Back in the early 1970s, the Alberta government effectively made a Faustian bargain. It allowed the oilsands industry to keep on mining, despite the sector not knowing how to clean up its fluid tailings waste — the assumption being that future technologies would solve the problem. Unfortunately, no silver bullets have been discovered, and the industry has kicked the can down the road on this mess for the last 50 years. In the meantime, the oilsands’ tailings ponds have grown so massive they impound a globally unprecedented 1.3 trillion litres of toxic waste. These tailings are unlike any other industrial by-product in the world; they contain residual hydrocarbons, a cocktail of toxic chemicals, and fine particles of clay and silt that remain suspended for centuries in a sort of artificial quicksand.
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This grim situation should deeply concern all Canadians. By allowing oilsands tailings ponds to continue to grow, the Alberta government is signing up all of Canada for decades of further uncertainty and risk. If any of these ponds were to breach, an unimaginable environmental disaster would result, affecting the Mackenzie River Basin as far as the Arctic Ocean. Moreover, according to recent estimates by Environmental Defence Canada, these ponds represent as much as $50 billion in total clean-up costs — of which only $1.3 billion is held in securities. All of the major political parties in Alberta seem strangely quiet on one of the largest fiscal issues facing the province. Should the oilsands mining sector face bankruptcies in the coming decades, the environmental and fiscal liability of these ponds would inevitably become a burden borne by Albertan and Canadian taxpayers.
We must face the uncomfortable reality that the future economic viability of oilsands mining in the context of the 21st-century global energy transition is uncertain at best. It follows that companies must be held accountable for addressing their environmental impacts today, while they are still around to do so. After five decades of procrastinating, the time has come for the Alberta government to finally step up and lift the substantial weight of these liabilities off the shoulders of Canadians.
Successive politicians in Alberta (both provincially and federally) have led the population of this province that everything was just jim dandy and in fact, it was Albertans who singlehandedly support the rest of Canada for decades. In addition, their Heritage Fund was something to behold, and now they have finally discovered that this much vaunted fund is just about broke. Yeah, those very fine politicians,including their super hero, King Ralph, used that money to cover shortfalls in the provincial budget for years on end. Yes, they certainly were good fiscal managers, weren't they?
ReplyDeleteAnd we here in BC have a massive mess to clean up due to Christy's very fine financial supporter being let off the hook as well.
It's the old "privatize profits and socialize risks" come back to bite us again. Alberta has collected from the private sector only 1/50 of the estimated cleanup cost. And now we're stuck because there is no mechanism to make oil companies pay for the costs.
ReplyDeleteAlberta had its chance to collect the cleanup costs, but unlike Norway failed to provide for the future by collecting substantial royalties. Instead, Alberta chose to become an oil company tax haven, with companies like Chevron moving their operations to Alberta to evade taxes. In fact, Chevron Canada paid almost three times as much tax to Nigeria and almost seven times as much to Indonesia as it did to Canadian, provincial and municipal governments.
But it's too late now. It's cheaper for oil companies to walk away from their Alberta investments than to pay for cleanup. The writing's already on the wall for the tar sands. Based on current and forecast oil prices, giants like Total and ConocoPhillips have sold off their Alberta assets; Petronas is currently looking to sell theirs. A tax or royalty increase big enough to cover cleanup costs will simply cause other companies to shut down.
Don't get me wrong - shutting down the tar sands now is precisely why Alberta should hike royalties and taxes. It's also why it won't do so. Alberta's and Canada's politicians won't shut down an industry that contributes so much to party coffers and offers so many sinecures to retired pols. They'd rather stick the public with the costs of cleanup.
Cap
ReplyDeleteLulymay, I disagree with your claim that Alberta "singlehandedly supported the rest of Canada for decades." For most of those decades the "have" provinces, usually Ontario, Alberta and British Columbia, all paid in to the equalization fund. And that line always ignores pre-OPEC Alberta. During that era Alberta oil was subsidized by the rest of Canada, west of the Quebec border. Alberta oil was sold to a captive market above the then prevailing "world oil price" in order that it could be profitable.
