Harper’s Shell Game Why Tar Sands Pipelines Are Not in Canada’s National Interest Research and writing Keith Stewart works on energy policy and green energy solutions for Greenpeace Canada, building on 14 years of experience as an environmental researcher and advocate. He has a Ph.D. in political science from York University and currently teaches a course on Energy Policy and the Environment at the University of Toronto. Acknowledgements Greenpeace Canada would like to thank our 86,000 Canadian supporters who fund everything we do, including this report. Without your individual and ongoing support Greenpeace could not function independently of government or corporate funding. We would also like to thank the Oak Foundation for its support of Greenpeace Canada’s climate and energy campaign. About Greenpeace Greenpeace is an independent, campaigning organization which uses non-violent, creative confrontation to expose global environmental problems, and to force the solutions which are essential to a green and peaceful future. Greenpeace’s goal is to ensure the ability of the earth to nurture life in all its diversity. Greenpeace is not affiliated with any political party. We do not solicit or accept donations from corporations or governments, in order that we may always act on behalf of the planet first and foremost. Greenpeace Canada relies on donations from individual supporters for approximately ninety five percent of our revenues, and on grants from foundations for the remainder. Greenpeace does not accept donations that could compromise its independence, objectives or integrity. Design: Peartree Design Photo Credits: © Jiri Rezac / Greenpeace TABLE OF CONTENTS

Executive Summary 4 Introduction 5 Energy Superpower Ambitions 6 A Tar Sands Pipeline to Asia? 11 Shell in the Tar Sands: Fuelling Climate Change 15 Shell in the Tar Sands: New Mines, Old Problems 18 Investing in the Tar Sands: An Act of Desperation? 24 Tar Sands and Democracy: A Caustic Mixture 28 Tar Sands Mines and Pipelines: Not in the National Interest 30 Endnotes 32

3 Executive summary The proposed Enbridge Northern Gateway pipeline from Bad for the economy: The Organization for Economic Alberta’s tar sands to the British Columbia coast has become Cooperation and Development, Deutsche Bank, and the a major political flashpoint because it is vital to achieving Alberta Premier’s Council on Economic Strategy have all Prime Minister Stephen Harper’s ambition of transforming warned that building Canada’s future on the tar sands is a Canada into a tar sands–based “energy superpower.” risky long-term investment strategy. Further investments in tar sands infrastructure will lock Canada into a high- To realize this vision, the Harper government has teamed carbon economy, at the expense of renewable energy up with multinational oil companies in an unprecedented alternatives. This risks leaving Canada ill-prepared to assault on nature and democracy. This report uses prosper in a world that is taking action on climate change. documents obtained under Access to Information legislation and from the public record to explore how and why one oil Bad for democracy: Documents obtained under Access company—Shell—has joined with the Harper government in to Information legislation detail the degree of collusion an aggressive “Oil Sands Advocacy Strategy” that aims to between Shell and the Harper government to undermine undermine environmental legislation in Canada, the United clean energy and environmental protection legislation that States and Europe. would limit the expansion of the tar sands. This behind- the-scenes lobbying strategy is accompanied by public In sharp contrast to many other oil companies, Shell has statements and legislative changes intended to intimidate long accepted the scientific consensus on climate change environmental and Aboriginal groups, who are labelled as and publicly called for action to reduce greenhouse gas “adversaries” in internal government documents and as emissions. Yet over the last decade, the company has largely “radicals” in the government’s public statements. abandoned its investments in renewable energy in favour of a major expansion of its tar sands operations. These This attempt to limit free speech is fundamentally expansion plans would enable production of enough oil undemocratic, but it is being aggressively pursued in order to fill Enbridge’s proposed Northern Gateway pipeline and to pre-empt a debate on what kind of energy strategy they include two major tar sands mining projects that are would be in Canada’s national interest. undergoing environmental assessments at the same time as The tar sands are not our only option for energy. The latest the proposed pipeline. research from the Intergovernmental Panel on Climate In addition to this carbon-intensive investment strategy, Change (IPCC) shows that we have the technology to solve Shell has played a key political role in the Harper government’s our climate crisis. The International Energy Agency (IEA) has lobbying against low-carbon fuels legislation in the US and detailed how it is much more cost-effective to start deploying Europe, and has actively supported the planned construction these technologies now than to wait. The worst option of all, of the Northern Gateway pipeline. according to the IEA, would be to proceed with business as usual and hence fail to stop global warming. The Harper government’s energy superpower ambitions may be in the interest of oil companies like Shell that now rely on Fortunately, we know what kinds of public policies are the more expensive and polluting oil from the tar sands to necessary to rapidly deploy these climate solutions and bring replace their rapidly declining reserves of conventional oil. about what Greenpeace calls an Energy [R]evolution. But such a strategy is not in the best interest of Canadians, Our challenge is that these policies are opposed by powerful because it is the following: interests, like Shell and the Harper government. These Bad for the environment: Scraping the bottom of the players are choosing to pursue the narrow, short-term barrel by increasing production of the more carbon- interests of oil industry profits over our common interest in intensive tar sands oil will put us on a pathway to building a green economy that will stop global warming. catastrophic levels of global warming. Tar sands expansion When viewed through the lens of this broader perspective, also increases the regional ecological destruction and it is clear that projects like Shell’s new tar sands mines and associated health impacts on local communities, while Enbridge’s Northern Gateway pipeline are not in Canada’s creating new risks from the inevitable oil spills in British national interest. Columbia from tar sands pipelines and tanker traffic.

4 There are related concerns over how the proposal Introduction disregards the rights of BC First Nations, who have Prime Minister Stephen Harper and his oil industry publicly and repeatedly stated their united opposition allies are willing to turn the proposal by Enbridge to to the project based on the threat it poses to the build a new tar sands pipeline through northern British region’s lands and waters—and hence to their culture Columbia into “the fiercest environmental standoff ever and livelihoods. seen in Canada”1 for one simple reason: without new There are fears over how the federal government’s pipelines, the planned expansion of tar sands oil output apparent determination to push this pipeline through at will come to a screeching halt. any cost will undermine Canadian democracy and the The looming bottleneck is a problem for the Alberta legal framework for environmental protection. and federal governments, who are eager to transform And beyond the pipeline itself, there are concerns Canada into a bitumen-based “energy superpower.” over how new pipelines would enable the rapid Their ambition to quadruple tar sands output is expansion of the tar sands, fuelling global warming facing two major constraints. First, existing pipelines and overloading regional ecosystems and downstream are near capacity, with some analysts suggesting communities with the toxic byproducts. that production could outstrip this capacity as soon On the technical side, the federal government has as 2015.2 Secondly, the demand for oil has been excluded upstream changes, such as increases in dropping in the US and is expected to continue to overall production, from the terms of reference for the decline, thanks to new vehicle fuel efficiency standards. review panel assessing the Enbridge pipeline, despite The solution to both of these problems is, according the fact that pipelines and tar sands expansion are to the federal government, to pursue direct access inextricably entwined. to growing Asian markets by building new pipeline The failure to consider upstream impacts is not an capacity that would ship bitumen from the tar sands to oversight. The Harper government is encouraging the British Columbia coast, where it could be loaded oil companies to invest in the tar sands in order to onto supertankers. fulfill the Prime Minister’s political ambitions of turning Enbridge’s proposed Northern Gateway pipeline is Canada into an “energy superpower.” To realize this also viewed as a vital piece of infrastructure by the ambition, the federal government has teamed up with major multinational oil companies. As they run out what it calls “like-minded allies” from the Canadian of cheaper, more easily–accessible conventional oil, Association of Petroleum Producers (with Shell they are disproportionately turning to the tar sands to undertaking key organizing work) in an aggressive replace their reserves. pro–tar sands campaign that seeks to reshape Shell, for example, is looking to triple its output from Canadian politics and society. the tar sands in the coming years.3 It has two massive Around the world, oil wealth has proven to have a new tar sands mining proposals going through the negative impact on democracy as corporate interests environmental assessment process in parallel with take priority over those of citizens. This effect is now the Enbridge pipeline project, and Shell’s proposed being felt in Canada, with oil companies playing a expansion of production in the tar sands would key role in the Canadian government’s attempts to produce enough new oil to fill the Northern prevent environmental legislation being passed in Gateway pipeline. Europe and the US that would restrict imports of tar These projects are, however, facing stiff and growing sands oil to those markets on environmental grounds. opposition from diverse groups advocating a greener The companies are also supporting the federal energy future. government’s legislative push to fast-track tar sands infrastructure projects by weakening environmental There are grave concerns over the impact that the laws in Canada. inevitable oil spills from the pipeline or the associated supertanker traffic will have on the ecosystems and At the same time, the Harper government is attempting resource-based livelihoods in the Great Bear Rainforest to intimidate the environmental and Aboriginal groups and along the BC coast. which it has labeled “adversaries” in its internal planning documents by publicly denouncing pipeline

