The Tar Sands – the Elephant In Canada’s Energy Future

It will be interesting as the federal election campaign unravels how the major parties deal with the elephant in Canada’s energy future-the tar sands.

Politicians and oil industry executives are almost orgasmic about the potential revenues from the tar sands, but few are talking about the huge climate impacts or the drain on already taxed water supplies caused by unsustainable drilling proposals.

The frenzy to expand the tar sands is reminiscent of the Klondike gold rush of yesteryear. Concerned about the hysteria surrounding the tar sands, a coalition of non-governmental groups stepped forward on December 1, 2005 to present a declaration laying out the minimum conditions for managing tar sands development.

The rising concern about impacts and laissez faire oversight is growing almost as fast as the international investment profile of the tar sands. The economics of the tar sands have benefited by significant federal and provincial subsidies, including a favourable royalty and tax regime – which some estimate to be over $1 billion.

The projected rapid rate of tar sands growth undermines“the ability of the federal and provincial governments to adequately protect our regional, national and global environment and climate.” In response to the risk presented by this rapidly growing industry, a dozen environmental groups across Canada joined together, calling on the government to “initiate and lead a transition towards a sustainable energy economy that ensures genuine and sustainable prosperity beyond the life of the oil sands.

The declaration outlines three conditions to be satisfied before a “license to operate” can proceed in the development of oil sands. These include:

  1. Addressing the demand for synthetic crude oil through legally binding automobile fuel efficiency standards;
  2. Underwriting the transition to a sustainable energy economy through a fiscal regime (specifically,the elimination of subsidies to the oil sands industry); and
  3. Implementing a regulatory and policy network that assures the maintenance of environmental integrity (requiring zero net greenhouse gas emissions from existing and new tar sands operations by 2020).

With oil prices above well above the US$25 per barrel needed to make the tar sands economic, vast amounts of previously uneconomic crude are now profitable to extract. But how come no political party – even those keen on market-based solutions – is questioning why the $1.2billion in subsidies should continue.

And why are the Liberals and the NDP- who say they support Kyoto – silent when it comes to the tar sands massive emissions, which will torpedo our efforts to reduce carbon emissions before they even really begin.

The lack of political will is the answer to both these questions.

As we head into an election cycle, we need to remember that the tar sands will not be around forever. Supporting the transition to a sustainable energy economy is imperative in conserving Canada’s future. We need to stop letting Ralph Klein, Bay street and the suits in Calgary determine Canadian energy policy.

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