The Role of the Federal and Provincial Governments in Compliance with Kyoto Protocol - Essay Example

The Role Of The Federal And Provincial Governments In Compliance With Kyoto Protocol While Increasing Oil Gains In Alberta. One issue that has constituted a cause of worry, and thus a rallying point for the world today, is climatic changes as it affects human living conditions on the planet and the grave implications it holds for the futurei. The problem of climate change is a global challenge that goes beyond just environmental issues; it constitutes a major political, economic and social challenge to all nations of the world. Apparently, this challenge is borne out of the fact that the manner in which human beings respond to the environmental problem of climate change will have grave consequences for economic conditions and living standards around the worldii. Naturally, the Earth's climate has always varied in content and composition, with man-made emissions accounting for less than 2% of green house gases - gas considered destructive to the Earth's climateiii. Over the past century, man-made emissions have increased markedly and the vast majority of scientist, in a growing volume of established studies, have concluded that the earth's climate is changing rapidly due to the alarming amount of green house gases released into the atmosphere as a result of human activitiesiv. The gases that are categorized as Green House Gases include: carbon dioxide, nitrous oxide, methane, chlorofluorocarbon, hydroflourocarbons and tetraflouromethane. Of these gases, carbon dioxide is the most prevalent and appears to carry the largest chunk of green house gases emitted by human activities. Scientist have demonstrated that these gases accumulate in the atmosphere, and that in large concentrations, they are capable of trapping heat within the earth's surface and in the process, overriding the planet's natural climatic variability resulting in irreversible climatic changev. This essay therefore intends to look at the problem of green house gas emission as it affects Canada's oil production, especially in the Alberta oil sands. The paper will specifically analyze how the federal and provincial governments are working towards solving this problem, with respect to the moral and legal obligations imposed on the country through the ratification of the Kyoto protocol and the competing interests of oil companies. The federal and provincial government, though sincere about attaining the emission reduction targets set by Kyoto, do not want to compromise the wealth that accrues from the Alberta oil production. In essence, though emission reduction is gradually being achieved through the several policies and programs, the oil companies are still allowed to increase their green house gas emission, accounting for this through the purchase of emission permits, either domestically or through international alliances. From this, it can be inferred that the oil companies are willing to cooperate with the government in achieving emissions reduction, as long as it does not impact negatively on their profits. This essay will demonstrate the tensions and compromises made between the governments and oil companies in their attempts to satisfy both economic and environmental concerns. In doing so, the first part of the essay shall take a look at the idea of ecological modernization and its relation to the Kyoto protocol. The essay will then progress into an analysis of the underlying rationale behind the Kyoto protocol such as reduction targets imposed on the country and its effect. This will then be followed by a description of the Alberta oil sand projects, the huge revenue source it portends for the country and the problem of green house gas emission. The concluding part of the essay will look at the policies, programs and incentives the federal governments, provincial governments and partnering oil companies have put in place towards complying with the Kyoto standards, while at the same time making the best of the Alberta oil opportunity. The idea of ecological modernization has taken center stage in regards to the Alberta tar sands issue. Ecological modernization is a prescription for reform that states it is feasible and desirable to conserve the environment while simultaneously developing in the economic and social aspects of the country. The process of ecological modernization can only be achieved through technological advances. Studying the Alberta tar sands issue, one must acknowledge the use of technology by oil companies in the process. The desire to be seen as environmental friendly, while maintaining their constant flow of revenue has seen many Canadian oil companies investing several billions of dollars into the research and development of better technologies that reduces the negative impact of their activities on the environment. In Alberta, many of the major oil companies have committed to using special machinery to extract the oils from the tar sands. These 'special' machines are intended to help reduce the negative