5 opponents as “radicals.” And while the 2012 federal These types of warnings, coupled with the negative budget continued to offer over $1.3 billion in tax breaks environmental and social impacts of the rapid growth to oil companies,4 budgets were cut at environmental of the tar sands, should raise questions as to whether ministries. This occurred even as more than $8 million the Energy Superpower aspiration is truly in Canada’s in new resources were allocated to the Canada “national interest.” Revenue Agency to harass environmental charities critical of the government through audits of their “political activities.” 5 Energy Superpower If the Harper government expects its unprecedented assault on democratic dissent to silence organizations Ambitions advocating for the transition to a low-carbon energy To grasp the essence of contemporary Canadian system, it should prepare to be disappointed. For in climate policy, one need only turn to Stephen the absence of any credible commitment from the Harper’s first speech as Prime Minister to business federal government to policies that would reduce leaders outside of Canada. Speaking in London, greenhouse gas emissions or address the cumulative he announced his intention to build Canada into an impact of the tar sands on downstream communities, “energy superpower” and invited British oil companies tar sands pipelines like Enbridge’s Northern Gateway to help him do it. and the Keystone XL will continue to be a key battleground in the struggle for a green energy future. Canada, he said, was already the fifth-largest producer of energy in the world, on the strength of its production Surprising new voices have emerged to warn of oil, gas, uranium and hydroelectricity. But this was of the economic risks posed by a development “only the beginning”: strategy based on the export of high-carbon oil. The Organization for Economic Cooperation and Development (OECD) has warned of the negative impact of a “petrodollar” on other sectors of the Canadian economy.6 Similar arguments have been made by Ontario’s Premier Dalton McGuinty7 and federal New Democratic Party leader Thomas Mulcair.8 And while climate scientists have long warned about the need to transition away from fossil fuels, we are now seeing financial institutions like Deutsche Bank argue that just as the explosion of digital cameras made the cost of film irrelevant, the growth of electric cars will make the price of oil all but irrelevant for transportation.9 We are even hearing doubts from the panel of economic advisors handpicked by the Government of Alberta. The Premier’s Council for Economic Strategy—which included Stephen Harper’s former Industry Minister and the former CEO of Shell Canada—was asked how to ensure the prosperity of the province in 2040. It came back in May 2011 with the startling advice that “we must plan for the eventuality that oil sands production will almost certainly be displaced at some point in the future by lower cost and/or lower-emission alternatives. We may have heavy oil to sell, but few or no profitable 10

markets wishing to buy.” 3

Greenpeace hanging a banner from the top of the iconic Calgary Tower to highlight the need to sever the relationship between the toxic tar sands oil industry and the federal and provincial governments. © Greenpeace

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At dawn on the opening day of the 2011 UN climate summit in Durban, South Africa, Greenpeace activists take to Parliament Hill to brand the Harper government a ‘CLIMATE FAIL’ of epic proportions. © Eye in the Sky / Greenpeace

An ocean of oil-soaked sand lies under the The strength of Canada’s status as an energy muskeg of northern Alberta – my home superpower comes in large measure from the role province. The oil sands are the second largest our country plays as the most significant supplier oil deposit in the world, bigger than Iraq, Iran or of energy (crude and natural gas) to the US. Russia; exceeded only by Saudi Arabia. Digging Given Shell’s significant resources and activities the bitumen out of the ground, squeezing out in Canada, we are committed to long-term growth the oil and converting it in into synthetic crude of our business here . . . The development of is a monumental challenge. It requires vast these [tar sands] resources can help Canada’s amounts of capital, Brobdingnagian technology, economy to grow and prosper, but it requires and an army of skilled workers. In short, it is an open and accessible markets to provide the US enterprise of epic proportions, akin to the building with the secure, reliable supply of energy it needs of the pyramids or China’s Great Wall. Only to prosper.12 bigger.11 For Shell, this would require aggressive action to combat The energy superpower vision he laid out in that environmental measures in other countries targeting tar speech—of an economic future for the nation rooted in sands imports. In that same letter to the Prime Minister, the rapid expansion of the tar sands and extending the Shell Canada President Brian Straub said: oil and gas frontier into the Arctic—has been the key Canada must oppose any moves that could driver of energy (and hence climate) policy in Canada threaten access to the US, our most important ever since. market, such as the “Section 526” provision Shell was an early and eager supporter of this vision. or a Low Carbon Fuel Standard (LCFS) In a February 2009 letter to Prime Minister Harper, that particularly disadvantages Canada’s obtained by Greenpeace under Access to Information unconventional resources. As well, it should be legislation, the President of Shell Canada wrote: made clear that the responsibility to address GHG emissions generated from oil sands

7 production rests squarely with Canadian I would like to thank you and Mr. Paquette for governments—federal and provincial, and that taking the time to meet with me on Thursday, such emissions are already well regulated by April 23 in Ottawa. [sentence redacted] the Alberta government and would also be well I appreciated your thoughts on industry’s role in regulated under a North American Cap and Trade leading oil sands advocacy efforts in the U.S. and program.13 Europe. As we discussed, Shell Canada has been and will continue to be active in this area, both Shell has publicly supported action on climate change with CAPP and on our own, and we appreciate and putting a price on carbon, yet it clearly doesn’t the government’s efforts in helping to facilitate make such action a precondition for its political this work. As we proceed with these advocacy support. Alberta’s regulations have been criticized initiatives, we will keep your department apprised as ineffective, as they would allow greenhouse gas of their outcomes. Also, as discussed, Shell will emissions from the tar sands to double or even triple be conducting an oil sands workshop in Ottawa by 2020, with companies able to avoid reductions at a in early-June, and will be in touch with your staff cost of roughly 11 cents per barrel.14 with further details.17 There is no North American cap-and-trade system Shell clearly has the ear of the federal government. in place, and Shell is no longer even advocating for While environmental group requests for meetings are one. According to notes on an October 2010 briefing routinely ignored, Shell lobbyists met 100 times with by Shell for federal officials that were obtained under senior federal officials between January 2009 and Access to Information legislation, “Shell has moved off December 2011, according to the federal Registry pushing for cap and trade given the bleak prospects of Lobbyists. This included 18 meetings with federal in US Congress – they are now looking for regulation Ministers within a 15-month period.18 This does with flexibility.”15 not include any of the lobbying done by industry Shell has tried to build support for measures that associations or organizations which Shell is a member would reduce greenhouse gas emissions—just not of, such as the Canadian Association of Petroleum its own emissions. The following is from an internal Producers (CAPP), which has been lobbying against government debrief on Shell climate lobbying: greenhouse gas regulations for the oil industry.19 Shell Shell: they called yesterday to brief on a is, however, represented on CAPP’s Oil Sands CEO 20 ‘dialogue’ they are organizing, with Bruce Carson Communications Task Group, which has worked with and Pembina, for April in Banff; idea is to bring the federal and Alberta governments to coordinate 21 academics, ENGOs [environmental groups] and lobbying efforts in the US and Europe. a range of industry reps together to try to agree Government documents show that Shell played a key on recommendations for gov’t in areas of the CC role in the Harper government’s “Pan-European Oil [climate change] debate that are seen as less Sands Advocacy Strategy,” by organizing workshops, controversial—energy efficiency, transportation hosting lobbying events and participating in the demand management, renewable, biofuels. government’s advocacy training sessions for Canadian Initiative is being driven by Royal Dutch Shell, diplomats.22, 23 Shell’s lobbying of the UK government and draws on experience with the Climate Group has also been credited with helping convince the in UK. I had to point out (nicely) that the initiative Cameron government to lobby against the Fuel Quality seems to sidestep the gorilla in the room of Directive within the European Union (EU).24 emission reductions from O&G [oil and gas], The goal of this strategy was to prevent the EU from but that otherwise it seems like a great idea.16 implementing the Fuel Quality Directive. The Directive In spite of its support for action on climate change would assign a default value to oil derived from in general, Shell remained eager to help with the bitumen (tar sands), that recognizes it as having a campaign against cleaner fuel legislation in the US higher carbon content than conventional oil, due to and Europe. In a May 2009 letter to Canada’s top civil the extra energy required to extract and process the servant (the Clerk of the Privy Council), Shell Canada bitumen. While there is very little tar sands oil exported President Straub wrote: to Europe, the Canadian government and oil industry

8 have mounted an “unprecedented” campaign to n It focuses on carbon dioxide, which is block the measure for fear that it would be copied by essential to life, rather than upon pollutants other jurisdictions and hence reduce the market for n Implementing Kyoto will cripple the oil and tar sands–derived products or discourage European gas industry, which is essential to the investment in the tar sands.25 economies of Newfoundland, Nova Scotia, According to the federal government’s documentation Saskatchewan, Alberta and British Columbia. of its Pan-European Oil Sands Advocacy Strategy, n Workers and consumers everywhere in this strategy targets “National and European level Canada will lose. THERE ARE NO CANADIAN Politicians (especially from the ruling and influential WINNERS UNDER THE KYOTO ACCORD parties),” and divides Canadians into two camps: “Allies” include the Canadian Association of Petroleum n Kyoto is essentially a socialist scheme to suck Producers and individual firms like Shell and BP, and money out of wealth-producing nations.27 business groups. Also appearing on the allies list is Once he became Prime Minister in 2006, it quickly the National Energy Board, which is surprising, given became clear that action on climate change was not that it is supposed to be an independent agency a priority. The Harper government’s first budget saw which decides whether infrastructure projects are in the elimination of fifteen climate-related programs.28 the ”national interest.” Environmental and aboriginal In response to the 2008 recession, only eight per groups, along with an unidentified subset of media cent of Canada’s economic stimulus package was (the adjective was redacted when the documents were dedicated to “green” measures, a level well below the released), are identified as “adversaries.”26 comparable green share of stimulus packages in the This kind of allies/enemies list has become an expected US (12 per cent), China (38 per cent), the European part of partisan politics in Canada, but it is unusual to Union (59 per cent), and South Korea (81 per cent). see it in a document prepared by and for Canadian And of the 8 per cent “green” component in Canada, diplomats. Yet, in the pursuit of energy superpower the largest component (41 per cent) was for carbon ambitions, Canada’s diplomatic corps has been drafted capture and storage projects—a direct public subsidy into a campaign to undermine domestic climate for coal-fired electricity and the tar sands.29 policy measures in other countries, even though the Furthermore, the International Energy Agency’s (IEA) Government of Canada is (at least formally) in favour of 2009 country review found that even though Canada dramatic reductions in greenhouse gas emissions. is of one of the highest emitters of greenhouse gases The depth of the governing party’s commitment to per capita in the world, and has a higher energy-use taking action on climate change is, however, suspect. intensity than any other IEA country, the largest part Prior to becoming Prime Minister, Stephen Harper of government research and development spending authored a 2002 fundraising letter to members of the is for fossil fuels (27 per cent) and nuclear power (38 Canadian Alliance party (which subsequently became per cent), while energy efficiency (14 per cent) and the Conservative Party) in which he attacked the Kyoto renewable energy (11 per cent) are short-changed.30 Protocol and climate change science. The letter stated: The 2010 federal budget eliminated the principal We’re gearing up for the biggest struggle our federal programs for supporting energy efficiency31 party has faced since you entrusted me with and renewable energy,32 while putting in place new the leadership. I’m talking about the “battle of measures to fast-track approvals for fossil fuel and Kyoto”—our campaign to block the job-killing, nuclear infrastructure.33 At the same time there are economy-destroying Kyoto Accord. It would take federal subsidies worth at least $1.3 billion annually for more than one letter to explain what’s wrong the oil and gas sector in Canada, with the bulk of these with Kyoto, but here are a few facts about this captured by the tar sands.34 so-called “Accord” Once they finally won a majority government in 2011, n It’s based on tentative and contradictory the Conservatives removed any doubts as to their scientific evidence about climate trends. intentions when, one day after returning from the United Nations climate conference in Durban, South

