shell was prepared to make the transition
from being an oil and gas company to becoming the
kind of green energy provider the world will need if we
are to avoid the worst impacts of climate change.
The green energy push came to a screeching halt
in the aftermath of Shell’s 2004 reserves scandal
(discussed below) and as the rising price of oil began
making the sector more profitable. The result was
16
The question for Shell is how to square this business
strategy with its position on climate change. Publicly,
Shell executives justify its investment in the tar sands
by arguing that such investment is necessary to meet
the 50 per cent growth in demand for oil over the next
25 years, as projected by the International Energy
Agency (IEA).76
Yet anyone familiar with the IEA’s report, World Energy
Outlook 2009, knows that this is only one possible
future, and that the global consumption of energy only
increases by 50 per cent in the scenario where no one
in the world adopts new measures to reduce global
warming. Going down this path, according to the IEA,
“would result in the global average temperature rising
by up to 6 degrees Celsius. This would lead almost
certainly to massive climatic change and irreparable
damage to the planet.”77
The IEA actually put forward three scenarios,
or possible futures. In the scenario where significant
efforts are made to address climate change, the
demand for oil from the Canadian oil sands drops to
such an extent that many of the new oil sands projects
that have already been approved are redundant.
Greenpeace’s Energy [R]evolution blueprint goes even
further, identifying a pathway to a future where we
don’t need any new oil from the tar sands and should
in fact be working on phase-out plans for existing
operations.78
This possibility was reinforced by a study from The
Massachusetts Institute of Technology (MIT) entitled
Canada’s Bitumen Industry under CO2 Constraints,
that looked at the market for oil from the tar sands in
a world which was taking serious action on climate
change. It found that “with CO2 emissions caps
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Figure 1
Source: Compiled using data from Oil Sands Developers Group, Oil Sands Project List: Updated as of January 2012, online at:
http://www.oilsandsdevelopers.ca/wp-content/uploads/2012/01/Oil-Sands-Project-List-January-2012.pdf>, and International Energy Agency (IEA),
World Energy Outlook 2009, available at <http://www.worldenergyoutlook.org/publications/weo-2009/>.
implemented worldwide, the Canadian bitumen
production becomes essentially non-viable even with
CCS [carbon capture and storage] technology,
at least through our 2050 horizon. The main reason
for the demise of the oil sands industry with global
CO2 policy is that the demand for oil worldwide drops
substantially.”79
What is striking is that the strategic planners at Shell
know that the growth projections they use to justify the
proposed expansion of their tar sands operations are
premised on a world where the climate is spinning out
of control. They also know that this is completely at
odds with the corporate commitment to do its part to
keep global warming below two degrees Celsius.80
Alberta currently has the capacity to produce about
1.8 million barrels’ worth per day of output from the tar
sands. There are, however, projects under construction
or with all the necessary permits required to expand
this to 4.8 million barrels per day,81 which would result
in more oil than the IEA says is necessary in any of
their scenarios for 2035.82 Meanwhile, there are an
additional intended 3.5 million barrels per day that have
been announced or are undergoing regulatory review,
including from Shell’s Jackpine mine expansion and the
new Pierre River site.83
This is not to say that the rapid expansion of tar
sands production in Alberta would fuel six degrees of
warming on its own. But as the first significant attempt
to exploit unconventional forms of oil, the tar sands
represent the thin edge of the wedge in one of those
possible futures.
If the world follows a path leading to enough demand
for this high-risk, highly-polluting fuel that we triple or
even quintuple the output of the tar sands—taking
into account that other projects around the world
would also be carried out in this scenario, because the
high-cost tar sands are amongst the last oil reserves
that will be tapped—then we are on the route to
catastrophic levels of global warming.
And developing the tar sands is a significant source
of greenhouse gas emissions on its own. As noted by
climate scientists Andrew Weaver and Neil Swart in
the journal Nature Climate Change, exploiting Alberta’s
proven reserve in the tar sands (i.e., less than 10 per
cent of the total bitumen in place) would produce three
quarters of all future carbon emissions allowed for
North America if we are to have a reasonable chance
of keeping warming below the two degrees Celsius
limit set in the 2009 Copenhagen Accord. They end
their commentary by stating:
17
If North America and international policymakers
wish to limit warming to less than 2 degrees C
they will clearly need to put in place measures
that ensure a rapid transition of global energy
systems to non-greenhouse-gas-emitting
sources, while avoiding commitments to new
infrastructure supporting dependence on fossil
fuels.84
This concern has been echoed by the IEA’s chief
economist Fatih Birol, who has warned that “[a]s each
year passes without clear signals to drive investment in
clean energy, the ‘lock-in’ of high-carbon infrastructure
is making it harder and more expensive to meet our
energy security and climate goals.” Four-fifths of the
total energy-related CO2 emissions permitted to 2035
in the IEA’s low-carbon (450 ppm—parts per million)
scenario are already locked in by existing capital
stock. If we continue with business as usual, the IEA
estimates that energy-related infrastructure in place by
2017 would generate all the CO2 emissions allowed
in its low-carbon scenario up to 2035. It also found
that delaying action is a false economy: for every $1 of
investment in cleaner technology that is avoided in the
power sector before 2020, an additional $4.30 would
need to be spent after 2020 to compensate for the
increased emissions.85
The implications for the tar sands have been brought
home by Mark Jaccard, one of the foremost climate
and energy policy experts in Canada:
The facts are simple. Our political leaders are
lying to us if they aid and abet the expansion of
tarsands while promising to take action to prevent
the imminent climate catastrophe.
If you love this planet and your children, and
are humble and objective in considering the
findings of science, you have no choice but
to battle hard to stop Gateway and other
tarsands pipelines. It is time to face up to this
challenge with honesty and courage.86
18
Shell in the Tar
Sands: New Mines,
Old Problems
The concern over oil revenue’s being “landlocked
in bitumen” is not restricted to governments. Shell
has declared the tar sands to be “major production
heartland for decades to come”87 and intends to triple
the share of its total production that it gets from the tar
sands over the coming years.88
The company has been rapidly ramping up its tar
sands production and related climate change–causing
pollution. According to Shell’s 2011 Oil Sands
Performance Report, greenhouse gas emissions from
its Canadian tar sands operations grew from 3.8
million tonnes in 2007 to 6.7 million tonnes in 2011.