environmental effects associated with the oil extraction process. However, it would be nave to believe that these attempts were 100% environmentally friendly or even the best that these oil companies could do. One of the major issues here, which is probably of no surprise, is the conflict between the desire for greater revenues and the issue of sustainable development. The root of the problem lies in finding a resolve or trade-off between economics and the environment. With an increasingly interconnected global economy and a marked increase in global energy demands - the demand for oil has become enormous, making the Alberta tar sands evermore alluring for oil companies. As a result of such global demands, many environmentalists, today, preach that the root of Canadian environmental dilemmas stem from increasing free trade - leading to a vicious cycle of environmental degradation. To resolve such environmental dilemmas, many have now shifted focus to the ideas of ecological modernization - and its impact can be found even in the Kyoto protocol. The central motive for the development of the Kyoto protocol has been to lower emission of green house gases around the world - relying on countries such as Canada to act as leaders and role models for others to follow. The principal growing concern in the midst of growing environmental problems is the plea for sustainable development. Preachers of sustainable development maintain that it is essential for us, today, to conserve the environment so that our future generations can also benefit from it. The future is the main issue - the future is one of the greatest concerns of the Kyoto protocol. However, with just about two years before Canada must start complying with its Kyoto target and with the flurry of activity in Canada's Alberta oil sands raking in increased revenue, it is important to assess the roles that the federal government, the provincial government and the affected oil companies have been playing in complying with the Kyoto targets for green house gas emission, in the light of the increasing wealth generated from the green house gas intensive Alberta oil sands projects. The oil sands or tar sands of Alberta are today recognized as a unique unconventional source of oil production in the world, establishing Canada as a major oil producing nation, second only to Saudi Arabia. Extraction of oil from tar sands is more expensive than conventional oil production but ever increasing world oil prices, depleting conventional sources of oil and continuing technological advances in oil extraction process have helped tar sands emerge as a competitive source of oil production by reducing the price differencesvi. Under current prices and with the available technology, 178 billion barrels of bitumen is recoverable which is just about 11% of the 1.6 trillion barrels estimated to be available initially. This recoverable quantity of 178 billion barrels would be sufficient to cater for Canada's crude oil demands for the next 250 yearsvii. The oil sands industry in Canada is poised to become a frontline business and is undergoing exponential growth since the very first oil sands development way back in 1967 commissioned under the 'Great Canadian Oil Sands Project. The oil sands development activities are intensifying by the day and positive effects on the economic sector of this development are already visible, both on the national and provincial scales. Contribution of oil sands to national oil GDP and overall Canada national GDP is picking up over the years. Similarly, in the provincial level, Alberta's GDP and employment statistics show positive trends attributable to the oil sands developmentsviii. However, oil sands developments and the associated economic and employment gains do not come without a price. The process of extraction of oil from oil sands is believed to have serious environmental consequences. Because oil sands are composed of sand, silt and clay, water and about 10-12% bitumen, oil extraction from these tar sands, can either be through surface mining from open pits, or through more technologically advanced methods that involve heating the bitumen from above so that it flows into wells and is then pumped to the surface, this is regarded as in situ extraction. However, almost 95% of Alberta's oil sands can only be developed through in situ recovery. Afterwards, special recovery methods, most commonly the injection of high-pressure steam, are needed to separate the bitumen from the sand. After being separated from the sand, the bitumen must be upgraded through the addition of hydrogen to convert it into synthetic crude oil that can be sent to refineriesix. Thus, while green house gas emission from the oil sands are rapidly increasing with increased synthetic oil production, oil sand extraction technologies and processes like cyclic steam stimulation (CSS), steam assisted gravity drainage (SAGD), thermal injections, also cause serious environmental damage. These alternate hazards add to the consequences of the oil extraction by generating