9 Africa, Environment Minister Peter Kent announced Risk Act; and made changes to the Income Tax Act that Canada would withdraw from the Kyoto Protocol. governing political activities of charitable organizations. The 2012 federal budget subsequently included Furthermore, the budget included $8 million in new an announcement that the legislation governing resources for tax inspectors to increase surveillance environmental approvals of energy projects would be and enforcement of environmental charities. changed to speed up the process, and the government Greenpeace is not a charity, but many environmental indicated that these changes would apply retroactively groups are and these measures are clearly intended to the review of the Enbridge Northern Gateway to send a chill through the environmental community pipeline. The budgets of key environmental ministries and stifle democratic debate. In the words of a Globe were also cut, which will likely have the effect of limiting and Mail editorial, “The Conservatives are continuing enforcement of remaining laws, and the government their dishonourable attack meant to intimidate disbanded an advisory body, the National Roundtable environmental groups, in a budget item that stands out on the Environment and Economy, that had been for adding a needless new cost . . . Witch-hunts don’t offering advice on how the government could achieve its come cheap.”37 stated greenhouse gas reduction targets.35 The funds for this “witch-hunt” were justified in the Prior to unveiling the 2012 budget, the Harper budget documents on the grounds that “concerns have government indicated that it intended to change been raised that some charities may not be respecting other major pieces of environmental legislation, such the rules regarding political activities. There have also as the Fisheries Act, to make it easier for energy been calls for greater public transparency related to the projects to be approved, leading over 600 scientists political activities of charities, including the extent to to send a letter opposing the proposed changes.36 which they may be funded by foreign sources.”38 These changes were nonetheless included in the Revealingly, in a fine example of the echo-chamber at budget implementation bill that: revoked the Kyoto work, these “concerns” had been expressed by Ethical Protocol Implementation Act; revoked the Canadian Oil,39 a pro-industry group with close ties to the Harper Environmental Assessment Act and replaced it with government itself. a weaker version that allows for greater ministerial discretion; made major changes to the Species at

Shell and “Ethical Oil” Ethical Oil is a pro-industry group, with close ties to Conservative cabinet minister, Jason Kenney, and has both the oil industry and the Harper government, that since left Ethical Oil to become the Director of Planning promotes tar sands oil as more “ethical” than what in the Prime Minister’s Office. The new Executive it calls “conflict oil” from places like Nigeria and the Director of Ethical Oil, Jamie Ellerton, also used to Middle East. It maintains a website, ethicaloil.org, work for Jason Kenney on Parliament Hill. and has run pro-tar sands advertising campaigns on The close relationship between Ethical Oil and the television and radio as well as billboards, including ads Conservative Party has been well documented, in support of the Northern Gateway pipeline. with key figures working for both either consecutively The organization has its origins in a book of the same or even simultaneously.41 The “ethical oil” label has name by Ezra Levant, a conservative media pundit been adopted as a key communications frame by who has previously worked as communications staff the federal Environment Minister Peter Kent,42 Natural person for the Conservative party and as a lobbyist for Resources Minister Joe Oliver43 and Prime Minister the tobacco industry. It was founded as a pro-industry, Stephen Harper.44 nonprofit corporation in May 2011 by Levant and Less clear is Ethical Oil’s relationship to the oil industry. Thomas Ross, a Calgary-based lawyer who specializes It has indirectly acknowledged that is receiving some of in working for the oil sands industry, with Alykan Velshi its funding from oil companies, but has refused to say as the primary spokesperson and Executive Director.40 how much.45 10Velshi was previously a communications officer for a Tar sands–derived oil is already trading at a significant A Tar Sands discount due to a glut of oil in the US Midwest.48 But even if new pipelines are built, the US market for oil Pipeline to Asia? is projected to get smaller in the future thanks to the Eliminating policy measures designed to reduce impact of the new, tougher vehicle-fuel efficiency greenhouse gas emissions while increasing political standards that President Obama has already put in support and fiscal support for the oil industry are place. In addition, there is also a risk that other parts of consistent with achieving Harper’s vision of Canada as the US might follow California in adopting regulations an energy superpower. Yet other observers have called to limit the access of high-carbon oil from the tar sands Canada an “energy superstore”47 because it is selling to their market. into only one market: the United States. This market Fears over being “landlocked in bitumen”49 (in the involves risks. words of Alberta’s former Energy Minister and current

So it is interesting to note the Shell has been Benchmarking Project—how to assign a premium advocating for the creation of an energy security index or energy security factor on world energy (similar to Ethical Oil’s characterization of “conflict oil”) supplies. for various sources of oil, as a counterpoint to the As you are aware, world energy supplies are European Union’s indexing of oil, the latter being based not assigned values based on security risk/ on carbon-intensity through the Fuel Quality Directive. democratic process/independent vs national In a July 2010 e-mail from Susannah Pierce, Shell oil company control. Would like to explore with Canada’s Head of Government Affairs, to Canada’s you the government’s support for developing Minister of National Defence, Peter MacKay, that was such a study that would factor in security factors obtained by Greenpeace under Access to Information and assign to world basket of crudes. (A similar legislation, Ms Pierce wrote: approach is being taken to assign default CO2 values to crudes).46 Was a pleasure to meet you at Brett Wilson’s party in support of Boomer’s Legacy. It turned Such an index would be a useful public relations tool out to be a great event for Boomer’s family for tar sands proponents, but would likely be a double- and memory and your attendance was much edged sword for the oil companies, as investments appreciated. Would like to follow up with you at such as Shell’s in Nigeria would likely fare poorly. your next convenience on the Energy Security

11 Finance Minister Ron Liepert) became more urgent in the face of the successful campaign against the Keystone XL pipeline. This has led oil industry executives to call for speedier approvals for new pipelines to reach new markets because, in the words of Shell Canada’s new president Lorraine Mitchelmore, “[o]ur increased access to our next-door neighbour, the US, is not a given any more.”50 Tar sands companies are understandably nervous about being captive sellers in a declining market as they contemplate spending up to $379 billion to triple production from the oil sands over the next 15 years.51 Their solution, promoted as early as 2008, is to push for the government to approve a new pipeline across the Rockies that would enable direct access to the Asian market.52 Although the idea of a pipeline to the port of Kitimat in northern BC has been around for years (Greenpeace first organized a protest against it in 197753), it has been revived as a way to flex those energy superpower muscles and counter both possible 3 Farmer Wayne Groot stands in his wheat field, near the US climate regulations and a declining US market Shell Scotford upgrader, outside of Fort Saskatchewan, Alberta. for oil.54 © Ian Willms / Boreal Collective / Greenpeace “It’s time for Canada to play the energy card and announce the fast-tracking of a new pipeline to the Environmental activists are increasingly targeting Pacific, and to encourage Asian investment in our the oil sands, demanding that, among other oil patch,” wrote former Canadian diplomat Colin things, CO2 targets be met. The energy industry’s Robertson in a July 2010 Globe and Mail op ed. workforce is aging. We are hampered by the “The Americans, especially those charged with national existing infrastructure and must find a timely security, will get the message.”55 way to build major new infrastructure projects that are needed to open up new markets for The Canadian Association of Petroleum Producers Canadian energy. These include Enbridge’s (CAPP) has been equally blunt: “As growth in Northern Gateway project, TransCanada’s production from the oil sands resources is expected Keystone Pipeline, Mackenzie Valley Pipeline and to continue, there is the potential that these traditional potentially Liquid Natural Gas terminal off the markets become saturated over time. Growing Asian west coast of BC57 [emphasis added]. oil demand, particularly in the economic powerhouses of China, Japan, South Korea and India, represent a Enbridge, for its part, has acknowledged that potential future market for Western Canadian crude Gateway is important for enabling additional tar sands oil production… Market diversification via west coast production. Responding to concerns that Enbridge’s exports is not intended to detract from the importance proposed new US pipelines would undercut the of the US market and may in fact provide additional business case for Gateway, Enbridge’s Stephen Wuori leverage to assist in approvals for pipeline projects told The Globe and Mail that “the company doesn’t (e.g. Keystone XL) that would increase export volumes believe new pipes will ‘cannibalize’ that project. to the US market.”56 Instead, Enbridge believes Gateway will be used to spawn production that might not otherwise happen, In October 2010, the new President and Country Chair by providing an avenue to markets with more stable of Shell Canada Lorraine Mitchelmore summed up pricing.”58 the “liabilities” standing in the way of Canada’s energy future as follows: In October 2011, as the debate over Transcanada’s proposed Keystone XL pipeline heated up, federal

12 Natural Resources Minister Joe Oliver responded to the possibility of the US government turning down the application for a new pipeline by saying, “if they don’t want our oil… it is obvious we are going to export it elsewhere… As a broad strategic objective we have to diversify our customer base… [and] China has emerged as the largest consumer of energy in the world, so it is utterly obvious what we must do.” 59