Not only did Shell produce more oil from the tar sands,
but it had higher emissions per barrel. The emissions
intensity (kilograms of carbon dioxide equivalent per
barrel, or kg CO2e/bbl) of its tar sands production went
from 69 kg CO2e/bbl in 2007 to 82.6 kg CO2e/bbl in
2011.89 This is significantly higher than the average for
conventional crude oil production of 35.2 kg CO2e/bbl
in Canada and 24.5 kg CO2e/bbl in the U.S.90
The growth trend is projected to continue. Shell now
has projects in the works that would bring its tar sands
production capacity to 932,500 barrels per day,91
which is enough oil to supply 40 per cent of Canada’s
current consumption.92
12ell3s 4ar 1a5ds 6pera785s 1,000,000 900,000 800,000 Capacity (barrels per day) 700,000 600,000 ApplicaEon 500,000 Approved OperaEng 400,000 300,000 200,000 100,000 0 Jackpine Mine Muskeg River Mine Pierre River Mine Orion (in situ) Peace River (in situ) Total 3
Figure 2
Source: Strategy West Inc. Existing and Proposed Canadian Commercial Oil Sands Projects. January 2011.
This new supply would, however, be destined for
export and could fill the Northern Gateway pipeline,
which could handle 525,000 barrels per day. The bulk
of this increase (300,000 barrels per day) would come
from two major projects that are going through the
environmental assessment process at the same time
as Enbridge’s proposed pipeline.
Shell’s proposed Jackpine Mine Expansion would be
located about 70 kilometres north of Fort McMurray
on the east side of the Athabasca River, and cover
approximately 20,800 hectares. The expansion
project would increase tar sands production by
100,000 barrels per day (to a total of 300,000 barrels/
day). Proposed water usage includes a diversion of
18,000,000 cubic metres per year (m3/yr) from the
Athabasca River.93
Shell is also proposing to develop the Pierre River
Mine, which involves building a new open-pit mine
and associated bitumen extraction facilities. It would
be located approximately 90 kilometres north of Fort
McMurray on the west side of the Athabasca River,
covering about 10,400 hectares. The proposed
development includes an open-pit mine, an orehandling facility, bitumen extraction facilities, tailings
processing facilities, support infrastructure, and
water and tailings management plans, as well as the
construction of a bridge across the Athabasca River.
The project is designed to produce a total of 200,000
barrels of tar sands oil per day and use 55,100,000
m3/year of water from the Athabasca River.94
These projects are being opposed by the Athabasca
Chipewyan First Nation’s (ACFN), who are also suing
Shell for not meeting commitments made as part of the
original Jackpine project. The ACFN claim that Shell’s
failure to live up to these agreements with ACFN has
led to harmful impacts on the environment and ACFN’s
constitutionally protected rights and culture, leading
Chief Allan Adam of the ACFN to state: “We’re drawing
the line, and taking a strong stand against Shell. ACFN
wants no further developments until Shell is brought to
justice and our broader concerns about the cumulative
impacts in the region are addressed.”95 The Pierre River mine is located about 27 kilometres
to the south and west of the ACFN’s Poplar Point
Reserve, while the Jackpine expansion would involve
mining out a portion of the Muskeg River, which is
culturally important to the ACFN. The ACFN and
the Mikisew Cree First Nation (MCFN) submitted a
joint response to Shell’s proposal. Their submission
stated that their members find it increasingly difficult
19
A number of these concerns regarding water quantity
appear to have been shared by provincial officials.
According to Government of Alberta documents
obtained under provincial Freedom of Information
legislation, the provincial Sustainable Resource
Development ministry:
…signed off on the 2010 EIA [the Environmental
Impact Assessment submitted by Shell]. However
that department has since raised outstanding key
issues… Outstanding key issues include:
n
n
n
n
n
3
Aerial view of Shell’s tar sands mine and tailings pond in Alberta.
© Jiri Rezac / Greenpeace
to hunt, fish, trap and gather as their lands are rapidly
industrialized and that this is inconsistent with section
35 of the Constitution Act 1982, which protects
First Nations’ right to hunt, fish, and trap as part of
guaranteeing a meaningful livelihood now and for the
future.
The two First Nations argued that Shell’s application
was flawed in three respects:
1. Shell has not provided sufficient information with
respect to the Project’s impacts and
infringements of their section 35 rights for the
Joint Review Panel to comply with the Terms of
Reference.
2. Shell has not provided sufficient information for
the Joint Review Panel to be able to conduct an
assessment of the cumulative effects of the
Project, either on environmental components or
on our section 35 rights and traditional uses.
3. Shell has not provided sufficient information for
the Joint Review Panel to assess water quantity
issues, including the degree to which the Project
could diminish water levels below the threshold
level where we can still exercise our section 35
rights and fully access our traditional lands.96
20
Water drawdown impacts on lenticular
patterned fen, McClelland Lake and
McLelland Fen Complex;
Peat salvage from External Tailings Disposal
Areas;
Water diversion plan and the creation of the
Kearl Lake Levee system;
Design of a new bridge across the Athabasca
River to mitigate wildlife corridor; and
Sufficient setback along the Athabasca
River.”97
With respect to First Nations concerns regarding
impacts on the Section 35 rights, the government’s
briefing note stated that Shell had fulfilled the
government’s obligation to consult with First Nations,
but that they still anticipated opposition from affected
communities:
Appropriate consultation with aboriginal groups
(Fort McKay, Mikisew Cree and Athabasca
Chipewyan First nations) was conducted directly
by Shell. It is anticipated the joint panel will hear
arguments against the project from affected
aboriginal groups for negative impacts on
traditional use, cultural values and sustainability
of the Muskeg River.98
There is no evidence, however, of the provincial
government considering cumulative impacts even as it
discusses Shell’s plans to more than double production
in the Fort McMurray area.
The issue of cumulative impacts, raised by
First Nations, has also been a primary focus of
environmental groups. The Oil Sands Environmental
Coalition (OSEC), which includes the Pembina Institute,
the Fort McMurray Environmental Association and the
Toxics Watch Society of Alberta, has raised concerns
with Shell’s Jackpine expansion and Pierre River Mine
proposals. In 2008, the groups argued that “the pace
of oil sands development is dramatically superceding
governments’ responsibility to manage the cumulative
environmental impacts of development. To allow
another project proposal to proceed in the absence
of land use planning and established thresholds is
irresponsible and poses long term environmental
liabilities to Albertans and Canadians.”99
n
n
n
3
These concerns were subsequently reiterated in 2010
and 2011, with the groups arguing that the Joint
Review Panel has a legal obligation to ensure that
all reasonably foreseeable projects and activities are
considered as part of the Panel’s assessment. OSEC
noted the following factors, which it felt had been
inadequately addressed by Shell:
The First Nations community of Fort Chipewyan lies on the Athabasca River,
downstream from the Alberta tar sands. Its residents face abnormally high cancer
rates and their traditional ways of life are at risk because of the effects of widespread
pollution on water, land, and wildlife. © Greenpeace
There are numerous other projects that
may impact the same ecosystem and intensify
the resulting environmental effects, including
Suncor’s Fort Hills project and the Frontier and
Equinox mines.