emissions particulate matter, sulphur dioxide, nitrogen oxides and volatile organics which in turn causes air pollution and contributes to endangering livelihoodx. Besides these, oil sands development also contributes to other menaces such as destruction of swaths of boreal forest and wetlands by strip mining, huge consumption of water from the rivers (6 barrels of water/barrel of oil produced), water pollution and tailings dumping. It is argued that the tar sands produce more pollution than any other source of energy. In 1990, greenhouse gas emission from tar sands activities was reported to be 17 megatonnes; this is projected to cross 70 megatonnes by 2010 and is estimated to be the largest single addition to Canada's greenhouse gas emissionsxi. Canada has a vast reserve of oil sands that cannot be ignored, considering the economic gains that accrues from oil production, notwithstanding the moral and legal obligations both to the international society as represented in the Kyoto protocol, and to the citizens, for a cleaner and safer environment. The several government agencies point out the numerous efforts of both the federal and provincial governments towards the reduction of green house gas emission geared towards achieving the Kyoto set targets, while on the other hand, environmental protection agencies believe that the government has not done enough in this regard. Additionally, Bernstein pointed out that the main institutional constraints on climate change policy in Canada results from conflicts within the federal cabinet and the federal provincial relations. For example, the federal environment ministry traditionally took the lead on climate change although Natural Resources Canada (NRCan) leads on domestic implementation - the interests of these ministries are often at oddsxii. Despite the obvious limitations, the federal government has been committed to stand up to the Kyoto challenge. However, with a governmental change at the federal level it is hard to predict the future dedications at the federal level to the environment. This uncertainty of future federal commitment has followed after new PM Stephen Harper has publicly displayed his feelings that the Kyoto protocol is ineffective. Nevertheless, in the aftermath of the Kyoto convention, even before the ratification of the protocol, the Canadian government had already established the National Climate Change Process, saddled with the responsibility of determining the impacts, costs and benefits of implementing the Kyoto protocol and the various alternatives that were open to Canada for achieving the desired cut in green house gas emission. In continuation of this effort, on April 1998 the so-called '16 Issue Tables were established comprising hundreds of experts from government, industry, the academic sector and non-governmental organizations to provide advice and input into the identification, analysis and assessment of implementation options. The Issue Tables came up with extensive reports identifying a full range of options. The Issue Tables and Working Groups also analyzed the status of the different sectors of the Canadian economy and came up with a range of alternatives that could help the country meet its targetxiii. According to Bernstein, the first major policy response of the Canadian government to the Kyoto challenge was the organization of the '16 Issues Table' mentioned above. The result of this analysis was the formulation of a national strategy that has served as guidelines towards the Kyoto goal. The first part of this national strategy was released in 2000 as the Action Plan. The Action Plan was a five year program that is aimed at cutting Canada's green house gas emission by 65 megatonnes per year for the first commitment period of 2008-2012, which represents about one-third of Kyoto mandated emission cutxiv. Bernstein states that the federal government aims to achieve the largest percentage of emission cuts in the energy sector, primarily through a federal government plan to buy 20 percent of its electricity from 'green 'sources, such as wind or solar power, and from carbon sequestration in the agricultural and forestry sector. These two sectors each account for 20 percent of the proposed reduction, while another 25 percent will be achieved through international action (JI and CDM). The Action Plan also calls for increases in the use of ethanol produced by biomass, investing in the re-fuelling infrastructure for fuel cell vehicles, providing incentives and upgrading energy codes to improve energy efficiency of buildings, and a variety of incentive measures in nearly all green house producing sectors. In addition, it supports further research into assessing impacts and adaptation needs, and analyzing policy options such as domestic emission trading. To add steam to these policy initiatives, the federal government approved $500 million to carry this plan through, in addition to the $625 million earlier pledged over a five-year period in the 2000 budget. The Action Plan included financial incentives to stimulate sales