As COVID-19 put the world on pause, a decreased demand for oil sent prices plummeting, spelling disaster for the future of Alberta’s oil sands. The province continues to deal with a worsening economy and the impacts of climate change, and climate activists say a green transition might be the solution Albertans need.
While the reopening of many countries’ economies and cutbacks in production have now raised the value of West Texas Intermediate—the North American benchmark for oil prices—to $55.94 CAD from May’s historic low of -$48.24 per barrel, prices are projected to remain down for the next four years.
These predictions paint a grim picture for oil and gas in Alberta—an industry already facing criticism and losing investors prior to this crash.
In 2018, the United Nation’s Intergovernmental Panel on Climate Change released a report stating that, to avoid the most serious consequences of climate change, the world must cut greenhouse gas emissions by 45 per cent from its 2010 levels in 10 years.
Currently, Canada is not predicted to meet its 2030 emissions reduction target. Scientists say the world could be unrecognizable by 2050, and Canada’s unwavering commitment to the oil and gas industry is facing increasing criticism.
A study released in 2019 by the federal government found that Canada is warming at twice the global average rate, and even more so in the North. The effects of global warming are being felt coast to coast, and the price of climate change, both emotional and economic, is only increasing with time.
Meanwhile, recent data has shown that in 2020 alone, greenhouse gas emissions from the oil sands have more than doubled, and Canada’s overall emissions resulting from energy production have increased by over 20 per cent since 1990.
Still, no province is seeing the impact of climate change on the public wallet quite like Alberta, which has suffered 6 of the 10 most costly natural disasters in Canada’s history.
In the last decade alone, the province has weathered catastrophic flooding in 2013, which killed 5, the 2016 Fort McMurray wildfire, which displaced over 88,000 residents from their homes, and, most recently, this past June’s hailstorm in Calgary, causing $1.2 billion in damages.
Despite this, the Albertan government has been reluctant to draw a connection between the oil and gas sector, Canada’s largest source of greenhouse gas emissions, and the increasingly destructive toll of climate change on the province.
The concept of a green recovery comes from the popular Green New Deal, which advocates for a community-based transition towards a sustainable economy. Politicians worldwide have been vocal in their support of the movement; in fact, the European Union recently released plans for the European Green Deal to funnel billions of euros towards a green transition, social services, and investments in tech.
Within the EU, individual countries like Germany have released their own plans for a climate-focused recovery, and outside of Europe, South Korea, Chile, and some American states—like New York and California—have also made commitments to green recoveries.
The pandemic, by highlighting cracks in society, has pushed Canadians to embrace many dramatic social reforms. As the world begins to consider what comes next, is Alberta ready to embrace a green future?
The oil and gas industry has only been a serious contributor to Alberta’s economy for the last 50 years, but the province’s identity has become deeply rooted in the industry.
Alison McIntosh of Climate Justice Edmonton, a grassroots climate advocacy organization in Edmonton, A.B., said that the provincial narrative about oil and gas ties the industry to what it means to be Albertan.
“I’m a born-and-raised Albertan,” she told The Pigeon in an interview. “We all internalize a narrative that, even if you or your family doesn’t work in fossil fuels, that the good things that you have are because of it.”
This sentiment is clear in the public discourse about the industry. In May, both former Green Party leader Elizabeth May and Bloc Quebecois leader Yves-Francois Blanchet criticized the federal government subsidizing the oil sands, advocating for the prioritization of post-pandemic renewable energy.
In response, United Conservative Party Alberta premier Jason Kenney requested that politicians “stop kicking [Albertans] while we’re down,” and called criticism of the oil sands “unwarranted, […] divisive [and] un-Canadian.”
McIntosh knows from her outreach work that Albertans take climate change seriously, but she feels there is no mainstream outlet in the province to express those concerns.
“[Albertans] understand that climate change does pose a risk to themselves, to their livelihood, their families—and they understand that their government has a role to play,” said McIntosh. “But that’s not the political discourse that we have here.”
