Pipelines vs Paris: Canada's climate conundrum

The push for new pipelines to bring Alberta bitumen to "tidewater" is on, even as the ink is barely dry on the Paris Agreement, and its call to action on climate change. Alberta Premier Notley argues that "We're not making a choice between the environment and the economy. We are building the economy." For his part, Prime Minister Trudeau commented on the eve of the first ministers' climate summit in March: "The choice between pipelines and wind turbines is a false one. We need both to reach our goal."

These "all of the above" answers are all over Canadian politics and mainstream elite opinion. But the truth is we cannot have it all; we must choose. More pipelines means going in reverse on the climate action we need.

Let's take a look at three pipeline proposals: Enbridge's Northern Gateway (officially approved, widely believed to be dead); Kinder Morgan's Trans Mountain expansion (pending approval, would run to the Burrard Inlet in Vancouver); and TransCanada's Energy East (also pending approval, headed to refineries in Quebec and Eastern Canada). The Table provides some summary statistics of note. For each I've started with the proposed increase in capacity; in the case of Kinder Morgan this is only the increase above and beyond the existing pipeline (total capacity would be 890,000 barrels per day).

Next I estimate incremental greenhouse gas emissions per year associated with each pipeline. I assume that all of the capacity facilitates increased production from the Alberta oil sands (which is the whole point of building them). I reduced the total annual flow by 30% to account for diluent mixed in with the bitumen to get it to flow through the pipelines, and converted volumes to carbon dioxide, representing the emissions that will eventually be combusted (outside Canada). I also estimate emissions for the entire lifecycle: emissions at the final point of combustion (i.e. the exported fuel) are only about 70-75% of the total lifecycle emissions, with the remainder representing the emissions from mining and extraction, upgrading and refining, and transport of bitumen-in-the-ground into usable fuel.

For comparison's sake, British Columbia's greenhouse gas emissions were 62.8 million tonnes of CO2 equivalent (Mt CO2e) in 2013, and Canada's were 726 Mt CO2e. These represent the emissions within the borders of BC and Canada respectively. One challenge with fossil fuel exports is that the full climate impact is not counted within the producer's borders. So for bitumen exports, the 70-75% of emissions from final combustion would get counted in the emissions inventory of whatever country imports our oil (be it the United States, or if pipelines are successful, China, Japan or Korea). In addition, most of the refining of that Canadian bitumen would be done outside Canada, so only a small share of the total lifecycle emissions gets counted in our GHG inventory. Even if we could power the whole oil sands with renewables, it would still be a global climate problem due to those combustion emissions.

The results are striking: annual lifecycle emissions for each of the pipelines would be greater than all of BC's annual GHG emissions, and are equivalent to a sizeable share of Canada's emissions (11% in the case of Enbridge; 13% in the case of Kinder-Morgan; and 24% in the case of Energy East).

This highlights a major flaw in the Paris Agreement, bold as it is. That Agreement is based on countries committing to reduce the carbon emissions within their borders, but not the carbon extracted and exported for someone else to burn. We need a different type of international framework to constrain global supplies of fossil fuels: to divvy up shares of a carbon budget for use in transition, then leaving the rest in the ground, forever.

The final lines in the table highlight what concern for climate change is all about: that it will cause damages to people in the future. Arguably, those damages are already hitting in the present, in the form of droughts and extreme weather events. Economists call these damages the social cost of carbon, and made attempts to estimate them. These estimates are imperfect – they quantify things that are hard to quantify, while missing some impacts entirely; they tend to do so in terms of human use-value (endangered species, meh); they discount the future, meaning damages far in the future have very little "present value"; and they don't consider the possibility of catastrophic impacts due to the crossing of climate tipping points. So if anything, the SCC understates the long-term damages associated with climate change.

The US government now uses a SCC of $37 per tonne, although other studies have come up with much higher numbers, such as $220 per tonne, derived by researchers at Stanford University last year. Based on alternative assumptions in climate-economy models, the SCC can range upwards of $800 per tonne.

In the table above I provide a range: a low estimate of $50 per tonne of CO2 and a high estimate of $200 per tonne of CO2. This shows the scope of climate-related damages each project is likely to cause, ranging from $4 to 16 billion per year for Enbridge, to $9 to 35 billion per year in the case of Energy East. That's a lot of damage, and just for one year of operation, never mind the 40-year lifespan of a pipeline.

If some terrorist cell was plotting $5-10 billion per year of damages every year, would we not send in some version of 007 to take them out and prevent that catastrophe? But rather than take decisive action to prevent such a catastrophe, our leaders are encouraging it. I doubt this stems from ill will, but is instead a manifestation of Canada's political leaders and media elites being, for the most part, still in denial about climate change. Not outright denial of climate science, but a more insidious form of denial that accepts the science but refuses to acknowledge the implications.

Is there another way? The United Kingdom's response to the Paris Agreement is very different from Canada's. Energy minister Andrea Leadsom stated recently: “The government believes that we will need to take the step of enshrining the Paris goal for net zero emissions in UK law. The question is not whether but how we do it.” Canada's real challenge is the same: how quickly we can get to 100% renewables. So let's get on with it and make it a national project, generating green jobs along the way.

Marc Lee is a Senior Economist with CCPA-BC. Follow Marc on Twitter @MarcLeeCCPA.