Living on Canada's Oil
Must we really choose between energy security and a climate disaster?
Deep in northern Alberta, under the cover of 50,000 square miles of boreal forest, lie spectacular reserves of what the Canadians call "oil sands"—a mixture of sand, clay, and a viscous tarlike form of petroleum that can be transformed into synthetic oil. With oil-sands production at more than 1.2 million barrels per day, Canada, which also produces conventional oil, has quietly passed Saudi Arabia to become the top supplier to the United States. U.S. government analysts expect that production could triple again by 2030, lessening our reliance on Middle Eastern sources. One very bullish scenario sees the oil sands eventually delivering as much as 37 percent of our imported crude.
No matter how useful the oil sands might be to our energy supplies, tapping into them remains the most controversial petroleum project on Earth. The local environmental fallout—in terms of deforestation, water demand, and toxic waste—varies among the dozens of ongoing extraction projects but is often immense. And taken as a whole, the oil-sands industry emits so much greenhouse gas that Greenpeace has called it "the biggest global warming crime ever seen."
In other words, U.S. policymakers are now faced with an awkward problem: How do you balance improvements in energy security with worsening climate change, especially when dealing with a resource that isn't yours? It's a live issue for the administration and Congress. President Obama was forced to address the matter when he visited with his Canadian counterpart in February. Energy Secretary Steven Chu brought it up in a meeting with Alberta premier Ed Stelmach this week. Meanwhile, lawmakers must decide what to do with several laws that could end up restricting oil-sands consumption in the United States. This is an issue that isn't going away soon.
Several months ago I decided to take a careful look at the oil sands (sometimes called "tar sands") to see how the security benefits of extracting oil there might be reconciled with the risks posed to the climate. After interviewing scientists, policymakers, industry insiders, and environmentalists, scouring reams of studies, and doing some of my own calculations, I concluded that both the security upsides and climate downsides of oil-sands exploitation have been overblown. Ramping up oil-sands production would indeed make it easier to live with our addiction to oil, even as we work to break ourselves of it. It would also be worse for the climate than exploiting most other sources of crude. But there's no need to make this a stark choice between the safety of the United States and the salvation of the planet.
In the first place, the most common strategic argument in favor of the oil sands rests on a flawed assumption. Middle Eastern evildoers aren't about to cut off our oil. World oil markets, backed up by Strategic Petroleum Reserves, make it all but impossible for anyone to cut off U.S. oil supplies—if the United States were all of a sudden unable to buy oil from one country, we could contract for it elsewhere (albeit at a higher price). In that sense, shifting to more Canadian oil would solve a largely nonexistent problem.
Still, expansion of oil-sands production would have some benefits for national security. Greater access to oil tends to push down world crude prices; as a result, adversaries like Iran, Russia, and Venezuela would make less money. If oil prices remained stable in the face of Canadian expansion, it would be because states like Saudi Arabia had compensated by curtailing their production—and shrinking their revenues. The security benefit here is limited and indirect, but it's real.
Meanwhile, the absolutist climate-change argument against any exploitation of the oil sands relies on some staggering, but misleading, headline numbers. Extracting and converting a typical barrel of synthetic crude in Alberta generates nearly 200 percent greater emissions than extracting the average barrel of oil consumed in the United States. This statistic looks less severe in context, though. The total "well-to-wheels" emissions from oil-sands crude—i.e., the greenhouse gases put out during its production, refining, and eventual use in cars and trucks—are only about 20 percent higher. If you traded in a Camry for a Prius and switched to oil-sands crude at the same time, your total emissions would still drop by 60 percent. That doesn't make oil sands unimportant for the climate—and their importance will grow over time—but it does suggest that avoiding oil-sands crude isn't among our most useful strategies for keeping emissions low.
Indeed oil-sands production currently accounts for less than one-tenth of 1 percent of global greenhouse gas emissions. (For comparison, the U.S. pulp and paper business puts out four times as much.) And though it's expected to rise in the future, it's difficult to imagine a situation in the next 50 years in which oil-sands production accounts for even 1 percent of the world's greenhouse gas output. If coal power suddenly disappeared, it would revolutionize the climate picture, but if the oil sands vanished, we'd replace much of their crude with oil from somewhere else, and our global climate challenge would remain largely, though not entirely, unchanged.
More troubling, for many, are the other well-documented environmental impacts that come with oil-sands development. The industry uses up lots of fresh water and collects its waste in toxic "tailings ponds" that are hard to clean up. Local stakeholders have every right to insist that development proceeds in a responsible way, even if that's at the expense of a slower pace of expansion. But those are local issues that must be worked out by Canadians. U.S. policymakers should focus on the larger climate-related questions, since greenhouse gas emissions anywhere lead to climate dangers everywhere.
If the oil sands were overwhelmingly important to our energy security or egregiously damaging to the global climate, policymakers in Congress and the administration would have to pick one priority over the other in their diplomacy with Canada. But because the stakes aren't as high as so many have claimed, policymakers don't need to choose either to press for a halt to oil-sands production or to advocate a climate-policy exemption for oil-sands fuel. The industry in Alberta can survive the same basic measures being contemplated for the rest of the U.S. and Canadian economies—a consistent price on carbon that would create a simple economic incentive to cut emissions without coming anywhere close to shutting down expansion altogether. That's where U.S. policymakers should focus their energies.
A scheme like that would financially reward oil-sands producers for cutting the emissions involved in producing a barrel of oil and would, over time, penalize them more strongly if they simply continued with business as usual. It would allow the United States and the world to enjoy whatever security benefits robust Canadian production provides while prodding the industry to clean up its emissions act.
That would let Congress and the administration focus their attention on the more pressing matter of our own emissions, which are 200 times larger than those of the oil sands. Meanwhile, the best long-term approach to improving energy security will center on cutting U.S. (and global) oil consumption and promoting alternatives. The tar sands aren't a trivial piece of the energy equation. But pretending that they're central to security or destruction is a dangerous mistake.
Michael Levi is the David M. Rubenstein senior fellow for energy and the environment at the Council on Foreign Relations. He blogs at CFR.org.
Photograph of the Alberta oil sand fields by AFP/Stringer/Getty Images.