I discovered this first hand when I moved to Ottawa to pursue a career in journalism. I filled my VW bug in Toronto for 59 cents a gallon but when I reached Ottawa I refilled it for 20 cents a gallon less. From the Ottawa Valley east it was dirt cheap offshore oil at world price. The difference kept Alberta's oil industry healthy and profitable.
When OPEC drove up world oil prices, Alberta insisted the old deal be scrapped and it was. However, when world oil prices began to wobble, Ralph Klein tried to have it both ways demanding a price floor but no price ceiling.
There's a lot of self-serving bullshit in all that self-righteous martyrdom. And of course they have nothing in their heritage fund. Peter Lougheed told them how to manage their oil industry and how to husband the revenues. They ignored him. Norway followed Lougheed's advice - to the letter - and today they have the world's largest sovereign wealth fund. In September of this year it broke one trillion dollars US and it just keeps growing. They happily credit Peter Lougheed with their prudence and success.
Albertans are left to yet again print up bumper stickers that read, "Dear God, just give us one more oil boom and this time, we promise, we won't piss it all away."
I'm not letting go of this quite yet. You have to evaluate the environmental costs of the Tar Sands against the realized value after Alberta's profligacy. After 50 years of this farce they have almost nothing to show for it. With nothing to show for it, how can anyone justify this environmental time bomb and the harm those emissions are causing worldwide?
ReplyDeleteYou're right, Cap. Alberta has fallen so far behind the power curve that they're out of enforceable options. Companies exhaust the easy-money resources and, when the well becomes unviable, simply sell it to a shell company. The oil giants can bugger off leaving the shell company to go under when the environmental bill comes due.
A fellow I know who has his own corporate finance shop says the Tar Sands will keep ticking along no matter how bad the oil price gets because neither the companies nor the provincial government can afford to acknowledge bitumen as a stranded asset. As a strategic asset, it's a Potemkin Village.
Mound: sorry, I must have left out a word in my first response. What I meant was that AB politicians had their citizens convinced they were "single handedly supporting the rest of Canada". I personally never believed that myth, and am old enough to remember when Alberta was on the receiving end of transfer payments.
ReplyDeleteSorry if my typing got ahead of itself and mislead you.
ML
Lulymay, I think I mis-read your comment. Confusion cleared. Thanks.
ReplyDelete.. Mainstream Canadian Media is doing essentially nada regarding the reality of tar sands and fracking. Pundits & vested interests utilize mainstream media to trumpet 'growing the economy' and Jobs Jobs Jobs.. to 'tidewater' we must go.. its 'nation building' ethical & needs to be part of school children's curriculum.. blah blah woof woof.. ad nauseum.. onward to the Rapture.
ReplyDeleteWhen mainstream media is forced to its knees.. we may achieve coherence & concern, instead of the constant spew of sheer nonsence and echo chamber on behalf of captured government & political parties. Thank you Rex Murphy from your high altar of know it allism.. you're a true Harper et al cabin bumboy.. and I could rattle off dozens upon dozens of similar suckhole political animals.. still beholding to the pseudo intellecualism of Tom Flanagan, Stephen Harper/Ray Novak, Brad Wall.. and seemingly, Justin Trudeau.. handmaidens or cabin boyz to Big Oil.. take your pick.
I won't even touch on fracking in this comment.. the poisoning of any land or water unfortunate enuff to have 'wealth' buried in its 'soil' or bedrock. 5,000 feet deep ? No problem ! They can frack it out.. get it off to Asia or the Gulf Coast along with diluted bitumin.. At all cost we must as Canadians be loyal to the neverending 'grow the economy' via pipelines for Asian supertankers fable. Bitumin or LNG .. take your pick. the wondrous solution to help us on the way to the Rapture.. and if most of our environment and species are extirpated.. well that's a neccessary 'step' to reach the distant 'promised land' .. They have an extreme ally in Donald Trump and the GOP of course.. and 'we' don't want to disturb the elephant that's ready to shit all over us.. now do we.. so we can just be compliant.. and weak assed accordingly.. not to mention raise the bar internally via elected & unelected political operators.. I can no longer describe them as 'public servants' .. they are at heart, public extirminators of our environment for 'political gain' and votes
It is disappointing to imagine that our Parliament and the Alberta government may be fearful of acting lest it expose bitumen as a "stranded asset" and trigger a major economic downturn in Alberta and elsewhere.
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