“Of course, the United Conservative Party [has] a pretty regressive worldview around the future for Alberta, […] but [environmentalists] don’t have strong allies at any level of politics.”
Julia Levin, a climate and energy program manager with Environmental Defence, a Canadian climate advocacy organization, explained that the strength of the oil and gas narrative in Alberta shields the industry from criticism.
“There are companies like Shell and BP in Europe that are really worried about their social license. That doesn’t seem to be the case yet for many oil and gas companies in Canada.”
Because of the polarizing political discourse in Canada surrounding oil and gas, the local industry doesn’t face the same scrutiny that is pushing European companies to go green.
With that being said, the global demand for oil is still high, and in discussions of an energy transition for Canada, the Canadian Association of Petroleum Producers (CAPP)—the country’s most influential oil lobby group, whose membership encompasses the majority of oil and gas companies operating in Canada—and the Albertan government often points out that the world continues to rely on hydrocarbons.
CAPP’s Executive Vice President Terry Abel feels the Canadian industry could potentially be a leader in responsibly producing the petroleum the world needs.
“We’ve seen over a 20 per cent reduction in the greenhouse gas intensity of the oil sands,” Abel said. “The economy and the environment go hand in hand. There will be no economic recovery without the energy to drive those industries.”
“And today, the reality is that the bulk of those industries are driven by hydrocarbon energy. That will probably change over time. That is the goal of everybody to change that over time.”
While a global reliance on hydrocarbons is indisputable, the narrative that an energy transition could happen in the near future is running out of time.
Oil is one of Canada’s biggest industries, and 96 per cent of it is produced in Alberta’s oil sands. The country is the world’s fourth largest petroleum exporter—but despite crude petroleum’s status as one of Canada’s most lucrative exports, many analysts have been suggesting that bitumen, the heavy crude found in the oil sands, is now essentially worthless.
The low worth is rooted in the Canadian standard for oil, Western Canada Select, having historically traded at a lower price than West Texas Intermediate, because of both the distance from the oil sands to American refineries in the Midwest and Gulf Coast, and the quality of the bitumen mined in Alberta. The thick oil is mixed with sand, water and clay, making it difficult to process and transport. As well, the mining process and resulting pollution in the area has given this Albertan oil a higher environmental cost than what yields from other sources.
The Oil-Climate Index, produced by the Carnegie Endowment for International Peace, responsible for ranking North American crude oil based on total emissions, places Athabasca DC SCO, a type of oil, at the top of its list.
These factors, as well a desire to foster an eco-friendly reputation, are behind the lost investments seen in the oil sands in recent years, according to Levin.
“Investors [are] seeing that the world is starting […] to transition away from oil and gas and, as that happens, the [oil sands] are most at-risk sector, and the first one that companies are cutting out because of their high costs,” she said.
Recently, Norway’s Norges Bank, the world’s largest sovereign wealth fund, divested from several Canadian oil sands companies because of the companies’ “unacceptable greenhouse gas emissions.”
Following that, in July, French oil and gas company Total wrote off $9.3 billion in oil sands assets and ended its membership in CAPP, citing long-term unprofitability because of the resource’s high production costs.
These divestments are only few of a growing number of European companies cutting investment ties to the oil sands, including Germany’s Deutsche Bank and London-headquartered HSBC.
Despite the industry’s role as a significant economic player in Canada, the oil sands industry has been losing jobs by the thousands, impacting the workers on the ground. Following 2014’s market crash, employment has been dwindling as oil prices fall, investors leave, and delays in pipeline construction limit market access.
The response from the Albertan government to retreating investors has been to defend the oil sands and criticize divestment.
Alberta’s energy minister, Sonya Savage, decried Total’s divestment from Canadian oil sands as “hypocritical,” in a release, and said that “international energy companies should, in fact, be increasing their investment in Alberta, rather than arbitrarily abandoning a source of a stable, reliable, supply of energy.”
She echoed these sentiments in response to the Norges Bank divestment, which she called “poorly informed and highly hypocritical.”
