New York, New York – Prudent greenhouse gas regulations can safely limit emissions in Canada’s oil sands while allowing robust development, according to a new report from the Council on Foreign Relations (CFR).
The report said that oil sands production delivers both energy security benefits and climate change damages, but warns that both are often overstated. According to the report, the economic and security value of oil sands expansion will likely outweigh the climate damages, but that these cannot and must not be ignored, and will become more important over time.
“Smart regulation can place a fair and reasonable price on the oil sands’ greenhouse gas emissions, providing the right incentive to reduce then, but ill-conceived regulation could undermine U.S. and Canadian climate and security goals,” said Michael Levi, author of the report. He said that is important to integrate U.S. and Canadian cap-and-trade systems, and warned against the risk of a Canada-only cap-and-trade scheme, and an ill-designed U.S. low-carbon fuel standard.
The rep0rt said that the development of Canada’s oil sands is not the “climate catastrophe” that some claim, and while the sands’ lifecycle greenhouse gas emissions are greater than those associated with conventional oil, the total emissions are equal to less than 0.1 per cent of the global total.
Levi also assessed six dimensions of energy security, including oil prices, vulnerability to supply shocks and terrorism, and wealth transfers to hostile states, and concluded that while the energy security benefits are real, the Canadian oil sands are not central to energy security. “Because oil is essentially traded on a global market, (the security benefits of oil sands are) not as large as some might intuitively assume,” he said. “Oil sands exploitation will not fundamentally change the global oil picture.”
The report urged U.S. policymakers to balance energy security and climate goals by working with Canada to promote strong incentives to cut emissions associated with each barrel produced from the sands, without directly discouraging production itself.