of renewable energy sources and tripling of the amount of ethanol Canada produces annuallyxv, while the funds are virtually devoted to international programs and research incentives for technological innovations towards minimizing green house emissions of industrial and oil refinery process. Amazingly, even Alberta, the hitherto most resistant province to the Kyoto protocol, due to its stakes in the Alberta oil sands, appears to have shifted grounds. As reported by Bernstein and the Government of Alberta, the province is positioning itself to take advantage of the new policy initiatives and is taking the lead in pushing for action towards the Kyoto targets. In line with this, the province created the Climate Change Central in 1999 a non-profit corporation that is intended to create partnerships among various economic sectors, government and academics to develop technological advances that will lead to improved competitiveness and lower environmental impacts. In the wake of the Kyoto ratification, Alberta also developed one of the most detailed provincial policies on combating climate change, and has since then, always attempted to position itself as a technological leader in clean energy production and sequestration technologiesxvi. Obviously, irrespective of the effectiveness of the policy instruments developed by the Alberta province in reducing green house emissions, its commitments to a proactive implementation strategy and support for Canada's national strategy marks a significant shift from its pre-Kyoto position. Part of that shift can be seen in the Alberta government's ability to frame its climate change policy, following the national strategy, as setting a 'common course that both manages the risks of climate change and enhances economic competitiveness'xvii. Beside all the policy instruments, the federal government has put into place, over time, several effective and efficient climate change programs. Most prominent of these include the Large Final Emitters (LFE) that seek to regulate the green house emission targets for energy intensive industries, the expansion of the WPPI from 1000 megawatts (MW) capacity to 4000MW, a Renewable Power Production Incentive (RPPI) to extend WPPI to 1500 MW of other low-impact renewable technologies, and a $4 billion Climate Fund to provide incentives in proportion to emission reductions achieved by any green house gas reduction project. Other climate change programs put in place by the federal government also includes the popular EnerGuide for Houses grants to help homeowners make energy-efficient renovations; the one-cent-per-kilowatt-hour (kWh) Wind Power Production Incentive (WPPI) that has made possible a dramatic expansion of low-impact renewable energy production; and Canada's Energy Efficiency Regulations that set minimum standards for energy-using appliances. All this programs are meant to cut down on green house emission, complementing the several emission permits that the federal government has purchased in international and domestic dealsxviii. However, the government cannot achieve the emission reduction targets on its own, without the cooperation and collaboration of the oil companies in Canada. Analysts have always argued that oil companies will be reluctant in cooperating with governments towards emission reduction. A good indication of this fact is that despite all the policy initiatives of the government, there has been a continuous support for the interest of the oil companies in the Alberta oil sands industry. Government policy is thus trying to advance in two diametrically opposed directions. On the one hand, the government seeks to meet a legally binding and internationally urged commitment to cut green house gas emissions. On the other hand, it is providing strong support to the rapidly expanding Alberta oil industry. Federal government support for the oil industry comes not only in the form of public expenditure, but in the very policies the government is proposing to deploy under the Climate Change Plan for Canada. Thus, while the oil extraction process in Alberta oil sands projected doubling of emissions between 1990 and 2010 contributes 72 Mt to Canada's "Kyoto gap" of 240 Mt, and is the single biggest reason why the gap is so large. Yet the federal government is proposing to require the oil industries to reduce their annual emissions by only 15%, or 22 Mt, below the business-as-usual level by 2010. This amounts to allowing the oil companies to increase their emissions by 69% between 1990 and 2010. The actual increase could be even greater because the government is proposing to set the targets for oil companies in terms of emissions intensity (emissions per unit of production), which means that emissions increases due to production increases beyond the official business-as-usual projected levels will be permitted without limit. Allowing these emissions increases is all the more alarming, considering the fact that the federal government is proposing to give oil companies unlimited access to the international emissions