Carbon caps and the future of oil sands growth: A reality check from the Fraser Institute
The Fraser Institute published a scathing report this week, suggesting the NDP government's carbon cap will kill growth in the oil sands and dramatically slash government revenues.
Without taking any climate change reduction targets into account, Canada's oil production is expected to rise to 5.8 million barrels/day by 2040, thanks mostly to increases in production from the oil sands.
In fact, much of that increase will come from in-situ extraction of bitumen, which is 30% more carbon intensive than oil sands mining due to high volumes of steam required to reduce the viscosity of the bitumen. Ironically, in-situ facilities are normally considered more environmentally friendly than mining - the plants have a relatively small footprint, use less water and do not produce tailings.
At current emission intensities, the authors estimate the 100 Mt emissions cap will be reached by 2024. With modest reductions in greenhouse (GHG) emissions acheived through improvements in technology, that ceiling could be extended to 2026.
The Fraser Institute estimates revenues from lost production will top $150 billion by 2040, and could potentially be as high as $250 billion. However, the report didn't calculated the fallout from lost capital investment in the province's energy patch.
Earlier this month, the provincial government set up an Oil Sands Advisory Committee to figure out how it will implement its Climate Leadership plan without destroying the province's economy. The review process is expected to take 24 months but the first progress report should be released to the public early in the new year.