Canada Struggles to Reduce Carbon Emissions With the Oil Sands

January 30, 2020 – The oil sands of Alberta and Saskatchewan, states the Canadian Oil Sands Factbook, a publication put out by The Canadian Association of Petroleum Producers (CAPP), will contribute between 2019 and 2029, $1 trillion to the country’s economy and $17 billion in royalties, and provincial and federal taxes. These same oil sands, states the book, contribute 10% of Canada’s greenhouse gas (GHG) emissions, equivalent to agriculture’s contribution, and far less than transportation at 25%.

The industry describes a number of pilot projects it has launched to find ways to reduce its GHGs. It has dramatically reduced emissions per barrel produced as well as the amount of fresh water needed in production. It claims based on data collected that its contribution to air pollution is improving or remaining the same despite the increase in levels of production. It even describes the industry’s investment in satellite technology to monitor oil sands emissions.

As the primary industry association responsible for informing the Canadian and global public about the oil sands, it is a well-presented case that is backed up by the political leaders of Alberta and Saskatchewan who consider any action by the federal government to constrain the sector an infringement on provincial authority.

Now add three other elements to the mix.

1. The Keystone XL pipeline
2. The Trans-Mountain pipeline
3. The Teck Resources Ltd., Frontier Oil Sands  Project

Canada’s federal government has been a strong advocate for improving the pipeline infrastructure to get bitumen, the product of the oil sands to foreign markets. It long ago approved the Canadian portion of the Keystone XL project which today, is being held up by legal battles within American states along the pipeline’s route.

The federal government has purchased the Trans-Mountain Pipeline after the company that was to build it backed out of the project. Considerable consultations with First Nations and stakeholders along the pipeline’s route have led to delays. The government plans to eventually turn the pipeline over to the private sector.

Then there is the application to Canada’s federal government by Teck Resources Ltd., to build a $20 billion oilsands mine with peak production to add as much as 260,000 barrels of bitumen daily, lasting up to forty years. Teck in its application acknowledges that its processes will increase GHG emissions and be a potential source of water pollution.

Caught Between a Rock and a Hard Place

Alberta has drawn a line in the sand on the Teck application with its Premier stating that anything less than approval is an attack on the province’s future. Environmentalists concerned about climate change are opposed to the approval.

A federal-provincial review of the application last year declared the project in the nation’s interest while admitting it would likely harm the land, air, and quality of life for indigenous people in proximity and downstream from it.

To add to the melodrama, in today’s The Globe and Mail, the CEO of Teck, Don Lindsay, remarked that even if approved, the project may likely never be built citing the low price for oil sands output on the world market.

So, the federal government, with its pending announcement to approve or not, is caught between two very different positions. Approving the project will lose the support of a growing number of Canadians who see climate change as the primary issue the country faces today. Disapproving the project will suggest to Albertans that the federal government is abandoning them with this the first step into shutting down the oil sands and the jobs of tens of thousands in the province.

Is There a Future for the Oil Sands?

In the face of a growing climate crisis and the federal government’s commitment to achieve and even exceed its commitment to reduce GHGs by 30% by 2030, how can a further expansion of oil sands capacity be justifiable?

The problems associated with oil sands production begin with extraction and are then exacerbated by processing and upgrading the product for the purpose of transportation by pipeline or rail. Further refining adds to the environmental footprint. And then finally, when the oil is burned usually for transportation and heating, the environment is even further impacted. There is no getting around it despite what the CAPP Factbook states. This is an industry in direct conflict with reducing GHG emissions, and in particular carbon dioxide and methane, the prime culprits in human-caused global warming.

So does that mean the oil sands in total must go? What if the output of the oil sands could be used not to burn but to create high-value, high-demand products?

What Carbon Fiber Can Do for the Oil Sands

The answer may be carbon fiber. Carbon fiber consists of very large carbon molecules. So does bitumen. What makes bitumen less than ideal as a source of fuel oil, its heaviness, makes it an attractive source of carbon fiber. Partial upgrading of bitumen, rather than breaking up the heavy carbon molecules to make them lighter, creates asphaltene, the feedstock for producing carbon fiber.

Today carbon fiber is used to build tennis rackets, golf club shafts, and bicycle frames. But more recently it is replacing fiberglass, steel, and aluminum, in automobiles. The Toyota Prius Prime, for example, uses carbon fiber panels. At current costs of $15.40 per kilogram ($7 a pound), carbon fiber is a material more valuable pound for pound than dilbit which should make it an attractive high-value-added product.

The current market remains small but that has more to do with manufacturing capacity than the product itself. To solve the capacity challenge, the Alberta government has created Alberta Innovates, and a $15 million international contest called the Carbon Fibre Grand Challenge. It will award three suppliers who can create large quantities of carbon fiber. The three phases of the challenge are to wrap up in 2024 with three $3 million grand prizes awarded to suppliers who produce 10 kilograms of carbon fiber per day and provide a roadmap to scale up to 250 tons daily.

Today’s oil sands produce a little less than 3 million barrels of bitumen daily. The Alberta government sees the possibility of converting 100,000 barrels daily to produce carbon fiber. On that scale, carbon fiber becomes a far more attractive end product than dilbit with far greater earning potential.

How big is the market opportunity? The carbon fiber market was worth $4.7 billion USD in 2019 and will grow by 10.6% annually based on recent forecasts. By 2029 it will be worth more than $13.3 billion. As supply ramps up carbon fiber will replace other materials used in aerospace, defense, automotive, and wind turbine industries.

In the electric vehicle (EV) market alone, a recent Deloitte study projects vehicle growth from 2 million units sold in 2018 to 4 million this year, 12 million by 2025, and 21 million by 2030. Carbon fiber is expected to make EVs lighter and replace steel, aluminum and fiberglass. A lighter EV means greater operating range before recharge even if no improvements are made to battery technology.

How much carbon fiber will the automotive industry need? Certainly far more than the 100,000 barrels daily that Alberta Innovates says is its current capacity goal.

What About Other Oil Sands End Products That Don’t Contribute to Climate Change?

Alberta Innovates is looking at additional uses for bitumen that don’t involve burning it. These include:

• Asphalt, a market worth more than $50 billion globally annually
• Vanadium, a byproduct of bitumen, is material in high demand for flow battery technology seen by utilities and large energy users as an important storage option when combined with renewable solar and wind.
• Bitumen mixed with shredded recycled plastic for road pavement (a current experiment in both The Netherlands and Los Angeles, California)
• Polymers (plastics) from bitumen, a market potential worth an estimated trillion dollars per year by 2030.

The question that logically follows is:

Is there an opportunity for the oil sands in the future?

And is that opportunity a green one?

The answer to both questions is yes.

Will these new byproducts of the oil sands create new jobs for Albertans and Canadians?

Again the answer is yes.

For the short term future, however, and in the face of the coming climate crisis, burning less of what the oil sands produce would be better for the planet.