An aerial view of a 400 ton truck dumping oilsands into a hopper for crushing and primary extraction at Suncor's base plant oilsands upgrading facility next to their oilsands mining operations north of Fort McMurray, Alta. on June 18, 2013. A new study has predicted that Canada would be left with the highest level of unburnable oil reserves because the bitumen in the oilsands is so expensive to get out of the ground and get to market. Photo: Ryan Jackson / Edmonton Journal Most of Canada’s oil riches should stay the ground, according to an international study that has deemed 75 per cent of Canada’s oil and all the Arctic’s fossil fuels “unburnable.”
The study, released Wednesday by the journal Nature, is one of the more comprehensive and provocative looks yet at the energy transformation needed to limit global warming.
Many of the planet’s fossil fuel resources should never be used, it says, with Canada standing out of as one of the big losers.
If the international community lives up to pledges to limit global climate warming to 2 C, the study says 75 per cent of Canada’s oil reserves and 85 per cent of its oilsands bitumen will be “unburnable” before 2050.
And unless some “whizo technology” comes along to economically and safely exploit Arctic oil and gas, it too will be left in the ground, says co-author Paul Ekins, a professor at University College London and deputy director of the United Kingdom Energy Research Centre.
The study, which is sure to fuel debate leading up to international climate talks later this year, assessed a range of scenarios based on least-cost climate policies.
It concludes that a third of global oil reserves, half of gas reserves and more than 80 per cent of coal reserves won’t be needed before 2050 if the 2 C warming target is met.
The study found most of the coal reserves in China, Russia and the United States would remain unused along with more than 260 billion barrels oil reserves in the Middle East, which is equivalent to all of the oil reserves held by Saudi Arabia. The Middle East would also leave more than 60 per cent of its gas reserves in the ground if the planet is to stay within the 2 C “carbon budget.”
The study found Canada would be left with the highest level of unburnable oil reserves — 75 per cent of Canada’s oil is unburned by 2050, because the bitumen in the oilsands is so expensive to get out of the ground and get to market.
“Open-pit mining of natural bitumen in Canada soon drops to negligible levels after 2020 in all scenarios because it is considerably less economic than other methods of production,” the report says. It found capturing and storing carbon underground will do little to help with 85 per cent of Canada’s bitumen remaining “unburnable” even with aggressive carbon capture.
Oilsands stockpiled for processing at Syncrude site north of Fort McMurray as seen on April 1, 2014. (Darcy Henton/Calgary Herald) [(Darcy Henton/Calgary Herald) ]
The study does point to a big role for natural gas in a low-carbon world. Gas releases much less carbon than other fossil fuels and the study says it will be an important substitute for coal. Only 24 per cent of Canada’s reserves are deemed unburnable by 2050.
The study adds to a growing pile of reports showing fossil fuel use must be limited if governments and policy-makers are to meet the 2 C goal to avoid the worst impacts of climate change.
“It is obvious to everyone who is just a bit scientific about this that the earth’s crust is full of fossil fuels and to burn them all would cause grave damage,” says Mark Jaccard, an energy economist at Simon Fraser University, who has long called on the Canadian government to adopt a more sustainable energy policy.
The new study adds the “obvious point” that fossil fuels that are cheaper to exploit will win out over fuels that are more expensive to exploit, Jarrard said, noting the findings are “not good” for Canada’s oilsands, already being hammered by plummeting oil prices.
The federal government had little to say about the study findings and predictions, but it did say it foresees a big and continuing global role for Canada’s fossil fuels.
“The choice is whether to use energy from a secure, environmentally responsible, transparent country like Canada or to seek energy from less stable countries without responsible environmental policies,” said Alain Cacchione, media relations manager for Natural Resources Canada.
“Canada is a secure, reliable and responsible source of energy that is making a growing contribution to global energy security,” Cacchione said.
The Canadian Association of Petroleum Producers, which represents the oil producers, had no comment on the study. “It is quite technical in nature,” Chelsie Klassen, CAPP’s media relations manager said in declining to comment. She referred Postmedia News to Andrew Leach, the Enbridge Professor of Energy Policy at the University of Alberta.
Leach said by email that “in most credible policy scenarios, you’d see a pretty big cut in production.”
But he notes that Canada’s reserves are very large — so using 25 per cent of oil reserves between now and 2050 would lead to growth above current rates of production.
“I still think there’s a future for Canadian oil, but our government and the industry need to take these future policy risks into account,” Leach said.
“The biggest risk, and one which has been ignored both by governments and largely by industry is global demand-side policies — policies which reduce the effective price of oil producers will receive,” Leach said. “Those have much more impact on viability of oilsands and other Canadian oil assets than domestic policy will.”
Study co-author Ekins questions why energy companies have been investing so heavily in exploring for new fossil fuels. ”One might ask why they are doing this, when there is more in the ground than we can afford to burn,” he told a press briefing in London pointing to the estimated $670 billion spent globally on exploration in 2013. “That money might be better spent.”
He also suggests investors in fossil fuel companies might want to hedge their bets and diversify. “They may like to invest in a wider portfolio of energy sources that may be more consistent with a low-carbon world,” Ekins said.
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