Tarsands not just a Canadian problem With so many countries invested in Alberta, who should be responsible? By Laura Payton Published November 4, 2009

View story Email Comments To the Editor

With a little over a month left to go until the UN climate change conference in Copenhagen, Canada is taking increased criticism over its reticence to agree to new environmental targets. In particular, critics have taken aim at the government's strong support for the tarsands despite their significant contribution to greenhouse gas emissions.

But while Canada has taken a great deal of criticism over its massive oil extraction projects, many of the companies investing in the area—and profiting from it—are based outside the country. Some are headquartered in Western Europe, while others, like Norway's Statoil, are partially or even entirely state-owned. So, with billions of dollars in foreign capital invested in Albertan oil fields, is it fair for Canada to take all the blame?

Not only a Canadian operation

Canada's greenhouse gas emissions climbed 26 per cent between 1990 and 2006, with a 2007 Environment Canada report putting part of the blame on "large increases in oil and gas production." The fear over tarsands-produced GHGs was so significant that the head of the UN's renowned International Panel on Climate Change suggested in September that Canada put its tarsands development on hold until there are better-developed technologies for lessening the environmental impact.

The fact is, any hold on the tarsands would affect more countries than just Canada. According to the Pembina Institute, an environmental NGO that specializes in energy issues, there are at least four companies either partially or fully owned by other countries currently operating in the tarsands: Korea National Oil Co.; PetroChina; Sinopec; and Statoil. Among private companies headquartered in other countries, BP (formerly British Petroleum), Total SA, Shell and Imperial all have tarsands operations.

"It's largely not a Canadian operation anymore," said Elizabeth May, leader of the Green Party, pointing to the number of Texas-based companies working in the tarsands.

Ms. May says that although companies like Shell, BP and Statoil are from countries with good environmental records (respectively: the Netherlands, the UK and Norway), those standards don't necessarily apply when they're working in other countries.

"One must remember that transnational companies that have to abide by strict rules at home are not required to pay attention to those strict rules overseas," said Ms. May. "So we have the phenomenon that the investments being made by some of those corporations are heavily criticized in their home countries, but they're not regulated. The extra-territorial application of domestic environmental law is something that hasn't started to happen yet."

Norway and Statoil may be the most interesting example because of the unique combination of a state-owned company and a country with one of the world's best records on the environment. The company has faced a public backlash in Norway, with the country's biggest newspaper calling on Aug. 30 for Statoil to pull its investment out of Alberta. Earlier this fall, the Canadian tarsands even became an election issue in the country when most of the major political parties promised to pull out. The incumbent governing coalition won the election, leaving Statoil's $2-billion stake safe.

"I think there are many people in Norway who do actually see the inconsistency between Norway's commitments to reduce greenhouse gases and their state-owned company, which is obviously contributing to the problem elsewhere," said Simon Dyer, oil sands director at the Pembina Institute.

Joseph Doucet, Enbridge professor of energy policy at the University of Alberta, says the contradiction shows it's easy to criticize others. But the world is still consuming oil, and Alberta is seen as a safer source than countries like Saudi Arabia or Venezuela.

"It brings to light the distinction between the way we think of energy producers and energy consumers. The energy producers tend to be the focus and sometimes be portrayed as the bad guys...as the ones needing some kind of fix," said Mr. Doucet.

At the same time, he says Canadians have to be aware of how they're being portrayed.

"The global international view of Canada does have an impact on how we can do business and how markets are open and diplomacy and so on, so it is important," he added.

Truls Gulowsen, a Greenpeace Nordic campaigner, says Norway should bring Statoil back into line with the company's generally good environmental practices.

"Engagement in tar sands is a severe breach with this [reputation]," said Mr. Gulowsen in an email from Oslo.

"We believe the owners, in this case the Norwegian state and a number of institutional shareholders, have a key responsibility to ensure companies follow good environmental practice."

But Mr. Gulowsen also says Canadian regulations are surprisingly weak. In order to get in on Norway's oil resources, international companies must pay a 78 per cent oil tax, cede roughly 30 per cent direct ownership in all fields and use Norwegian subcontractors, he said. On top of all this are strict environmental requirements.

"Canada seems to have chosen a very different path, and may be left with all the costs, emissions and degraded environment," he said.

As a rich source of oil and gas exploration, the tarsands make up a large part of Canada's GHG emissions. That works out to 4.6 per cent of the increase since 1990, Environment Canada said in the 2007 report.

Most critics say it is up to the Canadian government to strengthen environmental regulations for the tarsands in order to help meet Canada's Kyoto commitments.

"The European Union as a group has met their Kyoto targets and the individual companies within the European Union, some have done much better than others," said Ms. May. "At this point, Canada's reputation is the pits."

Else Berit Eikeland, ambassador of Norway to Canada, said simply that she doesn't speak to any specific company's work.

"All Norwegian companies are expected to follow Canadian laws and regulations, and we don't comment on a particular company's activity in Canada or elsewhere," she said in an email.

A spokesman for Statoil says the company ranks high around the world for its environmental efforts. Statoil has three of the world's largest carbon capture and storage projects in the world and has two research centres in Canada.

"We work hard to reduce the carbon footprint of our operations around the world," wrote Peter Symons in an email.

Statoil isn't currently producing in the tarsands but plans to start producing up to 20,000 barrels per day in 2010.

One company that is working in the tarsands is Shell, a Dutch company. Wim Geerts, ambassador of the Netherlands to Canada, says his country expects Canada will do its share in the run-up to Copenhagen. He argues it's a bigger issue than just the tarsands, pointing to Canada's size and frigid winters as contributing factors to the amount of energy Canadians consume.

"It would be an oversimplification to have a one-on-one relationship between the production of oil from the oilsands and the issues at stake in Copenhagen," said Mr. Geerts. "It has to do with regulations that can or could be in place to contribute to [a new agreement in Copenhagen].

"Everybody who's active there and producing there will have to be conscious of that and have to have their production processes in such a way that it reduces CO2 emissions.... Companies like Shell are very much aware of that and acting accordingly."

lpayton@embassymag.ca