The author of a recent New York Times article is reveling in his scathing indictment of the Canadian oil sands – describing them as “the world’s […] dirtiest oil reserves,” and it isn’t hard to see why. As one of the largest oil reserves in the world, Canada’s oil sands have an image problem. Open pit mining, tailings ponds, and trucks the size of houses are not very appealing to look at, which makes the oil sands an easy target for the current wave of energy activism. Growing concerns relating to climate change, biodiversity, and marine health have spurred a ferocious appetite for more robust and stringent environment, social, & governance (ESG) standards – and rightly so. Climate change is a paramount concern that needs to be addressed with innovation and collaboration. These evolving standards are providing Canadian producers with the opportunity to adapt to a new world order and be leaders in an industry often criticized for being resistant to change.

Some of Canada’s largest energy producers have responded with extraordinary achievements in greenhouse gas (GHG) reductions. Canadian Natural Resources Limited (CNRL) has invested more than C$3.4 billion since 2009 in research and development to reduce its carbon footprint. Canadian Natural is a leader in carbon capture and sequestration (CCS), removing approximately 2.7 million metric tonnes per year through its Quest, Horizon, and NWR facilities. CNRL is continually making improvements to lower its carbon intensity, and has successfully reduced GHG emissions from its Horizon Oil Sands mine by 27 percent between 2012 – 2018. Furthermore, CNRL has committed to reduce its oil sands GHG emissions intensity by an additional 25 percent through 2025. To achieve these ambitious targets, CNRL is trialing new cutting-edge technologies such as molten carbonate fuel cells (MCFC), solvent enhanced oil recovery, and In-Pit Extraction Processes (IPEP) for tailings ponds.

In response to growing climate change concerns, Canadian producers have stepped up in a big way. The carbon intensity of upstream resource extraction in the oil sands is at an all-time low. GHG emissions for barrels sourced from the Canadian oil sands are increasingly comparable with major energy producers across the globe (See Figure 1.1). The magnitude of this accomplishment is even more impressive when viewed with the lens of a total energy mix. Many of the world’s largest energy companies produce large amounts of natural gas, and light oil which typically have lower emissions than heavy crude. However, despite the recent successes of Canadian producers, challenges remain. As the molecule moves down the supply chain from transportation to refining these processes can contribute significantly to a barrel’s total lifecycle GHG emissions. Unfortunately, this can largely be out of a producer’s control, and for many producers without integrated downstream facilities, the primary focus must be on reducing emissions during extraction.

Figure 1.1 – Source: Peters & Co (2019), Global Integrated E&P Carbon Emissions.

The industry is rife with innovative collaboration and partnerships. Virtually all oil sands producers (90 percent) are contributing members to the Canadian Oil Sands Innovation Alliance (COSIA). COSIA functions as a research collective that brings companies together to share game changing technologies, intellectual property, and expertise. COSIA was formed to elevate the status quo and challenge its members to pursue operational excellence in the areas of GHG reduction, land reclamation, tailings ponds, and water management. Industry collectives are the new normal in Canadian energy and have extended beyond hydrocarbons to help facilitate the global energy transition. Nearly all of Canada’s top energy producers are among the 456 active members in the Clean Resource Innovation Network (CRIN) – which aims to share resource and expertise to accelerate and commercialize revolutionary energy technologies.

Canadian energy companies are the most active clean tech investors in Canada. According to Natural Resources Canada, the industry accounts for two thirds of the C$2.4 billion spent annually to fund cleantech research and development. New partnerships between energy companies and clean tech investment funds are helping to fuel the growth of energy innovation in Canada. Suncor and Cenovus have partnered with the BC Cleantech CEO Alliance and committed C$100 million to form Evok Innovations – a clean tech fund created to develop technologies aimed at addressing the world’s most pressing environmental and economic challenges. Canadian energy producers have been carefully listening to the concerns of stakeholders calling for greater environmental stewardship. Through innovative partnerships, cutting edge technologies, and capital investment, the industry is setting the template for responsible resource development.

Author

Michael Hebert, Viewpoint Research Team

In 2019 something incredible happened – the International Energy Administration (IEA) reported that energy related CO2 emissions in advanced economies fell to 11.3 gigatonnes (See Figure 1.1). This is significant for a variety of reasons, but most notably because the countries with the capabilities to act on emissions reductions are doing so, and with encouraging results. Energy related CO2 emissions in advanced economies haven’t been this low since 1990. The gradual decline of CO2 emissions has largely been underpinned by efficiencies and fuel substitutions in the power sector, which contributed to 85% of the reduction in emissions in advanced economies from 2018 to 2019. While renewables continue to play an ever-expanding role in the global power mix, the most significant reductions in carbon emissions were achieved through the substitution of coal-fired power stations for natural gas and nuclear power options.Several countries including the United Kingdom – the birthplace of the industrial revolution – are set to completely phase out coal-fired power stations in favor of more environmentally-friendly options by mid 2020.

