October 23, 2014
Thank you very much for the opportunity to speak here today. This event is about an important subject, one that may define the future of Alberta. I’m glad to be here to share some thoughts.
Of all the oil and gas producing jurisdictions in the world, none is under the world microscope the way Alberta is in the 21st century. No other oil producer has had to appeal to the European Union to not have its crude oil specially labelled as more hazardous to the environment than others. No other oil producer has faced so much controversy building pipelines south, west and east to provide reliable supplies of the world’s most important transportation fuel to those who need it every day.
And I’m particularly grateful that you’ve invited me. In case you haven’t heard, I’m trying really hard to become the next Premier. In doing so I’m seeking the opportunity to take centre stage in this important and controversial discussion. I’m going to explain what I believe the challenge to be, and what I believe we as Albertans must do to contribute to global efforts to reduce greenhouse gas emissions without jeopardizing the standard of living that makes Alberta such a great place to live.
While there are a myriad of sources for greenhouse gases, let’s face it -the elephant in the room is the oilsands. This incredible natural resource that has become – and could continue to be – Alberta’s most important source of wealth, jobs and opportunity, is also our biggest challenge. It is energy intensive in the sense that it requires energy to make energy. Whether it is more or less energy intensive than other forms of oil is irrelevant for Albertans – it’s what we have, we have lots of it, and it pays the rent. To maintain economic life in this province as we have come to know it, we’re going to have to stay in the business of developing and producing oilsands.
But to meet our obligations to the billions of people we share the planet with, we’re going to have to do this differently.
Let’s remember how we got here. Developing the massive oilsands resource gained a lot of traction because of the oil supply shocks of the 1970s when the world discovered oil wasn’t everywhere, it wasn’t cheap any more, and wasn’t always supplied by our friends. About 40 years ago the oilsands switched from being an interesting but uneconomic source of asphalt to a major contributor to western security of supply of an essential fuel.
Developing this resource was not only capital intensive, but labor intensive. New jobs emerged. New service and supply companies were started. Because oilsands were unique to Alberta they required unique equipment that wasn’t available anywhere else. So we built it here and created an entire secondary industry around it. As a result, the recycle ratio of oilsands spending in Alberta is phenomenal.
Governments loved this. Income taxes. Corporate taxes. Production royalties. As Albertans now know all too well, the government of Alberta collects billions and billions each year in oilsands royalties plus direct and indirect taxes. Where would Alberta be without it?
The fact that the oilsands are a highly regulated and profitable source of oil, jobs, wealth and taxes is no longer good enough. The oilsands now has to develop in a manner that emits less greenhouse gas.
And so it should. It’s the right thing to do. “Sorry we can’t” is the wrong answer. Alberta can no longer simply dismiss nor obfuscate growing GHG emissions. Our customers want action. For a while we told the world that emissions per barrel were declining, so we were doing okay. With the growth of Steam Assisted Gravity Drainage this is no longer the case. Not only are total GHG emissions from the oilsands rising with production growth, but GHG emissions per barrel is also rising.
So far the government reaction has been disappointing. They talk about a $15 per tonne carbon tax on large emitters. They brag about spending billions on carbon capture and storage. They promise to reclaim tailings ponds sooner. High profile people like actors and musicians come to Alberta to complain about the oilsands. They tell them that unless they walk to Fort McMurray they have no right to comment.
But we are not winning this public relations battle for the simple reason that we are not actually doing the only thing that will truly help us get on the right side of global public opinion, which is to reduce greenhouse gas emissions in this province in a way that is honest, measurable and explainable.
This will take time and won’t be easy. Reducing oilsands emissions will cost money and require technologies and processes that don’t yet exist. But real progress will only come with real and constructive dialogue. Alberta should not be saying “if” or “can you”, but when, how and by how much. Only then can we head down a path towards real progress on emissions reductions which will ensure true long-term economic stability.
Another way Alberta should change the channel is on how we measure emissions. Instead of measuring success by emissions per barrel – an area in which we’re going the wrong direction – we should start talking about measuring emissions per capita. Then we can more accurately compare ourselves with other jurisdictions. Here’s what I mean.
Obviously oilsands GHGs are only a fraction of our total output. Emissions come from every vehicle we operate, the homes we live in, the offices and buildings we work in, generation of the electricity we depend upon, and other important industries ranging from agriculture to forestry to manufacturing.
On the matter of emissions per capita, we have to set priorities. Until such a time that real emission reductions can be achieved in the oilsands, ordinary Albertans are going to have to make personal efforts. I’m not proposing carbon taxes, fuel taxes, purchasing carbon offsets when you take a vacation, or massive and unsustainable subsidies for renewables. I’m talking about the province-wide realization that this is everyone’s problem, not just those big rich oil companies.
Other jurisdictions that don’t have oilsands production are tackling all these other GHG sources regularly and with a commitment that, considering how important this subject is to our economic future, we need to follow. As I understand it, the greatest reduction in carbon dioxide emissions in the United States has taken place because of the replacement of coal with natural gas as a fuel for power generation. We’re heading in that direction as our old coal-fired plants get to the end of their economic lives. We’re trying to bring renewables into the electricity mix but our policies to support the increased use of wind, solar, geothermal, small scale hydro, biomass, particularly for microgeneration, have not gone far enough.
Several provinces have tax rebates for purchasing modern major appliances like fridges and washing machine that use less power, improving home insulation or installing better windows in your house. We need to do that in Alberta. Looking around Canada and the world, many jurisdictions offer economic incentives for purchasing electric cars. Let me just say a brief word about this.
I see Alberta as a global leader in something on the energy file besides greenhouse emissions growth. There is tremendous progress being made in automotive hydrogen fuel cells, portable electricity generators that allow vehicles to run entirely on electricity by generating their own electricity by burning hydrogen. This is essential for electric cars to travel long distances like they must in Alberta. When you burn hydrogen to make electricity, the only emission is water.
The knock on hydrogen fuel cells is that the energy required create hydrogen fuel is as much or greater than the emission reductions from using hydrogen for vehicle fuel. But Alberta is in the business of the large scale production of hydrogen as an essential element of our biggest industry. Why don’t we step out of the box and become a world leader in the adoption of pure electric vehicles powered by an oil and gas by-product, hydrogen?
What would the world think of Alberta if a growing percentage of the population drove all-electric cars? What if we were a world leader in hydrogen vehicle fuel?
We have to change the channel.
These are just ideas. But Alberta is about ideas. Always has been. Our province is at a crossroads. This conference and the people in this room illustrate the growing understanding and acknowledgement that the path forward is different than the one that got us here. We can do this.