Rapid development is evidenced by the
Canadian Association of Petroleum Producer’s
2011 projections of a doubling of oil sands
mining production and tripling of in situ
production in the next 14 years.
Environmental sensitivities and risks involved
include adverse effects on the Muskeg
river basin, the Athabasca River valley, and
the McClelland fen, which are all ecologically
sensitive areas.100
Furthermore, in contrast to Shell’s green rhetoric, the
company has a history of broken promises in the tar
sands.
21
Shell’s Promise
Shell promises to reduce GHG emissions in order
to facilitate project approvals.
In 2003 and 2006, Shell reached bilateral agreements
on greenhouse gas emission reductions with a coalition
of environmental groups who were participating in
the hearings processes for the original Jackpine Mine
and Muskeg River Mine Expansion projects. These
commitments helped inform the decision by the
governments of Alberta and Canada to grant regulatory
approval for the projects in 2004 and 2006, respectively.
For the first phase of the Jackpine Mine project,
Shell committed to reducing emissions below those of
the most likely commercial alternative (to producing oil
from bitumen) on a full-cycle basis.
For the Muskeg River Mine Expansion, Shell similarly
committed to setting an emission reduction target or
goal for new facilities (on a full-cycle basis) that is better
than the most likely commercial supply alternative.
Shell promises to reduce GHG emissions by
capturing CO 2 and pumping it back underground.
Shell has claimed that the greenhouse gas emission
removals achieved by a proposed carbon capture and
storage project at Shell’s Scotford refinery will be the
equivalent of taking 175,000 cars off the road.
The Quest project is a joint venture of the Athabasca
Oils Sands Project partners (led by Shell Canada, but
also including Chevron Canada Limited and Marathon
Oil Canada Corporation) to capture up to 1.2 million
tonnes per year of carbon dioxide from the Scotford
upgrader. If the project becomes operational, the CO2
would then be transported by pipeline 80 kilometres
north, where it would be injected underground.
Reality
Promise abandoned after projects approved.
In 2009, Shell abandoned its written agreements to
significantly reduce greenhouse gas (GHG) pollution
at its Jackpine Mine and Muskeg River Mine Expansion
projects.
In approving Shell’s projects, the Joint Review Panel
struck by the Alberta Energy Resources Conservation
Board (ERCB) and the Government of Canada explicitly
noted that they would review Shell’s approval in the
event that the company failed to fulfill commitments that
had been presented as evidence, but no action has
been taken to address Shell’s broken promise.
The Pembina Institute estimates that without these
commitments, Shell’s GHG pollution from these projects
will increase by an estimated 900,000 tonnes per year,
which is equivalent to adding 200,000 cars to the road
in Canada.
Shell negotiates the rights to sell two tonnes
of GHG “offsets” for every tonne it pumps
underground, thereby potentially allowing for an
overall increase in emissions from the project.
Under Alberta law, large polluters are allowed to emit
a certain amount of GHG emissions for free, and must
either purchase offsets for any additional emissions
or pay $15 per tonne into a technology fund. By
the Alberta government’s granting Shell two tonnes’
worth of offset credits for every tonne of CO2 it pumps
underground, the total number of tonnes of GHGs
allowed to be emitted is increased, so that there can be
a net negative effect on greenhouse gas emissions from
this project.
Shell was granted this two-for-one emission credit,
which represents an additional government subsidy to
the project, in spite of the fact that Shell had already
received commitments for $865 million in federal and
provincial subsidies for the project, out of the total
estimated cost of $1.35 billion for the project over its
first 10 years.
22
Shell’s Promise
Reality
Shell says it complies with provincial water
protection legislation.
Shell won’t comply with provincial water
protection legislation for the next 25 years.
Shell claims that its management system for the toxic
water left over from its tar sands operations “conforms
with 2009 legislation from the Alberta Energy Resources
Conservation Board.”
According to the Pembina Institute’s review of Shell’s
tailings management plan, “[t]he Shell Jackpine Mine
Tailings Management Plan shows that the operation is
not planning on being compliant with Directive 074
[the Government of Alberta regulation governing tailings
management]. Shell suggests they will not meet the
Directive 074 requirements until 2027 with respect to
tailings capture.”
Shell is also relying on an unproven technology—end-pit
lakes—for its long-term storage of toxic water from its
operations.
Honesty in Advertising
A national advertising campaign in the UK advertised
Shell’s investment in Canada’s tar sands as part of
building a “sustainable future.”
Respect for First Nations
“Shell respects the rights of others and works to
preserve the traditions and history of Aboriginal
Peoples… Shell aims to be the oil sands operator
of choice. That means establishing a reputation for
fairness and honesty in discussions and dealings that
respect local residents, Aboriginal groups, businesses
and governments.”
Shell was reprimanded and ordered not to run an
ad claiming tar sands are “sustainable” again.
This claim was formally challenged by WWF-UK,
and the UK’s Advertising Standards Authority
subsequently ruled that Shell’s claims breached
the UK’s CAP Code (of advertising and marketing),
with respect to substantiation, truthfulness and
environmental protection.
Shell is being sued by First Nations for not
honouring its commitments
Shell is currently being sued by the Athabasca
Chipewyan First Nation (ACFN) for failure to live up to
the terms of its existing Impact Benefit Agreement.
The ACFN is also opposing Shell’s new tar sands mine
projects.
23
Investing in the
Tar Sands: An Act
of Desperation?
oil companies controlling an even larger share of
the remaining cheap and relatively easy-to-extract
conventional oil supplies.114 According to The Wall
Street Journal, the thirteen largest energy companies
on Earth, measured by the reserves they control, are
now owned and operated by governments.115
We are accustomed to thinking of the big multinational
oil companies as corporate titans. In many ways,
they still are: Exxon-Mobil, Shell, BP, Chevron,
ConocoPhilips and Total are all in the top 20 of the
Fortune 500.
This poses a dilemma for the multinationals because
one of the key indicators used by market analysts to
assess an oil company’s worth is whether or not it is
replacing its reserves. If it hasn’t gained access to as
many new barrels of oil as it produced in the past year,
then it is literally running out of product.
