A new alliance of oil-sands producers is hoping to get $50 billion in government funds to use on technologies whose long term net climate benefits are questionable.

SHINY SILVER BULLETS like carbon capture, “clean” and “low carbon” blue hydrogen, or next generation nuclear have the potential to distract attention, while emissions continue to heat the planet. They could also attract climate subsidies away from proven solutions, and provide a lifeline to oil sands, LNG and other polluters.

Provincially, BC has launched its new Hydrogen Strategy which contains many good ideas, but supports blue hydrogen production, and the blending of hydrogen into the natural gas grid. These two goals could easily prolong reliance on fossil gas and contribute to missing another climate “commitment.”

Federally, there is a danger that the transition away from fossil fuels will be delayed by the perversion of erstwhile green strategies. Canada’s multi-billion-dollar Net Zero Accelerator funding could, in effect, become a fossil fuel subsidy. Tax credits for companies that invest in carbon capture, utilization and storage (CCUS) could support more dirty infrastructure at a time when it should clearly be shrinking.

Five companies (Canadian Natural Resources, Cenovus Energy, Imperial, MEG Energy and Suncor Energy) that produce 90 per cent of Canada’s oil sands bitumen are currently lobbying government to support their Oil Sands Pathways to Net Zero initiative. This new alliance proposes to develop, among other things, Carbon Capture Utilization and Storage (CCUS), “clean” hydrogen, and small modular nuclear reactors (SMR) as ways to offset their carbon footprint. They are looking for government support—to the tune of approximately $50 billion through 2050.

Syncrude's Mildred Lake site, plant and tailings ponds Fort McMurray, Alberta

Fossil fuel companies have been aware of their products’ dangerous global heating for decades, but have consistently undermined mainstream science’s message about the need to reduce combustion. Global CO₂ emissions continue to rise. 

Regardless of whether the alliance is motivated by climate concern, or by self-preservation, the pressing question is this: six years after Justin Trudeau’s promise to end fossil fuel subsidies, how should the government respond to their appeal for $50 billion in taxpayer support?

The oil and gas industry is the largest source of Canadian greenhouse gas emissions (GHGs), even without taking into account its eventual burning outside Canada. It represents 26 per cent of national emissions; more than transport, which also burns oil products. Given the urgent need for climate action, certain industry and government proposals don’t make sense. Using captured CO₂ for Enhanced Oil Recovery (extracting more oil) while the world struggles to decarbonize is one. Giving CCUS a disproportionate amount of taxpayer climate subsidy at the expense of electrification or renewables is another. 

If the oil sands companies’ alliance is planning to use fossil gas to power the CCUS process, and as a hydrogen feedstock, and to power hydrogen production, then the impacts of this extra gas must be acknowledged. Fracking for extra gas consumes and toxifies huge volumes of water, while triggering significant earthquakes. Extracting more gas means more methane leaks, and methane already causes over 25 percent of global heating. Burning more gas to power CCUS would add to non-carbon air pollution and negative health effects. The substantial cleanup cost for orphaned and abandoned wells, tailing ponds, and infrastructure—too often payed by the taxpayer—would rise proportionately.    

As governments scramble to reduce energy use, the sizeable energy needs of CCUS must be considered. For a power plant, CCUS increases the energy requirement by 20 to 25 per cent, while reducing its capacity. Building the pipelines, transporting the CO₂, and creating secure permanent storage would also require energy. CO₂ pipelines also pose risks from explosive ruptures of super cold CO₂ and asphyxiation.

Canada must be realistic about the reliability, benefits, costs and diminishing returns associated with oil sand CCUS. Very little CO₂ is permanently captured in practice. Even if 100 per cent of the CO₂ was captured in the bitumen extraction process (which it certainly is not), CCUS would do nothing for at least 70 per cent of emissions. This majority of bitumen’s GHG’s is emitted to our atmosphere during refining and eventual combustion in other countries of final use. 

 “Clean” hydrogen is also proposed by the alliance. The climate impact (cleanliness) of hydrogen depends entirely on how it is produced. Green hydrogen —electrolyzed from water using renewable energy—is clean. Blue hydrogen is produced by the combination of steam and fossil gas. It requires more CCUS, and is not clean. At the moment, blue hydrogen is cheaper than the green option, so long as you ignore the social cost of the leaked methane, fracking damage, pulmonary disease, et cetera. Green hydrogen is expected to be cheaper in the near future, as the cost of renewables continues to plummet. 

The intended use of hydrogen is also relevant. When used in a fuel cell, it creates energy with only water and air as exhaust products. When burned, however, it can emit toxic oxides of nitrogen. Blending 15 per cent hydrogen with 85 per cent fossil gas is proposed to reduce GHGs. This practice could serve to prolong the use of fossil gas, which could have a net negative effect on the climate. From a gas company perspective, though, 85 per cent is a lot better than 0 per cent.

The issue of subsidy support for CCUS and hydrogen can be confusing because these technologies can have a valid climate role in limited applications that are hard to decarbonize. Carbon capture makes sense for industries like cement and chemicals, but is not the best solution for industries that can be electrified or decarbonized. Similarly, hydrogen is a good decarbonizer for fertilizer, clean steel, long haul transportation, and refining fossil fuel for non-combustion feedstocks, but little else. 

Meeting Canada’s net zero pledge will require the majority of emissions to be displaced by efficiency, electric vehicles, heat pumps, electric heat for industry, and induction cooking. Should these electrified loads be powered by small modular nuclear reactors (SMR), one of the technologies the oil sands alliance is hoping to develop with government help, or by renewables including wind, solar, hydro, and geothermal?

The cost of energy produced by nuclear is already higher than energy from wind or solar with batteries. SMRs, if feasible, will take too long to plan, navigate NIMBY opponents, obtain insurance and permits, and to actually build. They are expensive to manage and operate, and to decommission at end-of-life. Their cooling systems entrap fish, and warm lakes. SMRs have serious weapons proliferation, meltdown, mining, lung cancer and waste storage risks. Renewables have none of these drawbacks and are already tried and true.

Despite fossil fuel production being at record highs, jobs and revenue into government coffers have dropped significantly over the last decade. Large subsidies would only lessen the industry’s net social contribution. 

Canada’s GHGs are 21 per cent higher than they were in 1990, and are still rising. This is by far the worst climate performance of any G7 country. 

Going forward, Canadian policy is on track to support oil and gas extraction that will eat up 16 per cent of the entire world’s 1.5C carbon budget. 

If the alliance’s proposed technologies are used as a pretext to further delay the transition to clean energy, then Canada could let its dwindling opportunity for effective climate action slip by. The growing severity of fires, storms and heat waves is showing us why we can no longer afford such a failure.

Bob Landell is an energy management consultant and climate-concerned grandfather living in Victoria, BC.