Coal condemned

During the last decade, the majority of the OECD countries decoupled their economic growth from energy consumption. Normally these rise in tandem – a trend that persists in developing countries and world’s soon-to-be fastest growing and most populous nation, India.

This decoupling happened as developed nations shifted to providing services and building knowledge economies, which is less energy-intensive than industrial production and manufacturing. China too has started down this path. Policy-makers now talk of “decarbonising” the economy. That is, only producing and consuming energy which does not release greenhouse gases into the atmosphere and contributing to climate change.

Decarbonisation is currently focussed in the electricity sector where it is being helped along by policy incentives. Subsidies, guaranteed prices for electricity and tax-breaks dramatically boosted the growth in renewable electricity generation across Europe in the last few years. The liberalisation of Europe’s electricity markets and new regulation improving competition also played a role. Although, falling prices and technology gains spurred the sector’s expansion more than any government policy, particularly for solar power.

For renewables’ expansion to make any difference to greenhouse gas emissions coal-fired power production has to be tackled. Although it is cheap, burning coal releases significantly more greenhouses gases than other fossil fuels including gas in the electricity sector and oil in transportation. Europe’s aging fleet of coal-fired plants are also extremely inefficient at generating electricity compared to newer gas-fired units. A quarter of electricity in the European Union and almost forty-percent in the United States is still generated by burning coal. It is around two-thirds of the electricity mix in China where the resulting air pollution in its major cities is fuelling a sense of urgency.

Political leaders are aware of this danger and are acting to reduce coal production and consumption in many countries around the world. By 2025 all coal-fired power in the United Kingdom will be shut down according to current plans. New Zealand will close its two remaining large-scale coal-fired power plants in 2018. The provincial government of Alberta in Canada, where the tar sands industry alone produces more emissions than Portugal, has announced plans to phase-out coal power over the next fifteen years. China’s goal is to cap coal consumption in 2025 and accelerate its decline thereafter.

President Obama’s Clean Power Plan intends to restrict emissions from current coal-fired power plans, substitute coal with gas-fired or zero-carbon generation and impose strict emissions standards on new plants. The goal is to cut emissions in the electricity sector by a third relative to 2005 levels. Coal mining states have fiercely contested this “war on coal”, which is bound to be difficult for certain towns and regions whose local economy and workforce are dependent on coal mining, not just in the US. Nevertheless, coal needs to eventually exit the electricity sector if the commitments made by the US and 195 other countries at COP21 in Paris late last year are to materialise.

Yet, none of the above is enough to slow climate change. India is set to contribute the greatest share of growth in global coal demand in the future, mostly from increased domestic production. How it intends to reach its goal to produce forty-percent of its electricity from non-fossil fuel sources by 2020 is unclear. In Germany, coal’s resurgence in the power sector has cast a shadow over its achievements in increased generation from renewable resources. Angela Merkel’s government is working on a plan to phase out coal by mid-century. From the European Unions’s biggest economy this is too long to wait. Decarbonising electricity production by phasing out coal remains a long way off. Coal has been condemned by the world’s leaders but not yet replaced.

Canada’s tar sands: unburnable carbon

Canada’s tar sands contain some of the biggest proven oil reserves in the world. They are mainly found in Alberta. But mining these tar sands, to produce ‘synthetic’ crude oil, is expensive. The process also releases more greenhouse gases than conventional oil production does. If we are serious about arresting climate change then these reserves need to stay in the ground.

What are tar sands?

Tar or oil sands are unconventional natural crude oil sources that have a viscous, tar-like consistency. A mixture of sand, clay, water and bitumen, the sands are really a bio-degraded form of crude oil: “Old oil, [it’s] kind of like old wine that’s past its peak.”[i]

The bitumen part must be separated out and then upgraded into a synthetic crude oil (syncrude) before it can be further refined into petroleum products like gasoline and diesel.

Two different production processes can be used to extract the bitumen from tar sands: open-pit mining, used when oil-sands deposits are close to the surface; and in-situ mining, used when oil deposits are deeper underground.

Open-pit mining accounts for around half of all production. The process is destructive. First, forests must be cleared away. Then the tar sands are dug out, using enormous shovels, and they are then transported to processing facilities in trucks several storeys high.