But in other ways, these multinational oil companies
have been shouldered aside by the state-owned oil
companies like Saudi Arabia’s Aramco or the China
National Petroleum Company. In a rather stunning
example of historical payback for Big Oil’s colonial
misadventures, state-owned oil companies now
engage in aggressive international expansion efforts
and have emerged as competitors of their privatesector counterparts in Africa, the Caspian Sea and
now even in the tar sands, as they seek to lock up
remaining reserves for their respective governments.113
The easiest place for oil companies to find new
reserves is in northern Alberta, which the Canadian
Association of Petroleum Producers claims is home to
over half of the proven reserves of oil in the world that
are still accessible to private investors.116 Much of the
rest lies deep beneath the ocean or in the Arctic.
In short, the multinational oil companies are reduced
to scraping the bottom of the barrel to try to keep the
analysts who determine their stock price happy.
Shell has felt this pain more acutely than most. In
2004, Shell suffered a major scandal for overstating its
reserves by 4.47 billion barrels,117 or about 25 per cent.
This led to a drop in its share price, a $120-million fine
Fifty years ago, the Western-based multinationals had
full access to around 85 per cent of global oil reserves.
Today, it is closer to 20 per cent, with the state-owned
Top Oil Reserves 4our5e6 7899 :; 4<a=s=5al Revie> o? @orld AnerBC Saudi Arabia Venezuela Canadian Oil Sands Iran Iraq Kuwait United Arab Emirates Dussian Federa41n Libya Kazakhstan Nigeria Canada /01n2en41nal6 0 100 200 300 400 500 Thousand million barrels 3
Figure 3
Source: BP. BP Statistical Review of World Energy. June 2011. Web: http://bp.com/statisticalreview
24
600 700 800 3
Bitumen Extraction: Oil filled soil is removed from the ground at Shell’s mining project in Alberta. © Greenpeace / John Woods
from the US Security Exchange Commission, investor
lawsuits costing the company over $400 million, and
the departure of the company’s top three executives.118
for the ‘marginal barrel’ of non-OPEC supply which
is precisely why expansion projects were hit so hard
when oil prices fell sharply.”125
It also resulted in Shell’s rapidly expanding its holdings
in Alberta’s unconventional oil to try to rebuild
those reserves, such that Canada is now home to
approximately 30 per cent of Shell’s global resources
base.119 In 2006, Shell paid $500 million for leases in
Alberta to what could be 30 billion barrels of oil.120
The company’s 2007 Annual Report announced
that the share of its production from unconventional
sources would triple by 2015 (from five to fifteen
per cent) and that the company’s new strategy was
“to be the leading oil sands operator in the industry
by continuing to focus on operational and project
execution excellence, and leveraging Shell’s extensive,
high quality land positions to drive profitable growth.”121
These resources, and the business model of the
companies that are banking on them, are only viable
in a world where the demand for oil is rising rapidly.
Otherwise, demand will be met by lower-cost supply,
primarily from the Middle East and Russia.
Shell is not alone. Between 2005 and 2009, four of the
top six private oil companies would not have achieved
reserve replacement ratio levels above 100 per cent if it
hadn’t been for Canadian tar sands oil.122
But these reserves aren’t cheap or easy to produce.
Shell spent $14 billion to bring on-line a capacity of
100,000 barrels per day at its new Jackpine tar sands
mine, which the company described in April 2010 as
“some of the most expensive production that we have.”123
This is a risky strategy. The boom-and-bust cycle
characteristic of natural resource extraction is
particularly pronounced in the tar sands because, as
the high-cost supplier, they are the most vulnerable
to downturns in demand. For example, over 85 per
cent of all of the upstream oil and gas projects in the
world that were cancelled or pushed back by at least
18 months in response to the 2008 recession were
in Canada.124 In the words of the International Energy
Agency, “the oil sands have come to be a by-word
Yet even the International Energy Agency—the very
embodiment of status quo thinking in the energy
world—is now considering the possibility of the global
demand for oil dropping over the next 25 years. The
consequence for the Canadian tar sands, they say, is
that “projects currently under construction or being
planned would suffice to match supply to demand.”126
Or in other words, unless we are prepared for global
average temperature to increase by 6 degrees Celsius
this century, we should stop approving and building
new tar sands projects like Shell’s proposed Jackpine
and Pierre River mines.
Moreover, there are now financial analysts—and
even Alberta’s Premier’s Council on Economic
Strategy—who are also identifying the risk (from the
perspective of tar sands investors) of demand possibly
dropping even further, turning the tar sands into the
planet’s largest white elephant, and grinding Canadian
ambitions of becoming an energy superpower to dust.
Greenpeace has mapped out a policy and
technological pathway—what we call the Energy
[R]evolution—to achieving even deeper reductions
in oil consumption than those contemplated by the
International Energy Agency.
Pursuing the path outlined by Greenpeace would
be the best shot at preventing dangerous levels of
global warming.
25
Greenpeace’s Energy [R]evolution
The Energy [R]evolution—a joint project of Greenpeace
International, the European Renewable Energy Council
(EREC) and the German Space Agency (DLR)—
provides a practical blueprint for phasing out fossil
fuels, while meeting global energy needs and creating
millions of new green jobs. Since the first edition was
launched in 2005,127 Greenpeace has published Energy
[R]evolution in over 40 countries, has developed
national scenarios, and has published three editions of
its global version.
In 2011, the Nobel Prize–winning organization
Intergovernmental Panel on Climate Change
(IPCC) released the Special Report on Renewable
Energy,128 which reviewed over 160 energy scenarios
published in the peer-reviewed literature in order to
explore possible deployment rates for renewable
energies, as well as the social and environmental
impacts of doing so. The Energy [R]evolution scenario
was chosen as one of the four lead scenarios for the
report.
The Energy [R]evolution explores how we can drive
down demand for oil, so that oil from unconventional
sources like the Canadian tar sands will become both
unnecessary and uneconomical.
The main demand for oil comes from the transport
sector. This is projected to increase substantially over
the coming decades, requiring major investments in
exploration and development of new supplies from
increasingly risky and expensive sources. In the IEA’s
Reference Scenario, demand for oil rises from 84.7
million barrels per day in 2008 to 105.2 million barrels
per day in 2030, with unconventional oil production
rising from 1.8 to 7.4 million barrels per day over the
same period.129 In the IEA’s Low Carbon Scenario, total
demand for oil in 2030 is lower than in the Reference
Scenario, but still higher than 2008 levels.
To cut back on the need for oil, the Energy [R]evolution
scenarios tap into the large potential for improving the
efficiency of the transport sector by shifting freight from
road to rail, expanding public transit, and by using
much lighter, smaller and more-efficient passenger
vehicles.
26
The other major factor reducing the demand for oil will
be a switch to electric drive-trains for vehicles.