trading market as a means of reducing emissions. Emission reduction credits valid for compliance with the Kyoto Protocol are currently being offered for about $10 (Canadian) per tonne of carbon dioxide equivalent. For the production of synthetic crude oil from oil sands, the most green house gas-intensive part of the oil industry, this represents only about 80 cents per barrel of oil xxvii. Fuller demonstrated the emission permission deals that serve as the oil companies' commitment to a better environment, when he reported the contract between Suncor Energy and an American firm. Under the terms of the agreement, Suncor Energy will purchase the equivalent of 100,000 metric tons of emission reduction credits from Niagara Mohawk Power Corporation of Syracuse, New York, with an option to buy up to an additional 10 million tons of credits over a 10-year periodxix. Recently, almost all Canadian oil company have entered into one emission permit contract or the other all. However, in an attempt to take greater responsibility for their direct actions, oil companies in Alberta have been investigating new methods to preserve the environment. This is evident in the several millions of dollars they reportedly spend annually into developing new technological procedures that would further enable the companies to produce oil with lesser emissions. One of such cases of technological innovation is seen in Imperial Oil's 2003 corporate citizenship report. Imperial Oil reported that it has reduced refinery emissions by 10% and invested $380 million to improve environmental performancexx. From the analysis so far, one thing that stands out is the fact that most of the climate change programs have been aimed at cutting green house gas to meet the Kyoto targets, does not affect the oil sands of Alberta. It is apparent that the federal and state governments have allowed the oil companies to continue with their increasing emission of green house gases, with their only responsibility being the purchase of emission permits, either domestically or internationally. Thus the bulk of the emission cuts are achieved in other spheres of the Canadian economy and industry, while the oil companies are allowed to increasingly emit green house gases. Bramley, Derek & Woynillowicz of the Pembina Institute reiterated that oil sands constitute the single largest contributor to green house gas emissions in Canada, responsible for about one-half of the projected business-as-usual growth in national emissions between 2003 and 2010. According to Bramley, Derek & Woynillowicz, the difference between projected business-as-usual emissions in 2010 (the middle year of the five-year period to which the Kyoto target applies) and the Kyoto target is commonly referred to as the Kyoto gap. The Kyoto gap measures the amount by which annual emissions must be reduced below the Business-as-usual level to reach the Kyoto target. They further explain that due to the increasing activity in the oil sands, the federal government has had to upwardly review its estimate of Canada's Kyoto gap. The emissions projection produced by the federal government in April 1997 showed a Kyoto gap of 138 Megatones (Mt).In October 1998, the Kyoto gap was updated to 185 Mt, with 45% (21Mt) of the increase attributed to new projections for oil sands production. In December 1999, a further update resulted in a Kyoto gap of 199 Mt. In February 2002, the Kyoto gap was further revised to 238 Mt, with 18 Mt of the new increase attributed to an additional rise in projected oil sands production. In April 2005, the government stated that the Kyoto gap is "likely in the area of 270 Mt." It is widely understood that yet more increases in future oil sands production were, once again, a key factor in this latest increase to the gap. Some critics believe that it is impossible for Canada to meet the set Kyoto standards because it is estimated that oil production will have doubled the present levels by year 2010xxi. So, is it possible for oil companies to gain profits and at the same time limit greenhouse gases That is what it comes down to in the Alberta tar sands issue. It is a matter of sustainable development and ecological modernization or simply - balance. Oil companies have to balance the profits with the environmental degradation through a cost benefit analysis. The reality is when oil companies separate the oil from the sand; they must use huge amounts of water and natural gases. Using huge amounts of water depletes the resource of water that Canada has. Additionally, large amounts of water usage also disrupt the habitat and eco-system of the living species in that region. Oil companies such as Syncrude, a company that operates the worlds largest tar sands production, plan spending more then $30 million a year on science and technology in the regionxxii. Syncrude also extracts bitumen and puts back clean sand, reclaiming the land. This shows that oil companies can protect the environment while at the same time make profits. Syncrude claims that they have reclaimed 741 acres of land