The Frontier oil sands mine has jumped to the political front burner lately. Whether the federal government will approve the northern Alberta project was the second question the Conservatives asked when parliament resumed last week. Naturally the Conservatives wanted it done, right away. But the Bloc, feeling its oats in the minority parliament had a different idea, calling approval “the end of us meeting our greenhouse gas reduction targets and the end of the Paris agreement.” And this week there is word that the Liberal caucus is split on the issue, one that has been framed as a litmus test for the Trudeau government. As Chronicle-Herald columnist Jim Vibert put it, the Liberals are “between a climate change rock and an Alberta hard place.”
On first glance, the climate change implications should be sufficient for the government to kill the project. The Teck Resources open pit mine – the largest ever proposed – was approved by a joint Alberta-Canada panel and forwarded to cabinet last July. It would add up to six million tonnes of greenhouse gases to Canada’s already bloated emissions total at a time when drastic cuts are already past due. And even if Canadians continue to accept the “have your cake and eat it too” approach favoured by the Trudeau government, gone will be any chance that Canada can play a positive role in the badly needed global campaign to reduce carbon emissions.
But the hard place of knee-jerk Alberta oil sands advocacy – with its underlying separatist vibe – is a large challenge. Jason Kenney, the master gauntlet thrower, has said if the feds say no to Frontier it will be proof that Trudeau really meant it when he spoke about the need to “phase out the oil sands.” And while many would agree that Trudeau had it right before he walked back that statement, in the unreal world of federal-provincial energy politics, the case for the hugely destructive project is supplemented by some inconvenient facts.
Although the oil sands mine will disturb an area of more than 29,000 hectares, adversely affecting wetlands, old growth forests and biodiversity, that sort of destruction has been par for the oil sands course. The climate implications are at the core of environmental concerns of the moment, because the additional emissions will make it more difficult for this country to meet its 2030 reduction targets, let alone the 2050 Paris commitments.
Already factored in
But that argument falters when it is taken into account that the Trudeau government made a deal with the previous NDP government in 2015 to allow up to 100 Mt of GHG emissions from the oil sands. At last count, those emissions were probably less than 80mt.
Given that the current Alberta government rode to power trashing the 2015 Trudeau-Notley agreement it may seem that the deal is off. However, aside from ditching the provincial carbon tax (replaced last month by the federal tax), Alberta has more or less stuck with main points – phasing out coal-fired electricity, regulating large polluters and controlling methane emissions. And in this time of reconciliation, the project proponent has the backing of 14 First Nations in the area.
Moreover, because the federal government has no credible plan for achieving the cuts needed to come close to reaching our 2030 targets it will be even harder to convince riled-up Albertans that the Frontier project must be rejected in the national interest. At this point we are projected to be 77 million tonnes above where we’ve promised to be in ten years – is it worth risking national unity over another four to six million?
In recent days there has been talk about a compromise through which the feds would approve the project in return for Alberta agreeing to an emissions cap of net zero by 2050. Considering that no one knows exactly what that means or how it will be achieved, such a commitment has about as much reliability as “your check is in the mail.” But if such a compromise lowers the temperature on Wexit and the rest of the racket coming out of the oil patch, it could be a useful stopgap.
Panel blew it
The unfortunate thing about this latest political drama is that it wouldn’t be happening if the three-member Alberta-federal panel had shown enough moxie to turn the whole thing down on environment and economic grounds rather than punting the decision into the fraught political arena.
Panel members – two men from the Alberta Energy Regulator and another appointed by the federal government – didn’t hold much back when it came to describing the devastating impact on nature that will result from ripping up a wilderness area twice the size of the City of Vancouver, perilously close to the Wood Buffalo National Park, a World Heritage site, and the Peace-Athabasca delta.
- Despite Teck’s reclamation plans there will be a net loss of over 14,000 hectares of wetlands, including an irreversible loss of more than 3,000 hectares of peatlands;
- Loss of 3,000 hectares of old-growth forest will threaten habitat for many species, including species at risk, for at least 100 years after the project’s completion in 2081;
- Notwithstanding Teck’s agreements with First Nations, the project will result in the loss of lands and resources used for traditional activities;
- The mine will create 5,000 hectares of tailings ponds, potentially impacting migratory birds, including the endangered whooping crane.
The panel also noted that the project “may make it more difficult to achieve Canada’s targets of a 30% reduction of 2005 levels by 2030 and a 2050 mid-century target for total Canada greenhouse gas emissions of 150 Mt/year.” May?
Despite painting a picture that should make rejecting the project a no-brainer, the panel approved it, washing its hands of responsibility for GHG emissions while embracing dubious pie-in-the-sky economic benefits. The panel accepted Teck’s claims that that the $20.6 billion project will produce about 3.2 billion barrels of bitumen over 41 years, paying over $70 billion in taxes and royalties while creating 278,190 person years of “direct, indirect, and induced employment across Canada.”
The panel arrived at this conclusion despite several interveners credibly questioning the economics of the project, including the dazzling taxes, royalties and jobs numbers. Those calculations came from input-output analysis “which quantifies the ripple effect of project-related spending.” So spending $20.6 billion would supposedly produce benefits of that magnitude, but only if the price of oil is high enough, a great unknown.
Interveners questioned Teck’s reliance on International Energy Agency (IEA) projections of world oil demand ranging from 95 to 110 million barrels a day by 2040 at prices in excess of $95US during most of the mine’s 2016-2067 period. Since the panel decision last July, the IEA has come up with a new projection. According to World Energy Outlook 2019, if governments pursue their stated policies, demand growth is strong to 2025, but “slows to a crawl” – just as the Frontier project would come on line. And under the Sustainable Development Scenario, the one the world must follow to avoid disaster, demand drops to less than 67 million barrels a day by 2040, more than 30 per cent below demand in 2019.
Teck Resources, primarily a coal and copper mining outfit, has been keeping an eye on prices and future demand. Last month the company’s CEO told an investor conference the project may not move ahead, even if it gets cabinet approval. That’s because of weak energy prices (just US$50.75 today) and the difficulty of finding partners willing to risk $20.6 billion when some in the industry have declared the days of large oil sands to be over.[i]
The waffling approach from Teck is not new, and in fact was going on even before the panel made its weak-kneed decision. In its annual report for 2018 the company acknowledged “uncertainty that it will be commercially viable to produce any portion of the (Frontier) resources.”
It is to be hoped the uncertainty only grows. As the Council of Canadians noted in its submission to the panel, success of the Frontier project is contingent on both the failure by Canada to curtail oil sands development and the lack of serious international action to limit greenhouse gasses. In other words, if the Frontier oil sands venture succeeds, efforts to mitigate climate change will have fizzled.
[i] Steve Williams, long-time head of Suncor, Teck’s partner in the Fort Hills oil sands project, has said on numerous occasions that the era of oil sands megaprojects ended with the 2014-15 collapse in oil prices