In the Advanced Energy [R]evolution Scenario, the final
energy share of electric vehicles on the road increases
to 4 per cent by 2020, 19 per cent by 2030 and to
over 50 per cent by 2050. Public transport systems will
also increasingly use electricity to power their vehicles.
This reduces greenhouse gas emissions because
the electricity sector will be the pioneer of renewable
energy use. By 2030, 60 per cent of electricity will be
produced from renewable sources, rising to 95 per
cent by 2050. A significant share of the fluctuating
power generation from wind and solar photovoltaic will
be used to supply electricity to vehicle batteries and to
produce hydrogen as a secondary fuel in transport and
industry.
When combined, these factors eliminate any global
need for any dirty tar sands oil by 2030.
Changes to Public Policy under Energy
[R]evolution
1 Separate Oil and State: Reduce the political
influence of the fossil fuel industry by
reinvigorating democratic processes.
2 Phase out subsidies for fossil fuels and nuclear
energy.
3 Internalize social and environmental costs of
energy production by putting a price on pollution
(e.g., a carbon tax or cap-and-trade system).
4 Implement strict efficiency standards for all
energy-consuming appliances, buildings and
vehicles.
5 Establish legally-binding targets for renewable
energy and combined heat and power generation.
6 Guarantee priority grid access for renewable
energy.
7 Implement feed-in tariffs for renewable energy,
such as those in Ontario’s Green Energy Act.
8 Increase research and development budgets for efficiency and renewable energy.
The Energy [R]evolution scenario only uses
proven technologies and is based on five key
principles:
Apply equity and fairness.
Respect natural limits.
Phase out dirty, unsustainable energy sources.
Implement renewable solutions and decentralize
energy systems.
Decouple growth from fossil fuel use.
3
Workers install a solar energy system in Sweden. © Greenpeace / Nicolas Fojtu
Banking on the
Tar Sands: A Risky
Proposition
The federal government’s new strategy of selling tar
sands oil to China can succeed economically if the
worst possible future scenario it faces is President
Obama’s administration making progress on his 2008
campaign promise to “end the tyranny of oil.”130
But there is a more nightmarish scenario for Canada’s
energy superpower ambitions. And that is the one
where the anticipated future growth in demand for oil
doesn’t materialize.
This possibility is highlighted in environmentallyfocused reports like Greenpeace’s Energy Revolution
or the MIT report131 on demand for oil from the tar
sands in a world taking serious action on climate
change. But the risk this would pose for Canada
has also been highlighted by those focused on the
economics of unconventional oil.
In 2009, financial analysts from Deutsche Bank
announced the “end of the oil age.”132 They expect
electric vehicles to replace gasoline or diesel-powered
vehicles, in the same way that digital cameras have
made film irrelevant.
Deutsche Bank expects the price of oil to spike in the
short term. Yet this price spike accelerates the shift to
electric vehicles, sending demand for gasoline into an
“inexorable and accelerating decline.”
This is particularly important to the Harper
government’s purported new market for the oil sands.
China’s demand for oil has been rising quickly, but
the country is already investing heavily in electricdrive technology thanks in large part to concerns over
energy security. The fact that it has come late to the
car-ownership game becomes a blessing, according
to Deutsche Bank: “China will be skipping the
combustion phase of its transportation development
arc, and moving right to the electric era, much as
it skipped the landline phase in its communication
development and built out a modern wireless system
over the course of 20 years.”133
The result for the companies banking on Canadian oil
sands is not pretty: “After the 2016 peak, we expect
falling oil prices. The value of high capex [capital
expenditure] intensity, long lead time, currently
un-developed oil, such as undeveloped Canadian
heavy oil sands, oil shales, and Brazilian pre-salt and
other ultra-deepwater plays could be far lower than the
market currently expects.”134
Similar concerns were expressed by the Premier’s
Council for Economic Strategy, appointed by then
Alberta premier Ed Stelmach.
The 12-member Council, which was headed up
by Stephen Harper’s former Industry Minister and
included a former CEO of Shell Canada, was asked
how to ensure the province’s prosperity in 2040. While
present-day prosperity is tied to oil sands exports to
the United States, they said, this has left the province
vulnerable: “We say this not because there is a danger
of running out of raw materials–Alberta’s energy
resources are massive–but because the production
27
costs of heavy oil from oil sands are among the highest
in the world, and because our reputation for
orderly and responsible development is under attack.
We must protect this revenue stream by addressing
issues of cost and environmental impact.135”
Yet rather than moving on to the predictable argument
on how politicians must step up to defend the oil
sands, the Council introduced a more jarring note:
At the same time, we must plan for the eventuality
that oil sands production will almost certainly be
displaced at some point in the future by lower
cost and/or lower-emission alternatives. We may
have heavy oil to sell, but few or no profitable
markets wishing to buy...…
High prices combined with increasing public
concern about the environmental impact of
oil production will accelerate development of
substitute transportation fuels (most oil is used
for transportation), such as natural gas, hydrogen
or innovative biofuels. A major disruptive
technology—or a convergence of smaller
innovations—could produce an affordable,
environmentally friendly energy source in
sufficient quantities to drive fundamental shifts in
global consumption patterns.
This would be a great thing for the world and
good for Alberta’s economy if we are ready
to exploit such a development. It could be
economically devastating if, when it happens,
we are still heavily dependent on exports of
oil and find markets for our production rapidly
disappearing.136
Unfortunately, our ability to “exploit such a
development” is undermined by the warping of our
economy and politics caused by the growth of the tar
sands.
Tar Sands and
Democracy: A
Caustic Mixture
Resource-led development often brings with it a
“resource curse” that is particularly powerful in oildependent economies.137 Researchers have noticed
that countries with abundant oil reserves often exhibit
a striking pattern of economic and political decline
that emerged alongside the rapid expansion of their
resource sectors: government corruption and chronic
citizen disengagement as governments became
dependent on energy revenues, and politicians far
more beholden to multi-national oil companies than
to the electorate; a rapidly widening gap between rich
and poor; and currency inflation that led to a decline in
the non-energy sectors of their economies.
Yet these problems haven’t been limited to developing
world nations like Nigeria, Chad, Venezuela or Ecuador.
In the late 1960s, the Dutch government entered into
a massive joint venture with Exxon and Shell to drill
for off-shore oil and gas. The energy wealth flowed
abundantly, but within a decade or so, the tiny country
found itself in trouble. Energy exports had driven up
the currency so much that Dutch manufacturers were
unable to sell their wares abroad due to unfavourable
exchange rates (this became known as “Dutch
disease”). Unemployment rose, and when those offshore reserves finally began to run dry in the 1980s,
the Netherlands was hard-pressed to re-build an
economy that had lost its entrepreneurialism during the
boom times.