A similar sentiment was coming out of Alberta, but with 3 an investment twist. Energy Minister Ron Liepert told An Enbridge oil pipeline ruptured and sent more than a million gallons of oil into the Kalamazoo river in Michigan around July 26, 2010. © Rebecca Cook / Greenpeace Bloomberg News that “[i]f we don’t soon figure out how to get the product to Asia, the investment is going to dry up. The Chinese want to see things happen. of people, as the line would cross hundreds of If we want to continue to be open to Asian investment, rivers and streams and pass through the Great Bear there comes a quid pro quo in their mind and that’s Rainforest—a region renowned for its salmon, wolves, coming up fast… Clearly we need to diversify. If we get bears and other wildlife. Meanwhile, the tanker traffic to where we’ll be [sic] in 10 years, we’re going to need in dangerous northern waters endangers coastal 60 several Keystones and Gateways.” fisheries. The federal government joined the battle in earnest The social, economic, and environmental costs to following President Obama’s decision to delay the British Columbia of a tar sands pipeline and the Keystone XL pipeline. In a January 2012 open associated oil supertanker traffic would be enormous, letter, Joe Oliver attacked pipeline opponents as and include the following: “environmental and other radical groups”61 and promised to change the regulatory system to make n Compromising the lifestyles of First Nations who it easier to get pipelines approved. Prime Minister depend on the region’s lands and waters for their Stephen Harper subsequently pledged to push a livelihoods, culture, and health. pipeline through BC as a “national priority,” during his n Threatening the economic well-being of the February 2012 trip to China.62 communities of British Columbia that depend on Gateway is not the only proposed pipeline: Kinder fisheries and forests. Morgan is interested in twinning its existing pipeline n Potential devastation from a major oil spill from from Alberta to Vancouver in order to increase export the pipeline or an oil supertanker, which could capacity, while Enbridge has a separate proposal destroy economically important salmon habitat, to reverse the flow of an existing pipeline so that it as well as the habitat of Spirit Bears and grizzlies, would take oil from Alberta to Maine. But the Enbridge and whales, orcas, and other marine life that Northern Gateway pipeline is the furthest along in the depend on these rich coastal waters. approvals process and hence is receiving the bulk of the attention. n Harm from an oil spill to the Great Bear Rainforest, which the province and First Nations The 1,172 kilometre–long Northern Gateway pipeline have worked hard to protect from unsustainable is designed to carry 525,000 barrels a day of bitumen forestry practices and to shift to a conservation- from the tar sands from a terminal near Edmonton based economy.64 and across the Rockies to Kitimat on the northern BC coast, where about 200 supertankers annually would The opposition to the Gateway pipeline has been led dock to take on the petroleum for export to the US by BC First Nations, who have been joined by other and Asia.63 First Nations so that there is now “an unbroken wall of opposition from the US border to the Arctic Ocean,” Much of the opposition to the pipeline has focused on with leaders like Chief Jackie Thomas of the Yinka the threat that the inevitable spills would pose to the Dene Alliance (representing First Nations along the environment and the livelihoods of tens of thousands

13 3

An Enbridge oil pipeline ruptured and sent more than a million gallons of oil into the Kalamazoo river in Michigan around July 26, 2010. © Rebecca Cook / Greenpeace pipeline route) saying they will physically block the Declaration66 (see box), launched by the Yinka Dene project if regulators allow it to proceed.65 Alliance in 2010 and now supported by over 130 First Nations from BC, Alberta and the Northwest Territories. First Nations have a special legal status under Section 35 of the Canadian constitution, which grants them Even on the days that the pipeline doesn’t spill, there greater influence over projects within their traditional would be huge environmental, social and economic territories. Their concerns over tar sands pipelines and costs from the upstream expansion in tar sands tankers have been summarized in the Save the Fraser production that this pipeline would enable.

values and our inherent rights as Indigenous Peoples The Save the Fraser under international law. Declaration We are united to exercise our inherent Title, Rights, and responsibility to ourselves, our ancestors, our WE THE UNDERSIGNED INDIGENOUS NATIONS OF descendants and to the people of the world, to defend THE FRASER RIVER WATERSHED DECLARE: these lands and waters. Our laws require that we do this. We have inhabited and governed our territories within Therefore, in upholding our ancestral laws, Title, Rights the Fraser watershed, according to our laws and and responsibilities, we declare: traditions, since time immemorial. Our relationship with the watershed is ancient and profound, and We will not allow the proposed Enbridge Northern our inherent Title and Rights and legal authority over Gateway Pipelines, or similar Tar Sands projects, to these lands and waters have never been relinquished cross our lands, territories and watersheds, or the through treaty or war. ocean migration routes of Fraser River salmon. Water is life, for our peoples and for all living things that We are adamant and resolved in this declaration, made depend on it. The Fraser River and its tributaries are according to our Indigenous laws and authority. We our lifeline. call on all who would place our lands and waters at risk—we have suffered enough, we will protect our A threat to the Fraser and its headwaters is a threat to watersheds, and we will not tolerate this great threat to all who depend on its health. We will not allow our fish, us all and to all future generations. animals, plants, people and ways of life to be placed at risk. Declared at T’exelc (Williams Lake), Secwepemc Territory, and Vancouver, Coast Salish Territories, and We have come together to defend these lands and affirmed by the following Indigenous nations… waters from a grave threat: the Enbridge Northern Gateway Pipelines project. This project which would [The Declaration had been signed by more than 130 link the Tar Sands to Asia through our territories and First Nations. It is available online at: the headwaters of this great river, and the federal http://savethefraser.ca/ process to approve it, violate our laws, traditions, 14 Shell in the Tar Sands: Fuelling Climate Change In a speech to the Calgary Chamber of Commerce celebrating 100 years of Shell’s operations in Canada, Shell’s top Canadian executive, Lorraine Mitchelmore, acknowledged that 2010 had been “a tough year, with 3 the tragedy of the Deepwater Horizon explosion and its Greenpeace activists place a giant banner and block Shell’s open-pit tar sands mine outside of Fort McMurray, Alberta, Canada on September 15, 2009. heavy impact on the US Gulf Coast, plus the Michigan © Greenpeace / Colin O’Connor pipeline spill and the anti–oil sands campaigns being 67 waged in North America and Europe.” bitumen must be upgraded before it can be refined like Her speech acknowledged the challenge of ensuring conventional crude oil. “a future of secure, sustainable and affordable Melting the bitumen out of the ground and upgrading energy with a lower carbon footprint.” For the oil that it into synthetic crude requires a lot of extra energy comes out of the tar sands isn’t like the oil we grew compared to pumping out a liquid, which means that up with. As the world starts to run out of so-called there are much higher greenhouse gas emissions “easy” or conventional oil, the rising demand for oil is per barrel of oil from the tar sands than from forcing companies to both exploit more expensive, conventional oil. and environmentally more damaging forms of unconventional oil like the crudes derived from the tar To determine how much more, the European Union sands, shale gas, or coal-to-liquids and to pursue oil commissioned an independent, peer-reviewed study from riskier and more challenging locations such as the from Stanford University. This review found that the deep ocean or the Arctic. most likely, or “average,” value for oil from the tar sands is 23 per cent more greenhouse gas–intensive This “dangerous abundance” poses huge risks to the than the average for conventional crude used in the planet, according to David Keith, a professor of both EU.69 physics and public policy at Harvard, as well as a prominent analyst of Canadian climate policy: Shell’s planned switch to carbon-intensive unconventional oil poses a dilemma for a company Come when it may, the end of easy oil will not that has long acknowledged that climate change is a signal a shortage of coal, gas and unconventional serious problem, in marked contrast to companies like oil to power our fossil-driven civilization at Exxon-Mobil or Koch Industries. twice our current burn rate for more than two centuries… High prices and oil scarcity will not Shell puts its corporate logo on letters calling on solve the carbon problem; on the contrary, the governments to take action to keep global warming high-carbon emissions associated with a shift to below 2 degrees Celsius and openly advocates for a ultra heavy oil and coal-to-liquids as we ‘scrape price on the pollution that causes climate change. the bottom of the barrel’ will counterbalance the It’s even gone a step further and published a demand reduction spurred by high prices.68 sophisticated political and economic analysis of possible energy futures, along with their associated The billions of barrels of bitumen locked up in Alberta’s implications for climate change, poverty reduction, tar sands are the first of these unconventional forms of human security and freedom.70 oil to be exploited at a large scale. Unlike conventional crude oil that is found in liquid form, the tar-like Shell was also putting at least some of its money bitumen is mixed with sand and clay. It is too thick where its mouth is: the company invested over a billion to flow naturally or to be pumped out of the ground dollars in wind power between 1999 and 2006, was at unless it is heated or diluted with a solvent, and the one time the second-largest solar power company in

15 that Shell announced in 2009 that there would be no “material amounts of investment”73 in wind or solar power going forward. It said it would continue with modest investments in biofuels, but the company made it clear that Shell would stay in the business of selling hydrocarbons. In April 2012, however, Shell cancelled its investment in a large-scale cellulosic ethanol plant in Canada even as it proceeded with plans for new tar sands mines.74 At the same time, the company was touting Canada’s high-carbon tar sands as possessing “the potential to become a major production heartland for Shell for decades to come.”75 The question for Shell is how to square this business strategy with its position on climate change. Publicly, Shell executives justify its investment in the tar sands by arguing that such investment is necessary to meet the 50 per cent growth in demand for oil over the next

