20/20 on 40/40 by 2020

Alberta’s Environment Minister Diana McQueen stunned federal Environment Minister Peter Kent and petroleum industry senior executives at a meeting in Calgary when she floated a proposal that would require greater GHG emission reductions per barrel of oil and increase the cost of noncompliance.
This is a good news – bad news story.  The good news is that the Province of Alberta clearly understands it must do something more to address emissions.   It’s a breath of fresh air compared to the unsupportable assertions made by federal ministers that Canada is doing its part on climate change in response to the Obama administration’s signal that it intends to take action.
Canadian oil sands

Aerial view of McClelland lake fen north of Fort McMurray, Alberta, Canada. The Alberta Tar Sands are the largest deposits of their kind in the world. (c) Jiri Rezak / WWF-UK

The bad news is that the so-called 40/40 plan – reducing emissions per barrel by 40% and charging companies that exceed their emission limits a penalty of $40/tonne – immediately attracted criticism from those who do not want to take action.  Alberta’s proposal is a modest step that wouldn’t change the fundamental problem that oil sands emissions are climbing dramatically when Canada has promised to reduce emissions nationally by 17% .
The problem is one of simple arithmetic:   Oil sands production emissions can be understood as the product of the emissions per barrel and the number of barrels produced.   If the industry managed to reduce per barrel emissions by 40% from 2005 to 2020, the 1.1 million barrels per day (M bpd) produced in 2005  could grow  to 1.83 M bpd in 2020 without increasing emissions, or 1.59 M bpd if the oil sands sector was required to do its share to achieve the national goal of a 17% reduction. The Canadian Association of Petroleum Producers expects oil sands production to exceed 2 million this year and grow to 3.17 million by 2020.   Oil sands emissions would rise 73% over the 15-year interval when national emissions are supposed to decline by 17% – if the industry manages to achieve a 40% per barrel emission reduction.

The part of the 40/40 plan that hopes industry will achieve a 40% per barrel emissions reduction is purely hypothetical.   Could it be achieved?   Who knows?  For now, the 40/40 plan is not so much a plan as pie in the sky.   The only way to limit oil sand emissions is to limit production unless and until the industry discovers a way to dramatically reduce emissions per barrel.
Finally, the $40/tonne noncompliance cost to industry is too low.  It would be an improvement over the current $15/tonne, but industry would still find it cheaper to pay for noncompliance than to actually reduce emissions.
The Federal and Alberta governments and the petroleum industry are said to be engaged in ”intense negotiations” about emissions reductions.   Let’s hope someone at that table will do the arithmetic and come up with a workable plan to achieve Canada’s modest emission reduction goals without foisting that responsibility onto other sectors of the economy.   And, lest we forget, the modest 17% reduction on emissions to 2020 Canada has promised is just the down payment on deeper cuts we will need to avoid dangerous climate change.