And according to a 2008 report from the Organization
for Economic Cooperation and Development (OECD),
Canada is exhibiting symptoms of Dutch disease:
The Alberta oil boom has created many jobs in
the rest of Canada, especially in professional
services and in the materials and capital
equipment supply industries. However, the
induced real exchange rate appreciation has cost
jobs in manufacturing-based provinces, which are
also competing with emerging Asia. For a time
the positive job and income spill-overs offset the
negative ones. However, with the gathering US
recession and depreciating US dollar, the balance
has been shifting.138
28
A 2011 analysis noted that Canada is unusual in that
it started suffering negative effects from Dutch disease
before the resource boom has even ended, thanks to
the regional nature of the Canadian economy:
[P]ersistently high commodity prices have
precipitated a resource boom in western Canada
and a strong appreciation of the Canadian dollar.
This phenomenon, without a doubt aided by
increased competition from China and other
emerging countries, is causing Dutch disease–
like symptoms in the Canada economy, where
manufacturing is undergoing major structural
changes. Whether or not Canada’s experience
exactly resembles that of the Netherlands, facts
on the ground strongly suggest that Canada
might suffer from its own strain of the Dutch
disease.
Making the affliction particularly acute is
Canada’s unique geography. As the resource
boom and the manufacturing bust are occurring
in different parts of the country [Alberta and
Ontario/Quebec, respectively], concurrent
reallocation of resources and jobs from
manufacturing to services and resources, which
would normally occur in a small country like the
Netherlands largely fails to take place.139
Oil is also noted for having a corrosive effect on
democracy. A review of the academic literature
conducted by Jeffrey Sachs, Joseph Stiglitz and
Macartan Humphreys, found that there is “a series
of political dynamics associated with oil and gas
dependence [that] can exacerbate adverse economic
effects.” These dynamics can include the following:
n
n
Weak states, as governments become more
accountable to oil companies than to voters:
“States that are able to generate revenue from the
sale of oil and gas are less reliant on citizens,
which can result in weak linkages between
governments and citizens.”
Higher levels of corruption: “The short run
availability of large financial assets increases the
opportunity for the theft of such assets by
political leaders. Those who control these assets
can use that wealth to maintain themselves in
power through legal means (e.g. spending in
political campaigns) or coercive ones
(e.g. funding militias).”
n
n
n
Less electoral competition and a tendency
towards single-party or authoritarian rule:
“In effect, access to oil wealth can allow leaders
to successfully repress or co-opt their opposition,
and thus avoid having to relinquish power through
electoral competition. These adverse political
effects of oil are not just a problem for developing
countries; such patterns have even been seen
within the United States”.
Undermining of the planning required to
prepare making a transition away from relying on
oil revenues, due to the boom-and-bust cycle that accompanies oil development: “[L]onger planning
is rendered difficult by great uncertainty over
future financing, especially as a result of
fluctuations in the value of the commodity.”
Grievances in producing regions, including those
arising from environmental degradation due to oil
extraction.140
Research on the resource curse in Canada has found
that, contrary to the traditional pattern of weak political
institutions which allows the oil industry to dominate,
Alberta has strong institutions, but these are geared
towards limiting public engagement and promoting the
interests of the oil industry:
Here, policy institutions are indeed well
developed but they are oriented toward either
low intervention or the promotion of tar sands
developments. Thus these institutions have
helped to entrench Alberta in petro-statedom
rather than serving to diversify the economy;
they seem to have exacerbated environmental
problems as well as other social and economy
issues.141
In other respects, however, Alberta fits in with the
resource curse model. The province generally has the
lowest level of voter turn-out in Canada.142
There is a long-standing political dynasty, with the
ruling Progressive Conservative Party in power for
over 40 years, but the institutionalized power of the oil
industry extends beyond the ruling party. According to
political scientist Angela Carter:
The power of the oil industry is now entrenched
and institutionalized, in great part through oil
industries’ donations to Progressive Conservative
(and Liberal) political campaigns and their
intense lobby of government, as well as due
29
to the government’s great dependence on
the energy sector (which represents 30% of
government revenues). Anecdotes abound about
the close professional and personal relationships
between various levels of government and the
oil industry as well as about the revolving door
between government positions and oil industry
appointments. Likewise, in the words of David
Eggen, NDP member of Alberta’s Legislative
Assembly and energy and environmental critic,
the government has “retooled” itself around
supporting this industry and spending its
revenues. Hence the repeated analogy of Alberta
as [a] “company” province: what is good for the
oil industry is considered good for Alberta.143
There remains a strong sense of regional grievances
(Western alienation) that was heightened by the 1980
National Energy Policy, which reduced Alberta oil
revenues. More recently, however, as the Westernbased Conservative Party under Stephen Harper has
become the national government, these tensions have
expressed themselves in two ways. Within Alberta,
there are over-negative impacts from downstream
communities (predominantly First Nations) in the north
of the province. And within Canada, there have been
increasing political tensions between regions and
provinces over the impact of the Dutch disease on
manufacturing provinces.
Nor are the political impacts of the “resource curse”
necessarily restricted to Alberta. The corrosive
effect of oil on democracy is spreading to the
federal government, which wants to build Canada’s
economic future on the tar sands. It can be seen in
the government’s push to silence dissent and weaken
environmental laws. It can be seen in the joint federal
government–oil industry campaign to kill climate
policies in other countries that would reduce demand
for high-carbon oil.
The shift is not lost on Canadians. A recent national
poll found that 59 per cent believe the government has
put oil and gas companies’ interests above those of
Canadians, while only 15 per cent agreed that Prime
Minister Stephen Harper was putting the interests of
Canadians over those of oil and gas companies.144
Selling tar sands oil is a way to make a lot of money
in the near-term, both for the oil companies and the
governments who would receive royalties and taxes
from this activity. But is it truly in the national interest?
30
Tar Sands Mines
and Pipelines: Not
in the National
Interest
If Canada follows the lead of Shell and the other oil
companies by mortgaging our future to the marginal
barrel of oil, then we make their dilemma our own.
For so long as companies like Shell are committed to
remaining as oil companies rather than evolving into
something else, there are only two possible futures for
them:
The world could move beyond oil to electric vehicles
powered by green grids, so that no longer is anyone
buying what the oil companies are selling. Shell can’t
say it wasn’t warned about this scenario—by its own
former CEO, no less.
The second possibility is that there remains a market
for dirty oil. In this future there will be a different kind of
price to pay: the world will be on a pathway to climate
destruction.