3 25 years, as projected by the International Energy 76 Shell Scotford refinery in the Alberta tar sands. © Jiri Rezac / Greenpeace Agency (IEA). Yet anyone familiar with the IEA’s report, World Energy the world, and had a massive ad campaign touting its Outlook 2009, knows that this is only one possible commitment to renewable energy. future, and that the global consumption of energy only increases by 50 per cent in the scenario where no one This green push was at least in part an attempt to in the world adopts new measures to reduce global recover from its public relations disasters of the mid- warming. Going down this path, according to the IEA, 1990s. Shell faced mass public protest in Europe in “would result in the global average temperature rising 1995 that forced it to cancel the deep sea disposal by up to 6 degrees Celsius. This would lead almost of the Brent Spar oil platform, and spent the latter certainly to massive climatic change and irreparable part of the decade trying to make the case that it damage to the planet.”77 really didn’t have anything to do with the death of Nigerian activist Ken Saro-Wiwa, who was executed The IEA actually put forward three scenarios, for protesting its operations in that country.71 These or possible futures. In the scenario where significant concerns haven’t disappeared, as a recent report by efforts are made to address climate change, the the oil industry watchdog Platform found that “Shell’s demand for oil from the Canadian oil sands drops to close relationship with the Nigerian military exposes the such an extent that many of the new oil sands projects company to charges of complicity in the systematic that have already been approved are redundant. killing and torture of local residents.”72 Greenpeace’s Energy [R]evolution blueprint goes even Yet many saw its investments in renewable energy, further, identifying a pathway to a future where we while modest with respect to its overall budget, as a don’t need any new oil from the tar sands and should sign that Shell was prepared to make the transition in fact be working on phase-out plans for existing from being an oil and gas company to becoming the operations.78 kind of green energy provider the world will need if we This possibility was reinforced by a study from The are to avoid the worst impacts of climate change. Massachusetts Institute of Technology (MIT) entitled

The green energy push came to a screeching halt Canada’s Bitumen Industry under CO2 Constraints, in the aftermath of Shell’s 2004 reserves scandal that looked at the market for oil from the tar sands in (discussed below) and as the rising price of oil began a world which was taking serious action on climate making the sector more profitable. The result was change. It found that “with CO2 emissions caps

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Figure 1 Source: Compiled using data from Oil Sands Developers Group, Oil Sands Project List: Updated as of January 2012, online at: http://www.oilsandsdevelopers.ca/wp-content/uploads/2012/01/Oil-Sands-Project-List-January-2012.pdf>, and International Energy Agency (IEA), World Energy Outlook 2009, available at .

implemented worldwide, the Canadian bitumen production becomes essentially non-viable even with This is not to say that the rapid expansion of tar CCS [carbon capture and storage] technology, sands production in Alberta would fuel six degrees of at least through our 2050 horizon. The main reason warming on its own. But as the first significant attempt for the demise of the oil sands industry with global to exploit unconventional forms of oil, the tar sands

CO2 policy is that the demand for oil worldwide drops represent the thin edge of the wedge in one of those substantially.”79 possible futures. What is striking is that the strategic planners at Shell If the world follows a path leading to enough demand know that the growth projections they use to justify the for this high-risk, highly-polluting fuel that we triple or proposed expansion of their tar sands operations are even quintuple the output of the tar sands—taking premised on a world where the climate is spinning out into account that other projects around the world of control. They also know that this is completely at would also be carried out in this scenario, because the odds with the corporate commitment to do its part to high-cost tar sands are amongst the last oil reserves keep global warming below two degrees Celsius.80 that will be tapped—then we are on the route to catastrophic levels of global warming. Alberta currently has the capacity to produce about 1.8 million barrels’ worth per day of output from the tar And developing the tar sands is a significant source sands. There are, however, projects under construction of greenhouse gas emissions on its own. As noted by or with all the necessary permits required to expand climate scientists Andrew Weaver and Neil Swart in this to 4.8 million barrels per day,81 which would result the journal Nature Climate Change, exploiting Alberta’s in more oil than the IEA says is necessary in any of proven reserve in the tar sands (i.e., less than 10 per their scenarios for 2035.82 Meanwhile, there are an cent of the total bitumen in place) would produce three additional intended 3.5 million barrels per day that have quarters of all future carbon emissions allowed for been announced or are undergoing regulatory review, North America if we are to have a reasonable chance including from Shell’s Jackpine mine expansion and the of keeping warming below the two degrees Celsius new Pierre River site.83 limit set in the 2009 Copenhagen Accord. They end their commentary by stating:

17 If North America and international policymakers wish to limit warming to less than 2 degrees C Shell in the Tar they will clearly need to put in place measures that ensure a rapid transition of global energy Sands: New Mines, systems to non-greenhouse-gas-emitting sources, while avoiding commitments to new Old Problems infrastructure supporting dependence on fossil The concern over oil revenue’s being “landlocked 84 fuels. in bitumen” is not restricted to governments. Shell This concern has been echoed by the IEA’s chief has declared the tar sands to be “major production economist Fatih Birol, who has warned that “[a]s each heartland for decades to come”87 and intends to triple year passes without clear signals to drive investment in the share of its total production that it gets from the tar clean energy, the ‘lock-in’ of high-carbon infrastructure sands over the coming years.88 is making it harder and more expensive to meet our The company has been rapidly ramping up its tar energy security and climate goals.” Four-fifths of the sands production and related climate change–causing total energy-related CO emissions permitted to 2035 2 pollution. According to Shell’s 2011 Oil Sands in the IEA’s low-carbon (450 ppm—parts per million) Performance Report, greenhouse gas emissions from scenario are already locked in by existing capital its Canadian tar sands operations grew from 3.8 stock. If we continue with business as usual, the IEA million tonnes in 2007 to 6.7 million tonnes in 2011. estimates that energy-related infrastructure in place by Not only did Shell produce more oil from the tar sands, 2017 would generate all the CO emissions allowed 2 but it had higher emissions per barrel. The emissions in its low-carbon scenario up to 2035. It also found intensity (kilograms of carbon dioxide equivalent per that delaying action is a false economy: for every $1 of barrel, or kg CO e/bbl) of its tar sands production went investment in cleaner technology that is avoided in the 2 from 69 kg CO2e/bbl in 2007 to 82.6 kg CO2e/bbl in power sector before 2020, an additional $4.30 would 2011.89 This is significantly higher than the average for need to be spent after 2020 to compensate for the conventional crude oil production of 35.2 kg CO e/bbl 85 2 increased emissions. 90 in Canada and 24.5 kg CO2e/bbl in the U.S. The implications for the tar sands have been brought The growth trend is projected to continue. Shell now home by Mark Jaccard, one of the foremost climate has projects in the works that would bring its tar sands and energy policy experts in Canada: production capacity to 932,500 barrels per day,91 The facts are simple. Our political leaders are which is enough oil to supply 40 per cent of Canada’s lying to us if they aid and abet the expansion of current consumption.92 tarsands while promising to take action to prevent the imminent climate catastrophe. If you love this planet and your children, and are humble and objective in considering the findings of science, you have no choice but to battle hard to stop Gateway and other tarsands pipelines. It is time to face up to this challenge with honesty and courage.86

18 12ell3s 4ar 1a5ds 6pera785s 1,000,000

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Figure 2 Source: Strategy West Inc. Existing and Proposed Canadian Commercial Oil Sands Projects. January 2011.

This new supply would, however, be destined for water and tailings management plans, as well as the export and could fill the Northern Gateway pipeline, construction of a bridge across the Athabasca River. which could handle 525,000 barrels per day. The bulk The project is designed to produce a total of 200,000 of this increase (300,000 barrels per day) would come barrels of tar sands oil per day and use 55,100,000 from two major projects that are going through the m3/year of water from the Athabasca River.94 environmental assessment process at the same time These projects are being opposed by the Athabasca as Enbridge’s proposed pipeline. Chipewyan First Nation’s (ACFN), who are also suing Shell’s proposed Jackpine Mine Expansion would be Shell for not meeting commitments made as part of the located about 70 kilometres north of Fort McMurray original Jackpine project. The ACFN claim that Shell’s on the east side of the Athabasca River, and cover failure to live up to these agreements with ACFN has approximately 20,800 hectares. The expansion led to harmful impacts on the environment and ACFN’s project would increase tar sands production by constitutionally protected rights and culture, leading 100,000 barrels per day (to a total of 300,000 barrels/ Chief Allan Adam of the ACFN to state: “We’re drawing day). Proposed water usage includes a diversion of the line, and taking a strong stand against Shell. ACFN 18,000,000 cubic metres per year (m3/yr) from the wants no further developments until Shell is brought to Athabasca River.93 justice and our broader concerns about the cumulative impacts in the region are addressed.”95 Shell is also proposing to develop the Pierre River Mine, which involves building a new open-pit mine The Pierre River mine is located about 27 kilometres and associated bitumen extraction facilities. It would to the south and west of the ACFN’s Poplar Point be located approximately 90 kilometres north of Fort Reserve, while the Jackpine expansion would involve McMurray on the west side of the Athabasca River, mining out a portion of the Muskeg River, which is covering about 10,400 hectares. The proposed culturally important to the ACFN. The ACFN and development includes an open-pit mine, an ore- the Mikisew Cree First Nation (MCFN) submitted a handling facility, bitumen extraction facilities, tailings joint response to Shell’s proposal. Their submission processing facilities, support infrastructure, and stated that their members find it increasingly difficult

