(June 6, 2011) New calculation; Substantial rise in pollution: report… Aldyen Donnelly responds.

After days of discussions with an oil and gas industry association, Environment Canada has confirmed a substantial rise in greenhouse gas pollution from the oilsands sector in 2009, along with data that casts doubts on whether the industry can continue to reduce emissions per barrel of oil produced.

While overall emissions from the sector rose by 11 per cent in 2009 — a new calculation based on revised Environment Canada estimates for oilsands emissions in 2008 — department spokesperson Mark Johnson said the data indicated “very little change in the total emissions intensity in oilsands” in 2009.

The details on the rise in emissions for the sector were left out of an inventory report on greenhouse gas emissions submitted by Canada to the United Nations.

But they were released gradually over the past week by Environment Canada through a series of emails in response to questions from Postmedia News.

The department declined all interview requests, except for one with a department official that was cancelled at the last minute without explanation.

Throughout this period, the department was communicating also with industry officials and environmental groups about its calculations.

The inventory report notes some of the gains previously touted by industry in reducing emissions intensity by 39 per cent since 1990 were now estimated to be a 29-percent reduction in emissions per barrel of oil produced.

The absolute annual emissions have almost tripled since 1990, according to the numbers released by Environment Canada.

An industry spokesperson said producers believe they can still make “incremental improvements” over the next five years to reduce the growth of emissions leading up to 2016, when the “lion’s share” of oilsands operations will shift to in-situ, or on-site, mining. He suggested this shift offers significant options for new innovations.

“Whether that’s less steam or whether it’s a different heat source, the bottom line is we will continue to reduce our intensity over time, and that’s what Canadians expect,” said Travis Davies, spokesperson for the Canadian Association of Petroleum Producers.

“There are still those incremental improvements that can be made and will be made. The real step change stuff does happen over time. But there’s a lot of potential.”

Although Postmedia News quoted sections of the report this week that suggested a 14-per-cent increase in emissions intensity as a result of two new facilities that were not operating at “peak efficiencies,” Johnson explained that this section referred specifically to a portion of pollution from the sector called “fugitive” emissions.

This category of emissions can result from accidents or unexpected situations in the course of production.

The data about the oilsands industry has garnered international media coverage at a time when Canada is trying to promote the sector in jurisdictions such as the United States and Europe.

It has also prompted frustration among both industry representatives and environmental groups who were struggling to find out why the government decided to exclude separate breakdowns for oilsands emissions after including them in the inventory report submitted.

Mike de Souza, The Montreal Gazette, June 3 2011.

Aldyen Donnelly comments: I agree that there is too much uncertainty about emissions estimates for the oilsands, but am very surprised to see reports that government officials have admitted this to the media.  (Very effective digging on Mike de Souza’s part.)  I have written about Canadian emission reporting regulation deficiencies and the implications for trade sanctions for years.  If this disclosure to Mike de Souze is an indication that Environment Canada is, for the first time in a long time, contemplating the required amendments to Canadian pollution and GHG (not just GHG) reporting rules, this is good news.  If this is just another oilsands story, it is a HUGE problem.

It is inappropriate to allow this discussion to focus only on the oilsands.  (I do not intend this as a defence of oilsands against increased regulation.  I continue to be an advocate for increased oilsands regulation.)  The real uncertainty factors for Canadian GHG emissions estimates in general — and for fugitive emissions, in particular — are higher in at least 5 other mainstream sectors reported in our inventory than they are for oilsands.  This does not make the deficiency of oilsands emission estimation/reporting acceptable.  But this is an issue we should be addressing on a broader basis.

Ever since 2006, I have repeatedly reminded our regulators that: “…in 2006 in the context of the Canada-US Air Quality Agreement Progress Report, the US EPA formally notified Canada that Canada will not be permitted to link any Canadian emission market to the US market unless/until Canada finally meets our prior obligation (committed to the US in 1991 but not yet delivered) to implement, in Canada, facility-level emission reporting standards that are comparable to US procedures.  The details of the final US GHG reporting rule, combined with the US definition of “comparable” is probably the single most significant determination of Canadian competitive risk.”

There are many major deficiencies in Canadian mandatory pollution and emission reporting rules. One major deficiency is that under US reporting rules, since the early 1990s, industrial facility operators are obliged to measure, audit and report pollutants and GHGs discharged from mobile sources (trucks, forklifts, etc.) that operate within the boundaries of or between industrial operations for all vehicles that typically operate at under 50 miles per hour.  This means, for example, that US mines and heavy oil extraction facilities are obliged to undertake and report to the US EPA much more comprehensive emission testing and auditing than has ever been required of comparable operators in Canada.

This is not just an issue for carbon markets.  Even in the absence of a common North American carbon market, US — and increasingly EU, Japanese and South Korean — regulations already and will increasingly discriminate against Canadian carbon-intensive commodity exports based on the arguments that Canadian emission reporting standards are deficient.

Deficient Canadian Emission Reporting Means Unfair Tariffs on our Exports to the US, EU, Japan and South Korea 

This is a HUGE problem because the US and EU both have very, very long histories of basing unfair transborder costs on Canadian commodity exports, basing the rationale for these unfair tariffs on the reported deficiencies in Canadian and provincial emission reporting regimes.  Some official US notices that our reporting regimes are deficient go back as far as 1984.  Some of the existing regulations behind existing substantial barriers to Canadian producers’ shares of US markets based on their (valid) argument that Canadian emission reporting regimes are deficient include: the US Reformulated Gasoline Standard (RFG, unfairly limits Canadian refineries’ share of US finished gasoline markets, passed into law in 1993 and in full effect between 1995 and 1997); the US Renewable Fuel Standard (RFS, discriminates against Canadian biofuels and bioenergy feedstocks on the basis of reporting deficiencies, derives from law passed in 2005, in full effect in September 2008, major amendments — called RFS2 — in effect this year); the California Low Carbon Fuel Standard (LCFS, being adopted by at least 14 US states, discriminates against all Canadian liquid fuels, both petroleum-based and biofuels, which discrimination is sustainable only as long as Canadian emission reporting mandates remain substandard).

Aldyen Donnelly, June 6, 2011