The poisoned bottle | The Press

Not easy to let go of the oil bottle that poisons our planet. How to reconcile the necessary decarbonization and energy security? And, moreover, ensure a just transition for the producing provinces?

These questions have no easy answers. With good reason, environmentalists are pushing for weaning and a rapid transition to renewable energy. But consumers are adept at rationalizing the usefulness of their SUVs. And in the age of populism, governments are afraid to rush them. As for the oil companies and the producing provinces, they obviously seek to protect their windfall as long as possible.

In Europe, the war in Ukraine has brutally reminded us of the imperative of energy security, which weighs more heavily than the bad conscience in financing President Putin’s aggression by buying Russian gas. We also remember the movement of yellow vests, triggered by the imposition of an environmental tax on fuel.

These are not reasons for doing nothing, but they explain the procrastination of governments, torn from all sides.

tar sands

In Canada, among the many divisive issues on climate change, high on the list is the ambition to clean up the western oil sands, which, barrel for barrel, emits three times more greenhouse effect (GHG) than conventional oil drilling.

It takes a lot of energy to heat viscous bitumen and separate it from sand, then process it into synthetic oil. That’s why producers speak with their mouths about carbon capture, utilization and storage (CCUS). However, even if we manage to produce it without emissions – and that remains a big if – burning this oil will remain as polluting as conventional oil.

According to the most recent report of the Intergovernmental Panel on Climate Change (IPCC), the target of a maximum warming of 1.5°C implies that coal consumption will drop by 95% by 2050, 60% for oil and 45% for gas. The challenge is that all the producers in the world aspire to be among those who will survive. Canada, ranked fourth in the world, does not want to give up its place.

This same report admits that it will also be necessary to use the CUSC to reach the Paris target, but underlines that this technology is still not perfected after decades of effort and that it will be one of the most expensive. Salvation will come much more from solar and wind energy, as well as carbon capture and sequestration through agriculture, afforestation and the restoration of ecosystems, which are more efficient and above all less costly.

A year ago, a “Carbon Neutral Tar Sands Initiative” was launched by six companies that exploit 95% of Canadian production. The carbon would be captured at the mines, then transported by pipeline to be sequestered deep underground.

This “carbon neutrality” targeted in 2050 for the oil sands would result in a 36% reduction in emissions from the oil and gas sector, which ranks first among polluters, with 26% of GHGs in Canada.

The CUSC is only feasible if the oil or gas is consumed in very large quantities at a fixed location, such as thermal power stations, steelworks or cement works. In Alberta, sharing common infrastructure with oil sands operators would reduce costs.

A polluting sector

Petroleum, however “carbon neutral” it may become in the discourse of oil companies, at the production stage, would not prevent 80% of the GHGs released by the combustion of engines, which are accounted for in transport.

The transport sector generates 25% of the country’s emissions, almost as much as the oil and gas industry. Automobiles, light trucks and public transport will be able to convert to electric, but the solutions are less obvious for heavy trucks, locomotives and planes. Many are betting on blue hydrogen, produced with the gas, but whose emissions would be captured and buried in the ground.

There remains the option of capturing carbon from the ambient air, a dream in which Bill Gates has invested large sums, but whose economic feasibility is not expected for several decades, and more.

The Oil Sands Initiative could eventually cost $75 billion, half of which is for carbon capture and storage. If the oil companies only bet their own money in this adventure, there would be nothing to complain about. But in her budget, the Minister of Finance of Canada, Chrystia Freeland, allocates 2.6 billion over five years for a credit that pays 50% to 60% of the investment in CUSC.

Last January, more than 400 climate and energy scientists signed a letter urging him not to grant this credit, recalling that the Liberals had promised to end subsidies to the oil industry. CCUS projects have often been failures, and the main commercial use of the captured carbon has been to extract more oil from otherwise depleted fields.

Note that the Minister has excluded enhanced oil recovery from her assistance, which makes the profitability of the CUSC even more problematic, unless the price of carbon imposed by the regulations becomes higher than expected.

According to the Climate Institute of Canada, an independent organization dedicated to climate policy, “the only chance for oil and gas companies to succeed is to focus now on producing low-cost, low-emission oil and gas. , while accelerating the shift towards new sectors of activity, such as blue hydrogen, renewable energies, biofuels and carbon capture and storage. Government policies and programs should support and encourage this transformation, not hinder it”.

The oil and gas sector represents approximately 5% of Canadian GDP and employs 800,000 workers concentrated in Alberta, Saskatchewan and Newfoundland, who cannot be sacrificed in a just transition of the economy.

In the Emissions Reduction Plan for 2030, recently unveiled by the Minister of the Environment, Steven Guilbeault, this sector must reduce its GHG emissions by 31% compared to 2005 levels (or 42% compared to 2019).

The International Energy Agency considers the CUSC to be a must-have solution. The industry believes it is capable of developing an efficient technology whose cost will fall, as with solar and wind power.

The bet is risky, on an oil market called to shrink. But it would be foolhardy to eliminate a potential tool when it is necessary to deploy all possible means to limit global warming. Governments play a useful role in de-risking new technologies.