19 A number of these concerns regarding water quantity appear to have been shared by provincial officials. According to Government of Alberta documents obtained under provincial Freedom of Information legislation, the provincial Sustainable Resource Development ministry: …signed off on the 2010 EIA [the Environmental Impact Assessment submitted by Shell]. However that department has since raised outstanding key issues… Outstanding key issues include:

n Water drawdown impacts on lenticular patterned fen, McClelland Lake and McLelland Fen Complex;

n Peat salvage from External Tailings Disposal Areas;

n Water diversion plan and the creation of the Kearl Lake Levee system;

n Design of a new bridge across the Athabasca River to mitigate wildlife corridor; and

n Sufficient setback along the Athabasca 97 3 River.” Aerial view of Shell’s tar sands mine and tailings pond in Alberta. © Jiri Rezac / Greenpeace With respect to First Nations concerns regarding impacts on the Section 35 rights, the government’s to hunt, fish, trap and gather as their lands are rapidly briefing note stated that Shell had fulfilled the industrialized and that this is inconsistent with section government’s obligation to consult with First Nations, 35 of the Constitution Act 1982, which protects but that they still anticipated opposition from affected First Nations’ right to hunt, fish, and trap as part of communities: guaranteeing a meaningful livelihood now and for the Appropriate consultation with aboriginal groups future. (Fort McKay, Mikisew Cree and Athabasca The two First Nations argued that Shell’s application Chipewyan First nations) was conducted directly was flawed in three respects: by Shell. It is anticipated the joint panel will hear arguments against the project from affected 1. Shell has not provided sufficient information with aboriginal groups for negative impacts on respect to the Project’s impacts and traditional use, cultural values and sustainability infringements of their section 35 rights for the of the Muskeg River.98 Joint Review Panel to comply with the Terms of Reference. There is no evidence, however, of the provincial government considering cumulative impacts even as it 2. Shell has not provided sufficient information for discusses Shell’s plans to more than double production the Joint Review Panel to be able to conduct an in the Fort McMurray area. assessment of the cumulative effects of the Project, either on environmental components or The issue of cumulative impacts, raised by on our section 35 rights and traditional uses. First Nations, has also been a primary focus of environmental groups. The Oil Sands Environmental 3. Shell has not provided sufficient information for Coalition (OSEC), which includes the Pembina Institute, the Joint Review Panel to assess water quantity the Fort McMurray Environmental Association and the issues, including the degree to which the Project Toxics Watch Society of Alberta, has raised concerns could diminish water levels below the threshold with Shell’s Jackpine expansion and Pierre River Mine level where we can still exercise our section 35 proposals. In 2008, the groups argued that “the pace rights and fully access our traditional lands.96

20 of oil sands development is dramatically superceding governments’ responsibility to manage the cumulative environmental impacts of development. To allow another project proposal to proceed in the absence of land use planning and established thresholds is irresponsible and poses long term environmental liabilities to Albertans and Canadians.”99 These concerns were subsequently reiterated in 2010 and 2011, with the groups arguing that the Joint

Review Panel has a legal obligation to ensure that 3 all reasonably foreseeable projects and activities are The First Nations community of Fort Chipewyan lies on the Athabasca River, downstream from the Alberta tar sands. Its residents face abnormally high cancer considered as part of the Panel’s assessment. OSEC rates and their traditional ways of life are at risk because of the effects of widespread noted the following factors, which it felt had been pollution on water, land, and wildlife. © Greenpeace inadequately addressed by Shell:

n There are numerous other projects that may impact the same ecosystem and intensify the resulting environmental effects, including Suncor’s Fort Hills project and the Frontier and Equinox mines.

n Rapid development is evidenced by the Canadian Association of Petroleum Producer’s 2011 projections of a doubling of oil sands mining production and tripling of in situ production in the next 14 years.

n Environmental sensitivities and risks involved include adverse effects on the Muskeg river basin, the Athabasca River valley, and the McClelland fen, which are all ecologically sensitive areas.100 Furthermore, in contrast to Shell’s green rhetoric, the company has a history of broken promises in the tar sands.

21 Shell’s Promise Reality

Shell promises to reduce GHG emissions in order Promise abandoned after projects approved. to facilitate project approvals. In 2009, Shell abandoned its written agreements to In 2003 and 2006, Shell reached bilateral agreements significantly reduce greenhouse gas (GHG) pollution on greenhouse gas emission reductions with a coalition at its Jackpine Mine and Muskeg River Mine Expansion of environmental groups who were participating in projects. the hearings processes for the original Jackpine Mine In approving Shell’s projects, the Joint Review Panel and Muskeg River Mine Expansion projects. These struck by the Alberta Energy Resources Conservation commitments helped inform the decision by the Board (ERCB) and the Government of Canada explicitly governments of Alberta and Canada to grant regulatory noted that they would review Shell’s approval in the approval for the projects in 2004 and 2006, respectively. event that the company failed to fulfill commitments that For the first phase of the Jackpine Mine project, had been presented as evidence, but no action has Shell committed to reducing emissions below those of been taken to address Shell’s broken promise. the most likely commercial alternative (to producing oil The Pembina Institute estimates that without these from bitumen) on a full-cycle basis. commitments, Shell’s GHG pollution from these projects For the Muskeg River Mine Expansion, Shell similarly will increase by an estimated 900,000 tonnes per year, committed to setting an emission reduction target or which is equivalent to adding 200,000 cars to the road goal for new facilities (on a full-cycle basis) that is better in Canada. than the most likely commercial supply alternative.

Shell promises to reduce GHG emissions by Shell negotiates the rights to sell two tonnes capturing CO2 and pumping it back underground. of GHG “offsets” for every tonne it pumps underground, thereby potentially allowing for an Shell has claimed that the greenhouse gas emission overall increase in emissions from the project. removals achieved by a proposed carbon capture and storage project at Shell’s Scotford refinery will be the Under Alberta law, large polluters are allowed to emit equivalent of taking 175,000 cars off the road. a certain amount of GHG emissions for free, and must either purchase offsets for any additional emissions The Quest project is a joint venture of the Athabasca or pay $15 per tonne into a technology fund. By Oils Sands Project partners (led by Shell Canada, but the Alberta government’s granting Shell two tonnes’ also including Chevron Canada Limited and Marathon worth of offset credits for every tonne of CO it pumps Oil Canada Corporation) to capture up to 1.2 million 2 underground, the total number of tonnes of GHGs tonnes per year of carbon dioxide from the Scotford allowed to be emitted is increased, so that there can be upgrader. If the project becomes operational, the CO 2 a net negative effect on greenhouse gas emissions from would then be transported by pipeline 80 kilometres this project. north, where it would be injected underground. Shell was granted this two-for-one emission credit, which represents an additional government subsidy to the project, in spite of the fact that Shell had already received commitments for $865 million in federal and provincial subsidies for the project, out of the total estimated cost of $1.35 billion for the project over its first 10 years.

22 Shell’s Promise Reality

Shell says it complies with provincial water Shell won’t comply with provincial water protection legislation. protection legislation for the next 25 years. Shell claims that its management system for the toxic According to the Pembina Institute’s review of Shell’s water left over from its tar sands operations “conforms tailings management plan, “[t]he Shell Jackpine Mine with 2009 legislation from the Alberta Energy Resources Tailings Management Plan shows that the operation is Conservation Board.” not planning on being compliant with Directive 074 [the Government of Alberta regulation governing tailings management]. Shell suggests they will not meet the Directive 074 requirements until 2027 with respect to tailings capture.” Shell is also relying on an unproven technology—end-pit lakes—for its long-term storage of toxic water from its operations.

Honesty in Advertising Shell was reprimanded and ordered not to run an ad claiming tar sands are “sustainable” again. A national advertising campaign in the UK advertised Shell’s investment in Canada’s tar sands as part of This claim was formally challenged by WWF-UK, building a “sustainable future.” and the UK’s Advertising Standards Authority subsequently ruled that Shell’s claims breached the UK’s CAP Code (of advertising and marketing), with respect to substantiation, truthfulness and environmental protection.

Respect for First Nations Shell is being sued by First Nations for not honouring its commitments “Shell respects the rights of others and works to preserve the traditions and history of Aboriginal Shell is currently being sued by the Athabasca Peoples… Shell aims to be the oil sands operator Chipewyan First Nation (ACFN) for failure to live up to of choice. That means establishing a reputation for the terms of its existing Impact Benefit Agreement. fairness and honesty in discussions and dealings that The ACFN is also opposing Shell’s new tar sands mine respect local residents, Aboriginal groups, businesses projects. and governments.”

23 oil companies controlling an even larger share of Investing in the the remaining cheap and relatively easy-to-extract conventional oil supplies.114 According to The Wall Tar Sands: An Act Street Journal, the thirteen largest energy companies on Earth, measured by the reserves they control, are of Desperation? now owned and operated by governments.115 We are accustomed to thinking of the big multinational This poses a dilemma for the multinationals because oil companies as corporate titans. In many ways, one of the key indicators used by market analysts to they still are: Exxon-Mobil, Shell, BP, Chevron, assess an oil company’s worth is whether or not it is ConocoPhilips and Total are all in the top 20 of the replacing its reserves. If it hasn’t gained access to as Fortune 500. many new barrels of oil as it produced in the past year, But in other ways, these multinational oil companies then it is literally running out of product. have been shouldered aside by the state-owned oil The easiest place for oil companies to find new companies like Saudi Arabia’s Aramco or the China reserves is in northern Alberta, which the Canadian National Petroleum Company. In a rather stunning Association of Petroleum Producers claims is home to example of historical payback for Big Oil’s colonial over half of the proven reserves of oil in the world that misadventures, state-owned oil companies now are still accessible to private investors.116 Much of the engage in aggressive international expansion efforts rest lies deep beneath the ocean or in the Arctic. and have emerged as competitors of their private- In short, the multinational oil companies are reduced sector counterparts in Africa, the Caspian Sea and to scraping the bottom of the barrel to try to keep the now even in the tar sands, as they seek to lock up analysts who determine their stock price happy. remaining reserves for their respective governments.113 Shell has felt this pain more acutely than most. In Fifty years ago, the Western-based multinationals had 2004, Shell suffered a major scandal for overstating its full access to around 85 per cent of global oil reserves. reserves by 4.47 billion barrels,117 or about 25 per cent. Today, it is closer to 20 per cent, with the state-owned This led to a drop in its share price, a $120-million fine

