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What in the World? Canada and GHG Management

Michal C. Moore Senior Fellow The Institute for Sustainable Energy, Environment and Economy University of Calgary. What in the World? Canada and GHG Management. An emerging, thoughtful, if hesitant and discontinuous, approach to carbon impacts and the future. Canada Energy and Resource Rich.

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What in the World? Canada and GHG Management

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  1. Michal C. Moore Senior Fellow The Institute for Sustainable Energy, Environment and Economy University of Calgary What in the World?Canada and GHG Management

  2. An emerging, thoughtful, if hesitant and discontinuous, approach to carbon impacts and the future

  3. CanadaEnergy and Resource Rich Major Industries • Thermal Energy Generation • Oil and gas extraction and processing • Pulp and Paper generation • Cement and lime production • Chemical production • Mining, smelting and refining • Iron and Steel production

  4. Canadian Population Concentrated Near Border Hydrocarbon Resources e.g. OilSands Concentrated in non-shield areas Oil Sands Western Sedimentary Basin

  5. The Oil Sandsan overview • 174 Billion Barrels of economically recoverable oil (>$35/bbl US) • Surface mining and in-situ extraction (SAGD) • Upgradable to synthetic equivalent of light crude • Output should exceed SA by 2047 at current rates • Water, energy, transport intensive • Bitumen extraction and upgrading produces >2x GHG emissions per barrel as conventional crude • Concentration of emissions close to production site, creating potential sequestration economies of scale

  6. Oil Sands Unconventional Oil Production has begun to rapidly increase Source: US EIA Initial export focused on US now increasing to China & in the future to India

  7. Carbon is the Key for GHG • Carbon is synonymous with GHG emissions, a principal catalyst for global warming • There are six main GHG’s all expressed as a ratio to CO2 • Methane (CH4) 21 • Nitrous Oxide (N2O) 310 • Hydroflourocarbons (HFC’s, HFC23) 11,700 • Perflourocarbons (PFC’s) • Sulphur hexaflouride (SF6)

  8. Policy Drivers in Canada • Emerging Evidence • Glaciers • Temperature • Crop cycles, breeding cycles • Permafrost changes • Politics • Kyoto signing • Lawsuits • Emergence of alternative markets e.g. enhanced oil recovery • Uncertainty and risk • Insurance payments • Trade disruption • Basic Science Research

  9. Coincident with Expansion of Oil Sands Activity, GHG emissions have increased … and exceeded Kyoto targets

  10. Overall energy demand increased even with energy efficiency

  11. Changes in air pollution indicators are regionalized and coincident with population and political centres the trend is generally up

  12. Alberta is the Principal Generator of new supply and of GHG

  13. Official and Unofficial Acknowlegment of carbon constraints • Kyoto • Project Green • High corporate responsibility • Still slow on energy efficiency • Missing linkage to corporate finance depts

  14. Emerging Long-term Strategies(post Kyoto planning was missing or inconclusive) • Hedging to reduce risk • Technology investment • Emblematic trading markets • European Union Emissions Trading System (ETS) • Chicago Climate Exchange • New South Wales Emissions Trading system

  15. Corporate Actions • Suncor - published carbon profile • Transalta - emission reduction trading • TransCanada - product transport • EnCana - sequestration

  16. Public Actions • New Renewables interest • Developing interest in demand management • New Carbon trading marketMarket liquidity • Cdn Federal Gov’t price assurance for compliance $15/tonne CO2 equiv. • Companies may find it easiest and least risky to purchase non tradable credits from govt, since marginal abatement costs usually in excess of 15/tonne • Rule change probability • Credit lifespan • Post Kyoto

  17. Examples • Weyburn - sequestration • New TransCanada Project Belle Plaine (syngas) • AICISE - Alberta Ingenuity Centre for In-situ Energy

  18. Challenges That Will Influence Oil Sands Operations(and consequent GHG emissions) Competitive markets Long term cost of fuel Transport challenges Future cost of carbon reduction credits Difference in domestic v intl markets Policy uncertainty

  19. Future Commitment • Morality • Market demand • World actions, primarily US policy • Liability and culpability • Sarbanes-Oxley and Canadian Equiv.

  20. Advice Givenand beginning to be taken There are a number of compelling legal and economic reasons that corporations would be well advised to give careful consideration to the issue of climate changeand even develop their own climate change action planin advance of any regulatory requirement. . . . [T]here is reason for genuine concern that liabilities may be lurking for those who neglect the issue now, to the later detriment of the corporation and its shareholders. J. Healy and J.M. Tapick, “Climate Change: It’s Not just a Policy Issue for Corporate Counsel - It’s a Legal Problem,” Columbia Journal of Environmental Law, 29 (2004), pg 93

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