Greenhouse gas emissions

‘Well-to-wheels’ life-cycle methodologies calculate the GHG emissions released in producing a petroleum product and getting it to the petrol pump. They don’t calculate emissions once you start driving. According to IHS CERA an Albertan tar-sands project releases between five and 15 per cent more GHG emissions from ‘well-to-wheels’ than does conventional oil production.

The extra emissions come from two main sources: fuel input and ‘fugitive’ emissions. Fuels used in open mining projects include diesel, electricity and natural gas – for trucking and steam production, and for upgrading the oil to create syncrude. (Syncrude then has to be refined again to obtain the final-use fuel.) Around 20 per cent of all Canadian natural gas produced serves the tar-sands industry.

Fugitive emissions are another problem. They stem from natural gas leakage, venting or flaring during mining. Venting is a process that releases any associated natural gas into the atmosphere; flaring burns off this unwanted by-product – because it’s not profitable to get it to a pipeline. 

Overall, the Canadian oil-sands industry generates emissions equivalent to Portugal’s – as a country. Portugal is ranked 56 out of 142 GHG-emitting countries worldwide.[ii] Open-pit mining also has the added effect of destroying Albertan boreal forest – a net carbon sink. All this makes Canadian tar sands development a significant net contributor to global climate change.

Who is the consumer?

Despite the emissions released during production, final-fuel combustion is ultimately more troubling. Emissions weigh heavily in the consumption phase, contributing 70 to 80 per cent of overall lifecycle emissions.

The US is Canada’s primary export market for syncrude. It is transported by pipeline to specialised refineries mostly in America’s Midwest. Around three-quarters then becomes gasoline and a quarter is turned into diesel, feeding domestic markets.

The controversy surrounding the Canadian-US Keystone XL pipeline project stems from US environmentalists’ opposition to production from the tar sands, since it is a particularly emissions-intensive source of crude oil. Yet, Albertan syncrude can still be imported by train, with or without Keystone XL, and transport by train has historically caused more leaks and accidents

Unburnable carbon

If all known oil reserves worldwide were extracted, produced and then used, climate change would occur on a dramatic, irreversible and dangerous scale. We have a lot of ‘unburnable carbon’. So we need to choose which sources, if any, we are going to develop. ‘Unburnable carbon’ refers to fossil fuels that can’t be burnt if the world it to limit carbon emissions so as not to trigger serious climate change.

Most oil that is easily and commercially producible around the world therefore needs to remain in the ground.

Tar-sands projects are among the world’s most expensive and marginal oil production projects – meaning that the cost of production is significantly higher than for conventional oil. In addition, tar-sands oil is only profitable when international oil prices are close to $100 per barrel. Canadian producers are already taking a hit. The International Energy Agency has estimated that a new Canadian oil sands project will cost up to 10 times that of a conventional project in the Middle East.

The economic cost

Research by the Canadian government and the Pembina Institute shows that Canada’s manufacturing slowdown is partly the result of the Canadian dollar appreciating. This has risen over the past decade as exports, mostly of crude oil, have risen. Essentially, the development of Alberta’s oil sands is hampering the manufacturing growth.

Continued reliance on commodity exports will divert investment away from the transition to a low-carbon economy. Being endowed with diverse natural resources, and having advanced manufacturing, service and innovation sectors, Canada has alternatives. Progress within more innovative and value-additive sectors is being overlooked, locking Canada into a high carbon-intensity development path.

The impact of tar-sands development on global climate change, though alarming, is not the only reason to discourage such development. They are not only of questionable benefit to the Canadian economy overall but are unlikely to remain profitable in a low oil-price climate.

Finally, as a significant GHG emitter, if Canadian politicians were to take a lead on climate change issues they could have a real political impact worldwide. Perhaps, the Canadian government and people could leave these particular hydrocarbons in the ground.


[i] The U.S Oil and Gas Boom, Ifri 2012

[ii] S. Dyer, M. Dow, J. Grant, M. Huot & N. Lemphers, Beneath the Surface : a review of the key facts in the oil sands debate, The Pembina Institute, 2013

Note: where unquoted statistics can be credited to the Pembina Institute.