NASA’s top climate scientist, Columbia University
professor James Hansen, writes:
As the most energy-intensive source of oil,
this project [the tar sands] represents the worst
of what humans are doing to the planet in a
quest to prolong our global addiction to fossil
fuels. It is still feasible to stabilize climate, but
only if we leave the tar sands in the ground. The
massive greenhouse gas amounts from the tar
sands surely would cause the climate system
to pass tipping points, while also trampling
on the human rights of Canada’s First Nation
communities and greatly damaging the Canadian
boreal forest… [T]he world has reached a critical
juncture in the climate debate. We can either
move into the production of the most damaging
fossil fuel, or we can begin to address our
destructive addiction.145
Canada only faces a similar lose-lose dilemma so long
as we are determined to be a bitumen-based “energy
superpower.” That path offers short-term economic
benefits, but would greatly deepen our dependence
on fossil fuels. This would not only fuel global warming,
but would also reduce our capacity to thrive in a world
that is making the transition to green energy, for the
longer we continue down this path, the harder it will be
to take a different one.
Contrary to the statements from federal politicians
and oil industry executives, a bitumen-based, energy
superpower future is not the only possible future.
We could choose to pursue a greener, safer future—
such as the one laid out in Greenpeace’s Energy
[R]evolution—by stopping the expansion of the tar
sands and requiring reductions in the harm from
existing operations as we phase them out over
the coming decades through investment in energy
efficiency and renewables.
This possible future got a boost in June 2011 when the
Intergovernmental Panel on Climate Change (IPCC),
the planet’s top authority on climate science, released
a special report on renewable energy146 whose 900
pages can be summed up rather simply: There is
no technical or economic reason that we can’t meet
our energy needs without frying the planet or digging
deeper holes in the oil sands, but it will take the right
policies.
What the IPCC didn’t mention was that getting those
policies in place will be particularly tough if people
running one of the most powerful corporations on
the planet, or the government of one of the top
greenhouse gas polluters, feel compelled to fight that
future in the interest of next year’s profits.
Oil executives may see scraping the bottom of the
barrel in the tar sands as being in the best interest of
their shareholders. New tar sands mines and pipelines
are not, however, in the best interest of any citizen who
recognizes an obligation to future generations.
For, in the face of the climate crisis, our true national
interest lies in acting as citizens who want to be
remembered as good ancestors. And that means
saying “No” to both Shell’s new mines and Enbridge’s
pipeline, and “Yes” to an Energy [R]evolution.
31
Endnotes
1
2
3
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Whittington, Les. “Titanic clash looms over proposed
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EnviroEconomics Inc., Dave Sawyer and Seton Stiebert.
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Howlett, Karen, and Dawn Walton. “Redford’s Energy
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Galloway, Gloria. “Mulcair digs in for long debate on ‘Dutch
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Straub, Brian (President and Country Chair, Shell
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Straub, Brian (President and Country Chair, Shell
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Bramley, Matthew, et al. Responsible Action? An
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32
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33
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Personal communication. The author has raised this
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academics and government officials.
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Vancouver Sun. 26 January 2012.
Macalister, Terry. “Shell Wants to Produce Five Times
More Oil from Tar Sands.” The Guardian. 18 March 2008.
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Shell Canada. Oil Sands Performance Report 2011.
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National Energy Technology Laboratory. Development of
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Strategy West Inc. Existing and Proposed Canadian
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upstream/oil_sands/>.
Energy Academy and Centre for Economic Reform and
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Strategy West Inc. Existing and Proposed Canadian
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Ibid.
Athabasca Chipewyan First Nation. “Shell’s
Environmental Impact Assessment Fails to Protect the
Environment and First Nation Rights”. Press release.
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shells-environmental-impact-assessment-fails-to-protectthe-environment-and-first-nation-rights/>.
Ibid.
Government of Alberta. “Meeting with Shell Canada
(Shell)—May 10, 2011.” Briefing note. Obtained by
Greenpeace Canada under the Alberta Freedom of
Information and Privacy Act. May 2011.
98 Ibid.
99 Simieritsch, Terra. Letter to Alberta Environment on behalf
of the Oil Sands Environmental Coalition. 2 October 2008.
100 Gorrie, Melissa. Letter to Shell Review Panel Secretariat
on behalf of the Oil Sands Environmental Coalition. 19
August 2011.
101 The Pembina Institute. Shell Breaks Global Warming
Promise for Oil Sands Projects. Report. 8 April 2011.
Web: <http://www.pembina.org/media-release/1808>.
102 The Pembina Institute. Shell Breaks Global Warming
Promise for Oil Sands Projects. Report. 8 April 2011.
Web: <http://www.pembina.org/media-release/1808>.
103 Shell Canada. About Quest12. Web: <http://www.shell.
ca/home/content/can-en/aboutshell/our_business/
business_in_canada/upstream/oil_sands/quest/>.
Accessed 26 March 2012.
104 Energy Resources Conservation Board (ERCB). “Notice
of applications: Shell Canada Limited, Quest Carbon
Capture and Storage.” 2 August 2011. Web: <http://
environment.alberta.ca/documents/Shell-Quest-Carbon
Capture-and-Storage-Project-Public-Notice.pdf>.
105 Severson-Baker, Chris. “Bonus credits for CCS weaken
Alberta’s greenhouse gas regulations.” Web:
<http://www.pembina.org/blog/552>.
106 Government of Alberta. “Alberta inks deal for Shell Quest
CCS project.” Press release. 24 June 2011. Web: <http://
alberta.ca/acn/201106/30771C28EE8FC-F24F-E03C
1BA374D3C893A32B.html>.
107 Shell. “Athabasca Oil Sands Project: Managing Water.”
Web: <http://www.shell.com/home/content/aboutshell/
our_strategy/major_projects_2/athabasca/water/>.
Accessed 27 March 2012.
108 Simieritsch, Terra, Joe Obad and Simon Dyer. Tailings
Plan Review—An Assessment of Oil Sands Company
Submissions for Compliance with ERCB Directive 074:
Tailings Performance Criteria and Requirements for Oil
Sands Mining Schemes. Pembina Foundation and Water
Matters. 2009.
109 Advertising Standards Authority (ASA). “ASA
Adjudication on Shell International Ltd.” 13 August
2008. Web: <http://www.asa.org.uk/ASA-action/
Adjudications/2008/8/Shell-International-Ltd/TF_
ADJ_44828.aspx>.
110 Ibid.
111 Shell Canada. Canada’s Oil Sands. Issues and
Opportunities: Community. Web: <http://www-static.
shell.com/static/can-en/downloads/aboutshell/aosp/
unique_resource/community.pdf>. Pp. 8, 13.
