Alberta’s new carbon tax

Alberta’s new carbon tax

Originally posted at Skeptical Science on December 31, 2015

http://alberta.ca/documents/climate/climate-leadership-report-to-minister.pdfOn Sunday November 22nd, 2015, Alberta’s new centre-left Premier, Rachel Notley, announced that the province would be introducing an economy-wide carbon tax priced at $30 per tonne of CO2 equivalent, to be phased in in 2016 and 2017. Observers had been expecting new efforts to mitigate emissions since Notley’s election in May 2015, but the scope and ambition of this policy took many by surprise.

Alberta, of course, is the home of the Athabasca oil sands and is one of the largest per-capita GHG emitters of any jurisdiction in the world. The new plan was nevertheless endorsed by environmental groups, First Nations and by the biggest oil companies, an extraordinary consensus that many would not have thought possible.

How was this done? I will try and explain the new policy as far as I can (the details are not all available yet), but the short answer is that a huge amount of credit is due to the panel of experts led by University of Alberta energy economist Andrew Leach and his fellow panelists. Not only did they listen to what all Albertans had to say, but they were thoughtful in framing a policy that is acceptable to almost everyone.

The background

Alberta is the wealthiest province in Canada, with a population of 4.1 million.  In 2013, greenhouse gas emissions were 267 Mt CO2 equivalent, about 65 tonnes per capita, which compares with the average for the rest of Canada of about 15 tonnes. Among US states only North Dakota and Wyoming are worse. Alberta’s fugitive emissions of methane alone amount to 29 Mt CO2e, about 7 tonnes per person, which is a little more than the average for all GHGs per-capita emissions in the world.

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So long, Keystone XL

After an approval process that lasted longer than World War Two, President Obama finally said “No” to the Keystone XL pipeline.

This is undoubtedly a major victory for climate activists who had a lot staked on the outcome. Obviously, this is a defeat for the oil sands industry, but it is also something of a blow to the Serious People who are in favour of action on climate, but who consider protesting against the construction of infrastructure to be naïve at best and, at worst, a counterproductive distraction from the real action of international negotiations and policy wonkery.

If you haven’t done so already, read David Roberts who writes most of what I’m going to, but does it better.

What the Serious People say

  • One pipeline is not going to make much difference to global emissions.
  • Oil sands’ emissions have been overstated.
  • Coal.
  • What matters is reducing demand, not restricting supply.
  • There are transportation alternatives to pipelines, like railways, and they are more environmentally risky.
  • It’s a distraction.

This is all true, more or less. But it is also beside the point. Continue reading

Keystone XL: Oil Markets and Emissions

Originally posted at Skeptical Science on September 1st, 2014

  • Estimates of the incremental emission effects of individual oil sands projects like the Keystone XL (KXL) pipeline are sensitive to assumptions about the response of world markets and alternative transportation options.
  • A recent Nature Climate Change paper by Erickson and Lazarus concludes that KXL may produce incremental emissions of 0-110 million tonnes of CO2per year, but the article has provoked some controversy.
  • Comments by industry leaders and the recent shelving of a new bitumen mining project suggest that the expansion of the oil sands may be more transportation constrained and more exposed to cost increases than is sometimes assumed.
  • Looking at the longer-term commitment effects of new infrastructure on cumulative emissions supports the higher-end incremental estimates.

President Obama (BBC) has made it clear that the impact of the Keystone XL (KXL) pipeline on the climate will be critical in his administration’s decision on whether the pipeline will go ahead or not.  However, different estimates of the extra carbon emissions that the pipeline will cause vary wildly. For example, the consultants commissioned by the US State Department estimated that the incremental emissions would be 1.3 to 27.4 million tonnes of CO2 (MtCO2) annually. In contrast, John Abraham, writing in the Guardian (and again more recently), estimated that the emissions would be as much as 190 MtCO2 annually, about seven times the State Department’s high estimate (calculation details here).

The variation in the estimates arises from the assumptions made. The State Department consultants assumed that the extra oil transported by the pipeline would displace oil produced elsewhere, so that we should only count the difference between the life-cycle emissions from the shut-in light oil and those of the more carbon-intensive bitumen. In addition, they estimated that not building KXL would mean that bitumen would instead be transported by rail, at slightly higher transportation costs. Abraham simply totted up all of the production, refining and consumption emissions of the 830,000 barrels per day (bpd) pipeline capacity and did not consider any effect of the extra product on world oil markets.

Neither set of assumptions is likely to be correct. Increasing the supply of any product will have an effect on a market, lowering prices and stimulating demand (consumption) growth. Lower prices will reduce supply somewhere.  The question is: by how much?

An interesting new paper in Nature Climate Change (paywalled, but there is an open copy of an earlier version available here) by Peter Erickson and Michael Lazaruares ,attempts to answer this question. The authors are based in the Seattle office of the Stockholm Environment Institute (SEI).
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The Editor-in-Chief of Science Magazine is wrong to endorse Keystone XL

Originally published at Skeptical Science on March 3rd, 2014

An editorial by the Editor-in-Chief of Science Magazine, Marcia McNutt, conditionally endorses the Keystone XL (KXL) pipeline. Her argument is that:

  • the absence of the pipeline has not stopped oil sands development and the building of the pipeline will not accelerate oil sands development;
  • President Obama can extract concessions from the Canadians to reduce emissions and upgrade the bitumen in Canada.

Both of these arguments are wrong; let me explain why.

Pipelines promote production

The Mildred Lake oil-sands plant in Alberta. Note the tailings pond behind the huge yellow piles of sulphur, a by-product of bitumen upgrading. The sulphur may come in handy later for use in solar radiation management. Photo Wikipedia

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