at the cost of $10 million a yearxxiii. On the same token, these oil companies use a lot of energy and water to extract oil from the tar sands. It is estimated by environmentalist that four to six barrels of water is extracted from the Athabasca River for every barrel of oilxxiv. Improvements in the water usage for the oil area are essential for conserving water for the future. Shell is a company with one of the most advanced technologies and has cut down water usage from 26.9 million cubic meters in 2003 to 22.2 million cubic meters in 2004xxv. Oil companies are trying to be more environmentally friendly while extracting oil - but are they being friendly enough This will be answered in the future as that is when the effects and aftermath of what is done to the environment now will be seen. However, environmentalist argue that these approaches to emission cuts does not put into account the health hazards of green house gases and by extension the welfare and wellbeing of the citizens. Some believe that the cost of slowing down production at the oil sands, in a bid to reduce the green house gas emission when compared to the health benefits derivable, does not constitute such huge loss or drawback to the national development as is being propagatedxxvi. This school of thought argues that the oil companies and other heavy green gas emitters should be limited to a certain amount of emission permits they can purchase, in a bid to actually make these companies reduce their green gas emission. Blomqvist et al argue that when the health co-benefits of green gas emission reduction is considered, it is more cost-effective to limit the amount of emission permits that the oil companies enjoy, otherwise its attempt at reducing the hazards of oil extraction from the Alberta oil sands will be seen as insincere. The oil sands of Alberta constitute a huge source of wealth for the Canadian government, but with the price of alarming green gas emission, at a time when the Canadian government has both moral and legal obligations to meet its Kyoto targets, and the danger of a polluted environment for its citizens. The federal and provincial governments have developed several effective climate change policies and programs aimed at making oil extraction in the Alberta oil sands less hazardous by creating a pattern that allows it to reduce its overall green gas emissions, despite the increasing productions at the oil sands. On the surface, Canada appears to be having "the best of two worlds"; it is effectively reducing its green gas emission through several policies and programs that cut down emission from every other facet of the economy, while at the same time increasing wealth from its oil sands by constantly increasing production and developments of the oil sands. However, whether this will ultimately lead to compliance with the Kyoto target, which must begin in less than two years, or reduce the health and environmental hazards associated with oil from the Alberta oil sands, is a question that does not appear to have an answer yet. References Alberta Energy and Utilities Board (2005). Alberta's Reserves 2003 and Supply/Demand Outlook 2004- 2013, June 2004 Revised Version. Bernstein, Steven (2002). International institutions and the framing of domestic policies: The Kyoto Protocol and Canada's response to climate change. Policy Sciences vol. 35 Issue 2 pg203 236. Blomqvist, ke, Seamus Hogan and Milan Jayasinghe (2004). Improved Health Benefits And The Kyoto Protocol: The Role Of Air Quality Regulation. Policy Options, March 2004 pg 69-71 Bramley, Matthew and Clare Demerse (2006). Climate Change, Kyoto and the New Federal Government: Concerns and Expectations. The Pembina Institute, April 2006 pg 1-8 Bramley, Matthew Derek Neabel and Dan Woynillowicz (2005). The Climate Implications of Canada's Oil Sands Development. The Pembina Institute. BACKGROUNDER November 2005 pg 1-15 Canadian Association of Petroleum Producers (2005). Canadian Crude Oil Production and Supply Forecast 2005-2015. Canadian Manufacturers and Exporters (2002). Pain Without Gain: Canada and the Kyoto Protocol. Canada Business Network. Available online at Climate Canada (2000). A Canadian Lens On Global Climate Change. International Institute for Sustainable Development vol. 1 No.1 pg1-7 Environment Canada (2000). Climate change: Budget 2000 overview. Last updated 29 February. Available at www.ec.gc.ca/budget/cc _e.htm Fuller, Jim (1998). Industry Shifting Gears -Seeking Solutions. Global Issues USIA Electronic Journal, Vol. 3, No. 1 Government of Alberta (2000). Partnership Key To Alberta's Position Leading Into Joint Ministers' Meetings On Climate Change.' Press Release And Backgrounder From Halvar C. Jonson, Minister Of Environment. Edmonton Govinda R. Timilsina, Nicole LeBlanc, Thorn Walden (2005). Economic Impacts of Alberta's Oil Sands. Canadian Energy Research Institute, Study No. 110, ISBN 1-896091-47-4, National Energy Board (2004). Canada's Oil Sands: Opportunities and Challenges to 2015. 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