Comparably, Levin says that this response to international criticism is irresponsible.
“International players are leaving the oil sands because they’re criticizing a lack of environmental standards,” she said. “Lowering environmental standards […] and then calling companies hypocritical for their decisions to leave Alberta [is] not a smart policy. That’s not reading the writing on the wall.”
“Alberta has a choice, and Canada has a choice; either we commit to starting to manage decline [of the oil and gas sector] now, and take care of workers, or we could pretend that nothing’s happening.”
While investors have cited emissions to justify turning away from Canada, Abel noted that investment traditionally tracks the fluctuating price of oil.
“There’s been a lot of other things that have impacted investments in Canada,” the CAPP Executive Vice President said. “We have had a great deal of challenges getting some infrastructure built in Canada. Pipelines […] to markets in the United States have all been challenged and have taken a great deal of time to go through the regulatory process.”
“So, you can imagine, nobody’s going to invest […] unless they’re sure they can get their products to market.”
Addressing concerns about greenhouse gas emissions raised by investors, Abel stated that in discussions about the oil sands’ climate impacts the overall state of environmental regulation in Canada is often disregarded.
According to him, oil and gas industry leaders are required to monitor their environmental impact in numerous areas, including water and soil pollution, as well as the health of local wildlife and nearby communities.
“[Oil and gas] as an industry, spends almost more than all other industries in Canada [on environmental monitoring],” he said. “While some may focus on greenhouse gas emissions or policy, the reality is that in Canada we have some of the most stringent requirements. We’ve had a price on carbon in Canada before anybody else did.”
This comes as several environmental protections have been suspended by the Albertan government in response to COVID-19. In May, environmental monitoring in the oil sands was halted, indefinitely releasing companies from their obligations to observe methane leaks, test groundwater, or continue with wildlife monitoring—all programs intended to address serious risks posed to Alberta’s natural environments.
These include the Athabasca River and Wood Buffalo National Park, a UNESCO heritage site and Canada’s largest national park, which the United Nations had already slated to list as ‘in danger’ due to the government’s negligence in managing the environmental impact of oil sands development in the area.
Across Alberta, natural disasters are adding up, and are only expected to become more frequent and destructive amidst the climate crisis.
The province is expecting a longer and more violent wildfire season in upcoming years, which scientists have explicitly linked to human-accelerated climate change. These fires displace hundreds of Albertans each year, causing extensive damage to property and natural environments. In addition, the wide-spreading smoke decreases air quality and increases temperatures, leading to more frequent drought.
McIntosh, in Edmonton, has begun to accept wildfire smoke as a yearly struggle.
“I, thankfully, haven’t had [a] direct experience of natural disaster beyond breathing in all of the wildfire smoke in the past kind of four years,” she said. “It was sometimes so bad that it obstructed the views.”
“You certainly smelled it, and felt your throat burning when you went outside, sometimes for weeks at a time.”
Last year the city of Calgary’s emergency management agency launched a website to walk residents through how to prepare for future disasters the city anticipates. These include the catastrophic flooding of several rivers, extreme heat, and major drought.
In addition, as Canada loses its last intact Arctic ice shelf to global warming, a University of British Columbia study has found that the loss of Arctic glaciers will cause water shortages for one in four Albertans.
On the province’s website, these predictions for the impacts of climate change are echoed, directly connecting the increase in global temperatures to the greenhouse gases released in the burning of oil and natural gas, and attributing 43 per cent of the province’s greenhouse gas emissions to oil and gas mining.
McIntosh still believes there is potential to flip the script on oil and gas in Alberta. She noted that younger generations are eager for change, especially as the downturn in the oil sands has left the province anticipating further economic decline.
Prior to COVID-19’s disruption, Climate Justice Edmonton was focusing on education about what a green new deal could mean for Alberta. The province’s experiences with climate disaster leave Albertans uniquely aware of the devastating toll of rising temperatures.
