Feature

Continued Canadian oil sands production could frustrate global climate goals

The continued expansion of Canada’s oil sands could slow the world’s transition to a low-carbon future, according to a new report from the Stockholm Environment Institute.

Published on 24 May 2018

A new SEI analysis finds that most of the country’s existing major oil sands projects are resilient to a decline in oil prices, and are thus likely to be “locked in.” Furthermore, if Canada lets oil production expand as expected, global emissions could increase by 50 to 150 million tons CO₂ by 2030 – the equivalent of putting as many as 32 million cars on the road each year.

SEI’s findings raise questions about efforts to expand Canadian oil production, including new, long-lived infrastructure such as the Kinder-Morgan pipeline.

“The Canadian federal government can significantly increase its ambition and contribution to global climate goals by limiting the future expansion of oil sands extraction,” said SEI Senior Scientist Peter Erickson, who authored the report. “Conversely, a failure to do so could almost fully counteract the climate benefits of its current Climate Action Plan.”

Canada currently produces about 1.5 billion barrels of crude oil each year. That is expected to rise to over 2 billion barrels by 2030, according to the country’s National Energy Board.

Findings

The report found that:

The continued expansion of Canada’s oil sands is likely to contribute to carbon lock-in and a long-term oversupply of oil, slowing the world’s transition to a low-carbon future.
Constraining oil sands expansion could nearly double the greenhouse gas benefits of Canada’s climate action plan. The plan’s measures – which include appliance efficiency standards, a phase-out of coal and carbon pricing – would reduce emissions by 5 to 55 million tons of CO₂ equivalent in each sector in 2030, for a total of 175 million tons CO₂
The expected rise in oil sands production could increase global emissions by 50 to 150 million tons CO₂ annually by 2030. That could be avoided if Canada holds crude oil production to current levels. (If Canada returns national production to the 2005 level of 0.9 billion barrels, it could avoid 94 to 280 million tons CO₂ in 2030.)
Canada’s existing oil sands projects produce a barrel of oil for the competitive cost of about $40 (US), thanks to the substantial infrastructure already in place. This ensures they are able to continue operating and provide returns to investors, even if global oil prices decline.

“Continued expansion of the oil sands may lead to an oversupply of oil in global markets, increased oil use, and negative climate consequences,” Erickson said. “This could make the low-carbon transition more difficult outside, as well as within, Canada and undercut global progress toward Paris Agreement goals.”

Read the report