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24 3

Bitumen Extraction: Oil filled soil is removed from the ground at Shell’s mining project in Alberta. © Greenpeace / John Woods

from the US Security Exchange Commission, investor for the ‘marginal barrel’ of non-OPEC supply which lawsuits costing the company over $400 million, and is precisely why expansion projects were hit so hard the departure of the company’s top three executives.118 when oil prices fell sharply.”125 It also resulted in Shell’s rapidly expanding its holdings These resources, and the business model of the in Alberta’s unconventional oil to try to rebuild companies that are banking on them, are only viable those reserves, such that Canada is now home to in a world where the demand for oil is rising rapidly. approximately 30 per cent of Shell’s global resources Otherwise, demand will be met by lower-cost supply, base.119 In 2006, Shell paid $500 million for leases in primarily from the Middle East and Russia. Alberta to what could be 30 billion barrels of oil.120 Yet even the International Energy Agency—the very The company’s 2007 Annual Report announced embodiment of status quo thinking in the energy that the share of its production from unconventional world—is now considering the possibility of the global sources would triple by 2015 (from five to fifteen demand for oil dropping over the next 25 years. The per cent) and that the company’s new strategy was consequence for the Canadian tar sands, they say, is “to be the leading oil sands operator in the industry that “projects currently under construction or being by continuing to focus on operational and project planned would suffice to match supply to demand.”126 execution excellence, and leveraging Shell’s extensive, Or in other words, unless we are prepared for global high quality land positions to drive profitable growth.”121 average temperature to increase by 6 degrees Celsius Shell is not alone. Between 2005 and 2009, four of the this century, we should stop approving and building top six private oil companies would not have achieved new tar sands projects like Shell’s proposed Jackpine reserve replacement ratio levels above 100 per cent if it and Pierre River mines. hadn’t been for Canadian tar sands oil.122 Moreover, there are now financial analysts—and But these reserves aren’t cheap or easy to produce. even Alberta’s Premier’s Council on Economic Shell spent $14 billion to bring on-line a capacity of Strategy—who are also identifying the risk (from the 100,000 barrels per day at its new Jackpine tar sands perspective of tar sands investors) of demand possibly mine, which the company described in April 2010 as dropping even further, turning the tar sands into the “some of the most expensive production that we have.”123 planet’s largest white elephant, and grinding Canadian ambitions of becoming an energy superpower to dust. This is a risky strategy. The boom-and-bust cycle characteristic of natural resource extraction is Greenpeace has mapped out a policy and particularly pronounced in the tar sands because, as technological pathway—what we call the Energy the high-cost supplier, they are the most vulnerable [R]evolution—to achieving even deeper reductions to downturns in demand. For example, over 85 per in oil consumption than those contemplated by the cent of all of the upstream oil and gas projects in the International Energy Agency. world that were cancelled or pushed back by at least Pursuing the path outlined by Greenpeace would 18 months in response to the 2008 recession were be the best shot at preventing dangerous levels of in Canada.124 In the words of the International Energy global warming. Agency, “the oil sands have come to be a by-word

25 Greenpeace’s Energy [R]evolution

The Energy [R]evolution—a joint project of Greenpeace The other major factor reducing the demand for oil will International, the European Renewable Energy Council be a switch to electric drive-trains for vehicles. (EREC) and the German Space Agency (DLR)— In the Advanced Energy [R]evolution Scenario, the final provides a practical blueprint for phasing out fossil energy share of electric vehicles on the road increases fuels, while meeting global energy needs and creating to 4 per cent by 2020, 19 per cent by 2030 and to millions of new green jobs. Since the first edition was over 50 per cent by 2050. Public transport systems will launched in 2005,127 Greenpeace has published Energy also increasingly use electricity to power their vehicles. [R]evolution in over 40 countries, has developed This reduces greenhouse gas emissions because national scenarios, and has published three editions of the electricity sector will be the pioneer of renewable its global version. energy use. By 2030, 60 per cent of electricity will be In 2011, the Nobel Prize–winning organization produced from renewable sources, rising to 95 per Intergovernmental Panel on Climate Change cent by 2050. A significant share of the fluctuating (IPCC) released the Special Report on Renewable power generation from wind and solar photovoltaic will Energy,128 which reviewed over 160 energy scenarios be used to supply electricity to vehicle batteries and to published in the peer-reviewed literature in order to produce hydrogen as a secondary fuel in transport and explore possible deployment rates for renewable industry. energies, as well as the social and environmental When combined, these factors eliminate any global impacts of doing so. The Energy [R]evolution scenario need for any dirty tar sands oil by 2030. was chosen as one of the four lead scenarios for the report. Changes to Public Policy under Energy [R]evolution The Energy [R]evolution explores how we can drive down demand for oil, so that oil from unconventional 1 Separate Oil and State: Reduce the political sources like the Canadian tar sands will become both influence of the fossil fuel industry by unnecessary and uneconomical. reinvigorating democratic processes. The main demand for oil comes from the transport 2 Phase out subsidies for fossil fuels and nuclear sector. This is projected to increase substantially over energy. the coming decades, requiring major investments in 3 Internalize social and environmental costs of exploration and development of new supplies from energy production by putting a price on pollution increasingly risky and expensive sources. In the IEA’s (e.g., a carbon tax or cap-and-trade system). Reference Scenario, demand for oil rises from 84.7 million barrels per day in 2008 to 105.2 million barrels 4 Implement strict efficiency standards for all per day in 2030, with unconventional oil production energy-consuming appliances, buildings and rising from 1.8 to 7.4 million barrels per day over the vehicles. 129 same period. In the IEA’s Low Carbon Scenario, total 5 Establish legally-binding targets for renewable demand for oil in 2030 is lower than in the Reference energy and combined heat and power generation. Scenario, but still higher than 2008 levels. 6 Guarantee priority grid access for renewable To cut back on the need for oil, the Energy [R]evolution energy. scenarios tap into the large potential for improving the efficiency of the transport sector by shifting freight from 7 Implement feed-in tariffs for renewable energy, road to rail, expanding public transit, and by using such as those in Ontario’s Green Energy Act. much lighter, smaller and more-efficient passenger 8 Increase research and development budgets for vehicles. efficiency and renewable energy.

26 The Energy [R]evolution scenario only uses proven technologies and is based on five key principles: Apply equity and fairness. Respect natural limits. Phase out dirty, unsustainable energy sources. Implement renewable solutions and decentralize energy systems. Decouple growth from fossil fuel use. 3

Workers install a solar energy system in Sweden. © Greenpeace / Nicolas Fojtu

This is particularly important to the Harper Banking on the government’s purported new market for the oil sands. China’s demand for oil has been rising quickly, but Tar Sands: A Risky the country is already investing heavily in electric- drive technology thanks in large part to concerns over Proposition energy security. The fact that it has come late to the The federal government’s new strategy of selling tar car-ownership game becomes a blessing, according sands oil to China can succeed economically if the to Deutsche Bank: “China will be skipping the worst possible future scenario it faces is President combustion phase of its transportation development Obama’s administration making progress on his 2008 arc, and moving right to the electric era, much as campaign promise to “end the tyranny of oil.”130 it skipped the landline phase in its communication development and built out a modern wireless system But there is a more nightmarish scenario for Canada’s over the course of 20 years.”133 energy superpower ambitions. And that is the one where the anticipated future growth in demand for oil The result for the companies banking on Canadian oil doesn’t materialize. sands is not pretty: “After the 2016 peak, we expect falling oil prices. The value of high capex [capital This possibility is highlighted in environmentally- expenditure] intensity, long lead time, currently focused reports like Greenpeace’s Energy Revolution un-developed oil, such as undeveloped Canadian 131 or the MIT report on demand for oil from the tar heavy oil sands, oil shales, and Brazilian pre-salt and sands in a world taking serious action on climate other ultra-deepwater plays could be far lower than the change. But the risk this would pose for Canada market currently expects.”134 has also been highlighted by those focused on the economics of unconventional oil. Similar concerns were expressed by the Premier’s Council for Economic Strategy, appointed by then In 2009, financial analysts from Deutsche Bank Alberta premier Ed Stelmach. announced the “end of the oil age.”132 They expect electric vehicles to replace gasoline or diesel-powered The 12-member Council, which was headed up vehicles, in the same way that digital cameras have by Stephen Harper’s former Industry Minister and made film irrelevant. included a former CEO of Shell Canada, was asked how to ensure the province’s prosperity in 2040. While Deutsche Bank expects the price of oil to spike in the present-day prosperity is tied to oil sands exports to short term. Yet this price spike accelerates the shift to the United States, they said, this has left the province electric vehicles, sending demand for gasoline into an vulnerable: “We say this not because there is a danger “inexorable and accelerating decline.” of running out of raw materials–Alberta’s energy resources are massive–but because the production

27 costs of heavy oil from oil sands are among the highest in the world, and because our reputation for Tar Sands and orderly and responsible development is under attack. We must protect this revenue stream by addressing Democracy: A issues of cost and environmental impact.135” Caustic Mixture Yet rather than moving on to the predictable argument on how politicians must step up to defend the oil Resource-led development often brings with it a sands, the Council introduced a more jarring note: “resource curse” that is particularly powerful in oil- dependent economies.137 Researchers have noticed At the same time, we must plan for the eventuality that countries with abundant oil reserves often exhibit that oil sands production will almost certainly be a striking pattern of economic and political decline displaced at some point in the future by lower that emerged alongside the rapid expansion of their cost and/or lower-emission alternatives. We may resource sectors: government corruption and chronic have heavy oil to sell, but few or no profitable citizen disengagement as governments became markets wishing to buy... dependent on energy revenues, and politicians far High prices combined with increasing public more beholden to multi-national oil companies than concern about the environmental impact of to the electorate; a rapidly widening gap between rich oil production will accelerate development of and poor; and currency inflation that led to a decline in substitute transportation fuels (most oil is used the non-energy sectors of their economies. for transportation), such as natural gas, hydrogen Yet these problems haven’t been limited to developing or innovative biofuels. A major disruptive world nations like Nigeria, Chad, Venezuela or Ecuador. technology—or a convergence of smaller In the late 1960s, the Dutch government entered into innovations—could produce an affordable, a massive joint venture with Exxon and Shell to drill environmentally friendly energy source in for off-shore oil and gas. The energy wealth flowed sufficient quantities to drive fundamental shifts in abundantly, but within a decade or so, the tiny country global consumption patterns. found itself in trouble. Energy exports had driven up This would be a great thing for the world and the currency so much that Dutch manufacturers were good for Alberta’s economy if we are ready unable to sell their wares abroad due to unfavourable to exploit such a development. It could be exchange rates (this became known as “Dutch economically devastating if, when it happens, disease”). Unemployment rose, and when those off- we are still heavily dependent on exports of shore reserves finally began to run dry in the 1980s, oil and find markets for our production rapidly the Netherlands was hard-pressed to re-build an disappearing.136 economy that had lost its entrepreneurialism during the boom times. Unfortunately, our ability to “exploit such a development” is undermined by the warping of our And according to a 2008 report from the Organization economy and politics caused by the growth of the tar for Economic Cooperation and Development (OECD), sands. Canada is exhibiting symptoms of Dutch disease: The Alberta oil boom has created many jobs in the rest of Canada, especially in professional services and in the materials and capital equipment supply industries. However, the induced real exchange rate appreciation has cost jobs in manufacturing-based provinces, which are also competing with emerging Asia. For a time the positive job and income spill-overs offset the negative ones. However, with the gathering US recession and depreciating US dollar, the balance has been shifting.138