McIntosh says that once the concept is explained, it sees a lot of support—but the narrative of Alberta being synonymous with oil and gas remains ingrained in many resident’s identities.
“I think it speaks to the power and the resilience of the mainstream narrative around climate change and oil and gas, that I don’t actually think [natural disasters] have a huge impact on the national psyche,” McIntosh said.
“That should serve as a warning to people who think that’s going to be the thing to change policy, and to change minds. Because if people have a story in mind around where the good times come from that doesn’t line up with that, then it’s easy to move on.”
This isn’t the first time that disregard for natural resource management in Canada has caused a province’s economy to collapse.
In 1992, the federal government indefinitely shut down Newfoundland and Labrador’s cod fisheries, leaving over 30,000 Newfoundlanders unemployed and abruptly ending the province’s way of life that had existed for almost 500 years.
The moratorium was put in place for fear that overfishing would drive local cod—a fish once so plentiful in the province’s waters that colonial-era sailors stated that they were “hardly able to row a boat through them”—to extinction. Doing so revealed the serious economic and environmental impacts of overexploitation and the insufficient nature of the existing environmental regulations.
The emergency measure was meant to be in place for two years. Instead, it lasted over 25 years. In the decade following the moratorium, the population of Newfoundland dropped by 10 per cent.
Government aid programs at the time were ill-suited to prepare those that had lost their jobs to enter new industries, nor did they properly account for workers’ capabilities or needs.
To this day, fisheries in the province are heavily restricted, and in 2017, fisheries employed only 3 per cent of Newfoundland’s workforce, and the lack of jobs continues to drive migration out of the province.
This is where the push for a just, green recovery becomes relevant. Levin says that investing in social services, diversifying Alberta’s economy, and working with communities to manage the fossil fuel phase-out could ease the burden of transition on working Albertans.
“You have no options once the commodity collapses,” Levin said. “That’s where we are [with oil]. This is a factor beyond our control.”
The demand for a just, green recovery has gained traction among Canadians as the pandemic continues. In Canada, over 150 civil society organizations, including Environmental Defence, have signed on to a statement advocating for the “Six Principles for a Just Recovery.”
These include strengthening Canada’s social safety net, building resilience to future crises—including the climate crisis—prioritizing workers, and upholding Indigenous rights.
In Canada, a green recovery could include investing in retrofitting buildings to increase energy efficiency, converting oil and gas infrastructure into hubs for geothermal energy, increasing renewable energy capacity, restoring carbon sinks, and protecting ecosystems.
It also includes transitioning oil and gas workers into related sustainable fields, supporting those nearing retirement, and investing in low-carbon jobs, like education, healthcare, and other social services. The essential nature of these localized jobs has only been reinforced by the pandemic.
In light of its pro-oil stance, Levin is skeptical that the Canadian government will take the steps to implement a true green recovery. She thinks they’ll increase the renewable energy capacity, but oil sands production will continue to increase.
“If [the federal government] is continuing to not make progress on our G20 commitment to phase out fossil fuels, then we don’t have a green recovery.”
The Canadian government’s new environmental strategy for the oil sands involves using carbon capture technology to convert oil sands methane emissions into additional clean energy known as blue hydrogen, but this process does nothing to limit oil sands production or the environmental damage it causes.
Levin noted that if a plan isn’t put into motion soon, environmental recovery may not be possible in the future.
“The spending we do today borrows from future generations,” she said. “And if the spending we do isn’t aligned with their interests, and the public interest, and in ensuring a living planet, then we won’t have that opportunity five years from now, ten years from now.”
For Levin, it seems like the global attitude has never been more receptive to a green transition. This September, Canadians took to the streets as thousands of people around the world marched to demand climate action, and at home, the ongoing damage of the pandemic increasingly reveals the flaws in our social safety nets.
“People are realizing there is no return to normal, because normal was broken and we don’t want to go back there,” she said. “There has been a shift in consciousness about how we build our society and how we want to live.”
“We can’t fix one global health crisis by exacerbating another global health crisis.”