How Canada can leave 83 per cent of its oil in the ground and build strong new economies
by Emily Eaton, Associate professor, Department of Geography & Environmental Studies, University of Regina
Phasing out fossil fuels means that today’s production is the peak, and that from here on out extraction and infrastructure must decline over time.
Burning coal, oil and natural gas accounts for nearly 90 per cent of the world’s carbon dioxide emissions. If we are to have a 50 per cent chance of limiting global warming to 1.5 C, more than 83 per cent of Canada’s oil reserves must stay underground.
Yet the newly re-elected Liberal government, which has put climate change policy at the centre of its agenda, is planning a long life for fossil fuels. Instead of keeping them in ground, the Liberals have committed to capping and reducing emissions from the sector and then offsetting any remaining emissions by 2050.
This would allow an indefinite future for fossil fuel production in Canada. It would require massive public investments in carbon capture and storage and create dubious accounting schemes that would move emissions off the books but not stop them from being produced.
Through the Corporate Mapping Project, my colleagues and I have been investigating the power and influence of the fossil fuel industry in Western Canada. This research shows that the industry only survives the politics of the climate crisis if it convinces politicians that net-zero will work and a future without fossil fuels is especially bleak.
But keeping 83 per cent of Canada’s oil in the ground doesn’t mean turning the tap off over night. It means winding down the industry using our skilled trades while also building out new lines of work that will remediate the land and focus on taking care of one another.
No future for Canada’s oil
Much of Canada’s oil must stay in the ground because Canadian oil is harder to reach — most of it is found in oilsands in northern Alberta, making it hard to extract, process and transport — and heavier than the light sweet crudes being produced in places like the Middle East. On a per barrel basis, Canadian oil produces more greenhouse gas emissions, costs more to extract and fetches a lower price on international markets.
In an era of climate action, Canada is attempting to keep its industry, which accounts for roughly five per cent of the country’s GDP, afloat through huge public subsidies estimated at between $2 billion and $63 billion per year. But the mirage of net-zero oil production is blind to the full life cycle of oil-related carbon emissions — it does not consider the emissions produced by consuming oil and gas, only those associated with producing the oil.
The oil and gas that is produced in Canada will be burned domestically and internationally in combustion engines and gas-fired power plants. These “scope 3” emissions, which can account for upwards of 90 per cent of the emissions associated with the complete life cycle of oil and gas, will no longer be tolerated in jurisdictions around the world trying to reduce their greenhouse gas emissions to zero.
Transition takes time
Phasing out fossil fuels does not mean turning off the tap tomorrow. It does mean that today’s production is the peak, and that from here on out extraction and infrastructure must decline over time, reaching close to zero production by mid-century.
This leaves time to plan appropriately and support fossil fuel workers and their communities in an orderly transition. If we start now, we have time to wind down one part of our economies while ratcheting up others like renewable energies, environmental remediation, energy efficient housing and low carbon work in the caring professions, including elder and child care, health care and education.
In fact for every dollar spent, the number of direct and indirect jobs created in these sectors far exceeds those in oil and gas extraction.
Some economies will be disproportionately affected — Western Canada and Newfoundland will feel the brunt of the effects. They — and rural areas — will need more support and attention.
What would the phase out look like?
There is significant debate about what an orderly phase out of oil and gas could look like. Some suggest the industries should be nationalized, so as to stop their powerful tactics of denial and delay. In this scenario Crown corporations would preside over the wind-down, shuttering the most costly and emissions-intensive production first, and investing the proceeds of oil production in the remediation and reclamation of oil infrastructure sites.
Over time, the public corporations would transition from extracting oil and gas to cleaning up oil wells, mine sites and pipelines, keeping fossil fuel workers employed using their existing skill sets.
A recent study looked at how California might limit fossil fuel production to reduce carbon dioxide emissions. When the state stopped approving new permits for oil wells, the natural rates of depletion of existing wells would cut production 70 per cent by 2030 and substantially lower greenhouse gas emissions globally.
Cleaning up the mess
Perhaps the most significant challenge in winding down the industry is how to clean up its vast infrastructure while ensuring that the public is not left to pay for it. Oil and gas companies often lease land for their infrastructure or to access their mineral rights where the surface is already being used for other purposes, such as farming and ranching, parks or private dwelling.
My research on rural oil-producing communities in Saskatchewan regularly turned up disgruntled landholders who were dealing with unremediated well and battery sites, and small pipelines. This infrastructure can leak oil, gas and salt water, affecting crops, emitting potent greenhouse gases and contaminating surface and ground water.
The number of inactive wells — wells that are not producing oil and need to be cleaned up — has grown precipitously in the past decade, and municipalities and landowners are complaining of unpaid property taxes and surface leases.
The Alberta Liabilities Disclosure Project highlights that the liabilities of the Alberta industry alone have been estimated at $58 billion to $260 billion. With only $1.5 billion held in securities, governments need to plan now for how they will recover the cleanup bill.
Governments could create public reclamation trusts, funded by increased oil and gas securities, royalties and taxes, that would employ oil and gas workers to clean up the industry’s infrastructure. By remediating the land they would be building the groundwork needed for the next economies.