112Athabasca Chipewyan First Nation. “Shell’s
Environmental Impact Assessment Fails to Protect the
Environment and First Nation Rights.” Press release. 20
December 2011. Web: <http://acfnchallenge.wordpress.
com/2011/12/20/shells-environmental-impact
assessment-fails-to-protect-the-environment-and-first
nation-rights/>.
113Klare, Michael T. Rising Powers, Shrinking Planet: The
New Geopolitics of Energy. Holt. April 2008.
114Dutto, Paolo R., Rodolfo Guzmán, and
Srinivasaraghavan Suresh. New Business Models for the
International Oil Company.” Prism. Issue 1, 2010. Page 52.
115Bremmer, Ian. “The Long Shadow of the Visible Hand.”
The Wall Street Journal. 22 May 2010.
116Canadian Association of Petroleum Producers. Report
of the Dialogues on the Oil Sands. April 2011. Web:
<http://www.capp.ca/aboutUs/mediaCentre/
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117Royal Dutch Shell. The Shell Report 2004: Meeting
the Energy Challenge—Our Progress in Contributing
to Sustainable Development. Report. 2004. Web:
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previous.html>.
118Pals, Fred. “Shell Closes Book on 2004 Reserves
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119 Natural Resources Canada (NRCan). “Confirmed
Companies’ Activities and Interests in Canada’s Oil
Sands.” Briefing note. Document obtained under Access
to Information legislation.
120 Stockman, Lorne, Andy Rowell, and Steve Kretzmann.
Shell’s Big Dirty Secret. Friends of the Earth Europe.
June 2009. Web: <http://www.foeeurope.org/
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121 Royal Dutch Shell. Delivery and Growth: Annual
Review and Summary Financial Statements 2007.
2007. Web: <http://www.shell.com/home/content/
investor/financial_information/annual_reports_and_
publications/archive/2007/>. Pp. 18, 28.
122 Stockman, Lorne, Greenpeace, Platform, and Oil
Change International. Reserve Replacement Ratio in a
Marginal Oil World: Adequate Indicator of Subprime
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123 Vanderklippe, Nathan, and David Ebner. “Shell Puts Oil
Sands Expansion Plans on Hold.” The Globe and Mail. 28
April 2010. Web: <http://www.theglobeandmail.
com/report-on-business/industry-news/energy-and
resources/shell-puts-oil-sands-expansion-plans-on-hold/
article1550160/>.
124 International Energy Agency (IEA). World Energy Outlook
2009. 2009. Web: <http://www.iea.org/W/bookshop/add.
aspx?id=388>. Table 3.2, on p. 142.
125 International Energy Agency (IEA). Medium-Term Oil
Market Report. Ed. David Fyfe. 29 June 2009. Web:
<http://omrpublic.iea.org/>. P. 48.
126 International Energy Agency (IEA). World Energy Outlook
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weo2010sum.pdf>. P. 147.
127 Greenpeace. Energy Revolution: A sustainable
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International. September 2005.
128 Intergovernmental Panel on Climate Change (IPCC).
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Climate Change Mitigation. Prepared by Working Group
III of the Intergovernmental Panel on Climate Change [O.
Edenhofer, R. Pichs-Madruga, Y. Sokona, K. Seyboth, P.
Matschoss, S. Kadner, T. Zwickel, P. Eickemeier, G.
Hansen, S. Schlömer, C. von Stechow (eds)]. Cambridge
University Press. 2011.
129 International Energy Agency (IEA). World Energy Outlook
2009. Page 81.
130 Obama, Barack. “A Secure Energy Future.” Barack
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131 Chan, Gabriel, et al. Canada’s Bitumen Industry under
CO2 Constraints. Report number 183 of the MIT Joint
Program on the Science and Policy of Global Change.
Massachusetts Institute of Technology. January 2010.
132 Sankey, Paul, Silvio Micheloto, and David T. Clark. The
Peak Oil Market: Price Dynamics at the End of the Oil
Age. Report. Deutsche Bank Securities Inc. 4 October
2009. Web: <http://www.petrocapita.com/attachments/
128_Deutsche Bank - The Peak Oil Market.pdf>.
133A December 2010 update from Deutsche Bank
reiterated this basic argument, saying “Taken together,
the developments suggest somewhat slower
electrification trends than we expected a year ago and
greater near-term gasoline demand, but also increased
confidence in the pace and breadth of the long-term shift
to a more efficient transportation system.” Sankey, Paul,
Silvio Micheloto, and David T. Clark. The End of the Oil
Age: 2011 and beyond: A reality check. Deutsche Bank
Securities Inc. 22 December 2010.
134 Ibid.
135 Premier’s Council for Economic Strategy. Shaping
Alberta’s Future. Government of Alberta. May 2011.
136 Ibid. Pp. 6, 14.
137 Karl, Terry Lynn. The Paradox of Plenty: Oil Booms and
Petro-States. University of California Press. 1997.
138 Organization for Economic Cooperation and
Development (OECD). Policy Brief: Economic Survey of
Canada 2008. OECD. 2008.
139 Bimenjimana, Celestin, and Luc Vallee. “Curing the
Dutch Disease in Canada.” Policy Options. November
2011.
140 Humphreys, Macartan, Jeffrey Sachs, and Joseph
Stiglitz (eds.). Escaping the Resource Curse. Columbia
University Press. 2007. Introduction, pp. 11–13.
141 Angela V. Carter. “Cursed by Oil? Institutions and
Environmental Impacts in Alberta’s Tar Sands.” Paper
prepared for the Canadian Political Science Association
Conference, May–June 2007. Page 15.
142 Elections Alberta. Web: <http://www.elections.ab.ca/
public%20website/926.htm>.
143 Angela V. Carter. “Cursed by Oil? Institutions and
Environmental Impacts in Alberta’s Tar Sands”. Paper
prepared for the Canadian Political Science Association
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144 Vongdouangchanh, Bea. “Feds set Canada back 50
years on environment regulations: critics”. The Hill Times.
30 April 2012.
145 Hansen, James E. “An Open Letter to Norwegian
Prime Minister Jens Stoltenberg.” Aftenposten. Oslo.
19 May 2010. Online at: <http://www.columbia.
edu/~jeh1/mailings/2010/20100730_NorwayLetter.pdf>.
146 Intergovernmental Panel on Climate Change (IPCC).
IPCC Special Report on Renewable Energy Sources and
Climate Change Mitigation. Prepared by Working Group III
of the IPCC (O. Edenhofer, R. Pichs-Madruga, Y.
Sokona, K. Seyboth, P. Matschoss, S. Kadner, T. Zwickel,
P. Eickemeier, G. Hansen, S. Schlömer, C. von Stechow
[eds.]). Cambridge University Press. 2011.
35
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