Thursday, May 17, 2018

Vice Runs the Trans-Mountain Numbers. The Results are Shocking. has analyzed the unmentioned but very real costs associated with the Trans-Mountain pipeline and the numbers are, dare I say it, "appalling."

What's interesting is that the Vice numbers only encompass "upstream" costs, extraction and transmission to "tidewater." Not included are the "downstream" costs, the refining of this crud and the emissions from  burning the high-carbon petro-sludge.

Kinder-Morgan promises that the pipeline will bring a windfall of $2.3 billion a year shared among the federal government, and the provincial governments of Alberta and British Columbia. That's where it all gets very murky.
Although Canada’s government agrees there are real costs to decisions that result in releasing more CO2 into the atmosphere—costs that are reflected in our tax bills, insurance claims, and ill health—politicians never seem to total up those costs. Here, we gave it a shot.
SCC - The Social Cost of Carbon
Canada and the US have assessed the cost of those impacts at C$45 per ton of CO2 (all figures in Canadian dollars). This is known as the social cost of carbon, or SCC: a monetary measure of the incremental damages expected from an additional ton of CO2 in the atmosphere. 
Some experts say $45 is far too low. One Stanford study, published in 2015, concluded that $275 is closer to the mark.
Production and processing of an additional 590,000 barrels a day to fill the new TMX pipe would emit 13 to 15 million tonnes of CO2 a year, according to a 2016 report by Environment and Climate Change Canada (ECCC). These are called upstream emissions, while downstream emissions are produced by the refining and burning of the product.

Still, upstream emissions of 15 million tonnes of CO2 a year is lot: It’s equivalent to adding another 3,750,000 passenger vehicles on Canadian roads. 
So 15Mt of CO2 per year, at a social cost of carbon (SCC) of $45 per tonne, means TMX would result in $675 million a year in economic impacts. That number will climb over time: As emissions accumulate in the atmosphere, so does the cost of damage from every additional tonne of CO2 emitted. In 2030, the SCC is expected to rise to $54.50, pushing the climate damage from the pipeline to $817 million a year. 
Of course, it’s not just Canadians who will have to deal with this. The impacts will be global, with the poorest countries hit hardest.
Experts continue to debate how accurately SCC reflects the real costs of climate change. Economists Joseph Stiglitz and Nicholas Stern, for example, wrote in 2017 that current SCC estimates “fail to consider many vitally important risks and costs associated with climate change.”

Specifically, the SCC used today fail to account for biodiversity losses, ocean acidification, long-term impacts on labor productivity and economic growth, impacts on the poorest, as well as the possibility of extreme and irreversible changes, they said.
This suggests the $45 SCC is likely too low. I ran the numbers with the $275 SCC estimate published by Stanford University. In that case, the economic costs of the upstream emissions of the TMX expansion that Canadians and the rest of the world will pay is just over $4.1 billion a year. For comparison, Alberta’s entire royalties from all tar sands operations totalled $1.48 billion in 2016-17, which was more than the previous year.
To summarize: The climate impacts of the TMX will cost at least $2.1 to $8.7 billion upfront, and at least $675 million a year [up to $4.1 billion per annum], for as long as the pipeline operates. As for the downstream emissions of 105 Mt per year, maybe someone else will foot the bill?
Maybe we should do the planet a favour. Scrap this pipeline and just go back to flogging asbestos to the Third World again.


Troy said...

It's insane. Somebody needs to slap our PM upside the head, and let him know he's got Canada backing up the wrong industry. The tar sands are dead. They're done. It's sunk cost fallacy in trying to keep 'em going. There's no more profit to be had.

Just a few days ago, a university released the results of experimentation in cheaply producing carbon nanotubes, which if implemented could well improve every type of new technology now coming online.

Graphene production too is undergoing serious study with breakthroughs happening frequently enough that I can't help wondering, why isn't Canada, why isn't BC in on these discoveries?

We should have been full bore on these concepts decades ago, but the allure of profits from the tar sands blinded our leaders like fools.

Carbon nanotubes. This is the stuff straight out of science fiction. It's like fiber-diamond. And it could improve computers, insulation, concrete, you-name-it. And what does BC have in abundance? Coal. We're wasting away a precious resource that could well change the world. We could reduce dependence on the mining of rare metals in China. We could make aluminum as strong as steel. We could make concrete that could withstand the worst impacts of weather. Fire-retardant fibers. Better wear-resistant tires. Better batteries (10x better than what's on the market today! which is absolutely incredible, because electronic engines now rival gas and diesel powered engines).

This is what we should be pursuing as a nation. That we aren't is a complete and utter disaster of leadership.

There's only a short time frame in which we can mitigate the worst of climate change effects in the future. It's stark. It should be, at least. But Canadian leadership is failing. Utterly useless governments.

The Mound of Sound said...

I did a post back in February about the six largest corporations in the world and how they're all situated in California and Washington. They're all technology based companies, and there's a swarm of innovative high-tech companies just behind them.

I contrasted that with Canada's three biggest corporations. They're all banks. America has this dynamic vitality. We have banks. Banks. Record-breaking profits, year upon year, and virtually zero contribution to the economy.

I hope to do a post on that in the next few days incorporating a few insights on the "mortmain" nature of banks from US economist, James (son of John K.) Galbraith. Once you read that, let's revisit this discussion.

Anonymous said...

"As for the downstream emissions of 105 Mt per year, maybe someone else will foot the bill?"

That would be China. Their dictator-for-life says he might start reducing emissions in 2030. But this whole social-carbon-cost thing – well, he's not really a people person. As far as he's concerned, the people can bear the social costs themselves!

Of course, Chinese oligarchs are kinda like Western oligarchs: really tight-fisted with their billions. They expect to be paid rent for sitting on top of their mountains of money. Paying out money to the little people – that's preposterous!

Owen Gray said...

It's standard neo-liberal economics -- privatize profits and socialize losses.

The Mound of Sound said...

Owen, the more I learn about the politics and economics behind this pipeline the more baffling it becomes. There are so many aspects that appear counter-intuitive, even bone-headed, and then the back-stories begin to emerge.

I'm beginning to think that Trudeau is working to protect the Canadian banks, institutional lenders, pension funds, etc., that now stand in considerable jeopardy on their Tar Sand investments.

It wasn't the great revenue potential that has caused some majors, including Norway's StatOil, to cash out of Athabasca "while the gettin's good."

It seems no coincidence that Ottawa and Edmonton have turned aggressive. It may be the measure of their desperation. It seems Kinder Morgan also smells blood, sees these Canadian governments as sufficiently weak that the Texas giant can dictate terms to them.