Figure 1.1 – Energy Related CO2 Emissions, 1990 – 2019(1)(2)

Source: IEA Global CO2 Emissions in 2019, IEA CO2 Emissions from Fuel Combustion by Country.

Advanced economies: Australia, Chile, European Union, Iceland, Israel, Japan, Korea, Mexico, Norway, New Zealand, Switzerland, Turkey, and United States.
Canadian emission data 1990 – 2017

While emissions reductions in advanced economies are encouraging, it is hard to ignore the proverbial elephant in the room – the fact that global emissions have steadily crept up over the same period, largely due to rapid industrialization in developing economies. In 2015, Bill Gates aptly stated that we need an energy miracle in order to see global emissions fall; “[Most problems can be solved locally – but this one is a world problem. … [I]t doesn’t really matter whether it’s a coal plant in China or a coal plant in the U.S. – the heating effect for the entire globe is the same.”

Many advanced economies enjoy the luxury of choice while grappling with the pragmatism of climate change. It is undeniable that cheap and abundant energy played a major part in industrializing economies at the turn of the 19th century, and many developing countries desire the same access to low-cost energy that allowed advanced economies to flourish.

Natural gas can offer a viable bridge between heavy-emitting carbon pollution, and sustainable renewable resources. However, natural gas is often priced out of consideration for many developing countries without the domestic infrastructure necessary for extraction and transportation. Therefore, advanced, energy producing economies like Canada, have an opportunity to continue to provide clean and affordable sources of energy to developing economies so these countries can continue to advance, and we can all benefit from a more sustainable future.

Canada’s Contribution to Global Emissions

While emissions in advanced economies have fallen to a level not seen since the launch of the Hubble Space Telescope (1990), Canada has struggled to reduce emissions at the same pace. Canada agreed to cut its GHG emissions by 30 per cent under the Paris Agreement (from a 2005 baseline) but the Country faces a tough set of obstacles to achieve this end. While many advanced economies are reducing emissions by transitioning away from coal, Canada’s electricity mix was largely already free of heavy GHG emitting sources. Approximately 82% of Canada’s electricity is supplied by non-GHG emitting sources such as hydroelectric and nuclear power, which leaves little room for reductions compared to the peer group of advanced economies. As Jackie Forrest notes, “If the U.S. could transform their power system to match Canada’s current electricity mix, this alone would achieve most of their Paris target.”

Figure 1.2 – Change in Emissions from Fuel Combustion, Canada, 1990 – 2017.

Source: IEA CO2 Emissions from Fuel Combustion by Country.

Despite Canada’s high baseline for non-GHG emitting power generation, the Country has made significant improvements elsewhere to reduce CO2 emissions from fuel combustion since 1990, particularly in the residential housing sector (-7.3%), and in industrial applications (-11.8%) (See Figure 1.2). Canada experienced an immigration boom between 1990 and 2018, which resulted in a net population increase of more than 33%. The increase in Canada’s population coincided with the rapid development of carbon intensive industries, which contributed to large gains in emissions from transportation (37.6%), commercial buildings (21.9%), agriculture (157.1%), and the energy industry (192.7%). Canada is a major exporter of both energy and agricultural products, which disproportionately elevates Canada’s overall carbon footprint. Between 1990 and 2017, Canada’s overall net carbon footprint increased by 31.0% (130 Mt CO2). It is important to recognize that without Canadian supply, countries with less stringent environmental standards would be required to produce these goods, and the impressive reduction in advanced economy emissions (Figure 1.1) would likely be diminished.

To augment the Country’s role as a resource supplier, Canada is implementing trailblazing technologies and processes to reduce its GHG emissions. The C$1.2 billion Alberta Carbon Trunk Line (ACTL) opened on June 3rd, 2020, and is the world’s newest integrated, large-scale carbon capture, utilization, and storage system. The ACTL will transport captured CO2 from the Agrium fertilizer plant and the NWR Sturgeon Refinery to be injected underground as part of an enhanced oil recovery process. The ACTL is capable of sequestering 14.6 Mt CO2 per year at full capacity, which represents a 20% reduction in all oil sands emissions, or the rough equivalent of taking 2.6 million cars off the road.

Canada set the standard for low-carbon electricity generation 20 years ago with a steadfast commitment to non-GHG emitting sources. This model is now being adopted across the globe, and Canada is again at the forefront of new carbon reduction technologies. With the appropriate support, investment climate, and global exposure, Canada’s practical applications of carbon technologies will hopefully again, provide a model for developing economies seeking to navigate towards a low-carbon future.

Author

Michael Hebert, Viewpoint Research Team

Energy Innovation: Oilsands Becoming Leaner and Greener

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What on Earth is Happening? Energy Emissions are Falling in Advanced Economies

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