Canada’s photogenic prime minister promises a new type of enlightened, environment-friendly leadership. But he's still hooked on dirty oil.
- By Andrew NikiforukAndrew Nikiforuk is a contributing editor to the Tyee, a Canadian online newspaper, and author of Tar Sands: Dirty Oil and the Future of a Continent.
The horrific wildfire that is consuming large swaths of Fort McMurray, Alberta, has already broken Canadian records for calamities fueled by climate change. The fire surpassed the economic damage wrought by Quebec’s multibillion-dollar ice storm in 1998 and even southern Alberta’s biblical $2 billion deluge in 2013. The boreal inferno, which mushroomed exponentially like some airborne virus, not only forced the perilous evacuation of 80,000 Canadians from the corporate mining outpost, but also consumed nearly 2,400 buildings. Twitchy bankers and nervous insurers now peg the unprecedented firestorm as Canada’s costliest natural disaster.
It is no accident that the fire sprang up amid Canada’s climate change debate in one of the nation’s most disturbed northern landscapes. All around Fort McMurray, pipelines, roads, seismic lines, and mining pits occupy huge chunks of the forest like an industrial octopus. Humans most likely started the blaze, but climate change helped propel the flames into a storm that made its own lightning and has left behind an estimated $10 billion in damage.
The unfolding horror show caught the young government of Prime Minister Justin Trudeau at an interesting juncture. Unlike his predecessor, Stephen Harper — an ideologue who championed pipelines, muzzled climate change scientists, and attacked environmentalists with malice — Trudeau has changed the tone. He ended the censorship of scientists and personally played a prominent role at the recent Paris COP21 conference on climate change. But he has not yet departed from Harper’s “drill, baby, drill” national narrative. He now promotes oil-export pipelines and wind farms in the same sentence — a sort of political schizophrenia. Contrary to overwhelming scientific evidence, Trudeau acts as though sunny rhetoric on curbing emissions will somehow win more markets for what has become an uneconomic crude. At current oil prices, most oil sand miners are bleeding cash.
Even Trudeau’s response to the climate-inspired disaster was somewhat oily, though sadly demonstrative of the business-as-usual attitude that afflicts even Ottawa’s best and brightest. On May 4, he abruptly criticized Green Party leader Elizabeth May for spelling out the obvious: that the fiery consumption of Fort McMurray and the global climate crisis are linked. “Any time we try to make a political argument on one particular disaster, I think it’s a bit of shortcut that can sometimes not have the desired outcome,” Trudeau countered. “There have always been fires.”
But that’s not true in a world destabilized by an increasingly human-engineered atmosphere. For more than a decade now, Canada’s federal foresters and climate change experts have documented a plethora of bad trends. Warming temperatures have not only increased the area burned by wildfire, but also extended the length of the fire season. Thanks to climate change, patterns of natural forest renewal by fire have been thrown off-kilter. The more frequent and more disastrous blazes have also bankrupted provincial fire-fighting budgets.
Canada is home to a third of the world’s great boreal forest. It supplies Canadians with $700 billion worth of life-supporting services each year and remains one of the world’s important climate and water regulators. Yet the hotter and drier it gets, the more easily it will succumb to fire, disease, and insects. As early as 2003, Canadian forestry experts made the inconvenient prediction that “it is unlikely that there will be sufficient resources to respond to increasing fire.” This, of course, all came to pass in the ashes of Fort McMurray.
Anyone who doesn’t work in oil sands (a low-grade heavy oil that even the Koch brothers call “garbage” crude) grasped the disaster’s smoky irony. The fire consumed sections of the business center of this dirty industry. Bitumen, a tarry mess trapped in oil sands, has one of the highest carbon footprints of any hydrocarbon on the planet and is more impure than Mexican or Venezuelan sour crudes. As a consequence, the energy required to extract and upgrade 2.4 million barrels a day of oil sands has made the energy megaproject Canada’s single largest source of greenhouse gases.
Thanks to unchecked growth and the lack of a national carbon plan, forest-drying emissions from the nation’s oil and gas sector recently surpassed those of Canada’s immense transportation sector. Moreover, despite historically low oil prices, the industry now wants to double production, which would worsen emission trends. As a consequence, the oil sands and their climate-denying supporters have become an almost unmovable boulder on the road to constraining national carbon emissions. The project’s scale also explains why federal promises, made in 2006 to reduce Canadian emissions by 20 percent by 2020 and 65 percent by 2050, have all come to naught. “There is no way Canada can come close to meeting its greenhouse gas targets by expanding bitumen production,” says David Schindler, one of Canada’s top scientists. Simply put, there’s no way Trudeau can make a dent in climate change without limiting — and then shrinking — Canada’s chief carbon-maker.
Canada’s fading oil sands boom is a cautionary tale on the madness of crowds and the greed of politicians. By rushing development to take advantage of high oil prices, the industry and complicit government regulators exaggerated benefits, ignored carbon risks, lowered taxes, and saved hardly a dime. In the process, the oil sands made Canada the world’s fifth-largest oil producer and the supplier of nearly half of U.S. oil imports. But the perils of rapid development, including a volatile petrodollar and a wounded manufacturing sector, are now raining down on the country like glowing embers pelted convoys of vehicles fleeing Fort McMurray.
In a strange twist of fate, the firestorm gives the federal government and Canada’s political class a chance to revisit the project’s failing economics and carbon liabilities. The collapse of global oil prices last year ignited a highly predictable market firestorm. The high-cost oil sands industry quickly dumped 40,000 workers in Canada and scaled back investments by tens of billions of dollars. The downturn also illustrated the marginal character of an ugly resource. Extracting oil sands not only costs more than other hydrocarbons; it also sells at a fraction of the price of West Texas crude due to its poor quality. Jeff Rubin, the former top economist at one of Canada’s biggest banks, recently noted that bitumen still “trades at anywhere from a 25 to more than 50 percent discount to world oil prices, rendering it the cheapest-priced oil in the world, with one of the highest production costs.” That sort of fragility makes Canada’s heavy product highly vulnerable to oil price volatility, as well as carbon pricing.
The fire did what no politician has yet contemplated: It temporarily shut in a million barrels of oil sands production due to worker shortages and safety concerns. Rubin and other analysts have duly noted that large production increases from U.S. shale deposits and Canada’s oil sands are largely responsible for the global supply glut. A sober government might note that new proposed pipelines would make the glut worse and possibly drive prices down further. The solution? Chart a course toward curtailing production by a million barrels a day with effective carbon pricing. It’s either that or politicians drunk on the illusions of oil wealth could wait for a carbon-constrained world to exact more punishing terms later.
That’s the blunt choice facing the Trudeau government: It can act now to save Canada’s endangered northern forests and honor the country’s commitment to a green future, or it can support a doomed and ruinous crude. It can’t do both.
Any clear-eyed observer would realize that high-cost, high-carbon oil sands extraction must shrink over time. Canada gambled on a resource boom that has fizzled and overproduced a high-risk “garbage” crude. Carbon pricing and climate change — opportunities and risks, respectively, the country collectively denied — point to only one rational destiny for the oil sands: contraction. And so, now Trudeau must act unconventionally, boldly pushing his oil-exporting nation to lead the charge against climate disruption.
Photo Credit: Anadolu/Contributor