28 A 2011 analysis noted that Canada is unusual in that n Less electoral competition and a tendency it started suffering negative effects from Dutch disease towards single-party or authoritarian rule: before the resource boom has even ended, thanks to “In effect, access to oil wealth can allow leaders the regional nature of the Canadian economy: to successfully repress or co-opt their opposition, and thus avoid having to relinquish power through [P]ersistently high commodity prices have electoral competition. These adverse political precipitated a resource boom in western Canada effects of oil are not just a problem for developing and a strong appreciation of the Canadian dollar. countries; such patterns have even been seen This phenomenon, without a doubt aided by within the United States”. increased competition from China and other emerging countries, is causing Dutch disease– n Undermining of the planning required to like symptoms in the Canada economy, where prepare making a transition away from relying on manufacturing is undergoing major structural oil revenues, due to the boom-and-bust cycle that changes. Whether or not Canada’s experience accompanies oil development: “[L]onger planning exactly resembles that of the Netherlands, facts is rendered difficult by great uncertainty over on the ground strongly suggest that Canada future financing, especially as a result of might suffer from its own strain of the Dutch fluctuations in the value of the commodity.” disease. n Grievances in producing regions, including those Making the affliction particularly acute is arising from environmental degradation due to oil Canada’s unique geography. As the resource extraction.140 boom and the manufacturing bust are occurring Research on the resource curse in Canada has found in different parts of the country [Alberta and that, contrary to the traditional pattern of weak political Ontario/Quebec, respectively], concurrent institutions which allows the oil industry to dominate, reallocation of resources and jobs from Alberta has strong institutions, but these are geared manufacturing to services and resources, which towards limiting public engagement and promoting the would normally occur in a small country like the interests of the oil industry: Netherlands largely fails to take place.139 Here, policy institutions are indeed well Oil is also noted for having a corrosive effect on developed but they are oriented toward either democracy. A review of the academic literature low intervention or the promotion of tar sands conducted by Jeffrey Sachs, Joseph Stiglitz and developments. Thus these institutions have Macartan Humphreys, found that there is “a series helped to entrench Alberta in petro-statedom of political dynamics associated with oil and gas rather than serving to diversify the economy; dependence [that] can exacerbate adverse economic they seem to have exacerbated environmental effects.” These dynamics can include the following: problems as well as other social and economy n Weak states, as governments become more issues.141 accountable to oil companies than to voters: In other respects, however, Alberta fits in with the “States that are able to generate revenue from the resource curse model. The province generally has the sale of oil and gas are less reliant on citizens, lowest level of voter turn-out in Canada.142 which can result in weak linkages between There is a long-standing political dynasty, with the governments and citizens.” ruling Progressive Conservative Party in power for n Higher levels of corruption: “The short run over 40 years, but the institutionalized power of the oil availability of large financial assets increases the industry extends beyond the ruling party. According to opportunity for the theft of such assets by political scientist Angela Carter: political leaders. Those who control these assets The power of the oil industry is now entrenched can use that wealth to maintain themselves in and institutionalized, in great part through oil power through legal means (e.g. spending in industries’ donations to Progressive Conservative political campaigns) or coercive ones (and Liberal) political campaigns and their (e.g. funding militias).” intense lobby of government, as well as due

29 to the government’s great dependence on the energy sector (which represents 30% of Tar Sands Mines government revenues). Anecdotes abound about the close professional and personal relationships and Pipelines: Not between various levels of government and the oil industry as well as about the revolving door in the National between government positions and oil industry appointments. Likewise, in the words of David Interest Eggen, NDP member of Alberta’s Legislative If Canada follows the lead of Shell and the other oil Assembly and energy and environmental critic, companies by mortgaging our future to the marginal the government has “retooled” itself around barrel of oil, then we make their dilemma our own. supporting this industry and spending its For so long as companies like Shell are committed to revenues. Hence the repeated analogy of Alberta remaining as oil companies rather than evolving into as [a] “company” province: what is good for the something else, there are only two possible futures for 143 oil industry is considered good for Alberta. them: There remains a strong sense of regional grievances The world could move beyond oil to electric vehicles (Western alienation) that was heightened by the 1980 powered by green grids, so that no longer is anyone National Energy Policy, which reduced Alberta oil buying what the oil companies are selling. Shell can’t revenues. More recently, however, as the Western- say it wasn’t warned about this scenario—by its own based Conservative Party under Stephen Harper has former CEO, no less. become the national government, these tensions have expressed themselves in two ways. Within Alberta, The second possibility is that there remains a market there are over-negative impacts from downstream for dirty oil. In this future there will be a different kind of communities (predominantly First Nations) in the north price to pay: the world will be on a pathway to climate of the province. And within Canada, there have been destruction. increasing political tensions between regions and NASA’s top climate scientist, Columbia University provinces over the impact of the Dutch disease on professor James Hansen, writes: manufacturing provinces. As the most energy-intensive source of oil, Nor are the political impacts of the “resource curse” this project [the tar sands] represents the worst necessarily restricted to Alberta. The corrosive of what humans are doing to the planet in a effect of oil on democracy is spreading to the quest to prolong our global addiction to fossil federal government, which wants to build Canada’s fuels. It is still feasible to stabilize climate, but economic future on the tar sands. It can be seen in only if we leave the tar sands in the ground. The the government’s push to silence dissent and weaken massive greenhouse gas amounts from the tar environmental laws. It can be seen in the joint federal sands surely would cause the climate system government–oil industry campaign to kill climate to pass tipping points, while also trampling policies in other countries that would reduce demand on the human rights of Canada’s First Nation for high-carbon oil. communities and greatly damaging the Canadian The shift is not lost on Canadians. A recent national boreal forest… [T]he world has reached a critical poll found that 59 per cent believe the government has juncture in the climate debate. We can either put oil and gas companies’ interests above those of move into the production of the most damaging Canadians, while only 15 per cent agreed that Prime fossil fuel, or we can begin to address our Minister Stephen Harper was putting the interests of destructive addiction.145 144 Canadians over those of oil and gas companies. Canada only faces a similar lose-lose dilemma so long Selling tar sands oil is a way to make a lot of money as we are determined to be a bitumen-based “energy in the near-term, both for the oil companies and the superpower.” That path offers short-term economic governments who would receive royalties and taxes benefits, but would greatly deepen our dependence from this activity. But is it truly in the national interest? on fossil fuels. This would not only fuel global warming,

30 but would also reduce our capacity to thrive in a world that is making the transition to green energy, for the longer we continue down this path, the harder it will be to take a different one. Contrary to the statements from federal politicians and oil industry executives, a bitumen-based, energy superpower future is not the only possible future. We could choose to pursue a greener, safer future— such as the one laid out in Greenpeace’s Energy [R]evolution—by stopping the expansion of the tar sands and requiring reductions in the harm from existing operations as we phase them out over the coming decades through investment in energy efficiency and renewables. This possible future got a boost in June 2011 when the Intergovernmental Panel on Climate Change (IPCC), the planet’s top authority on climate science, released a special report on renewable energy146 whose 900 pages can be summed up rather simply: There is no technical or economic reason that we can’t meet our energy needs without frying the planet or digging deeper holes in the oil sands, but it will take the right policies. What the IPCC didn’t mention was that getting those policies in place will be particularly tough if people running one of the most powerful corporations on the planet, or the government of one of the top greenhouse gas polluters, feel compelled to fight that future in the interest of next year’s profits. Oil executives may see scraping the bottom of the barrel in the tar sands as being in the best interest of their shareholders. New tar sands mines and pipelines are not, however, in the best interest of any citizen who recognizes an obligation to future generations. For, in the face of the climate crisis, our true national interest lies in acting as citizens who want to be remembered as good ancestors. And that means saying “No” to both Shell’s new mines and Enbridge’s pipeline, and “Yes” to an Energy [R]evolution.

31 Endnotes

1 Whittington, Les. “Titanic clash looms over proposed the Canadian Association of Petroleum Producers, Northern Gateway pipeline.” The Toronto Star. 8 January to Cassie Doyle, Deputy Minister of Natural Resources 2012. Canada. 11 June 2009. Document obtained under 2 Canadian Energy Research Institute. Canadian Oil Sands Access to Information legislation. Supply Costs and Development Projects (2011–2045). 21 Natural Resources Canada. “Briefing Note for the March 2012. Deputy Minister: Points to Register for Your Meeting with 3 Royal Dutch Shell. Delivery and Growth: Annual Review Oil Company Executives on Friday, June 12, 2009 and Summary Financial Statements 2007. 2007. Web: at 11:30 a.m. at Nexen Inc. Headquarters, Calgary AB.” . legislation. 4 EnviroEconomics Inc., Dave Sawyer and Seton Stiebert. 22 European Oil Sands Advocacy Calendar. March– Fossil fuels: At what cost? Government support for upstream oil December 2010. Document obtained under Access to activities in three Canadian Provinces. International Institute for Information legislation. Sustainable Development. 2010. 23 De Souza, Mike. “Diplomats ‘targeted’ influential media to 5 Government of Canada. Jobs, Growth and Economic boost oil sands coverage in Europe.” The Financial Post. Prosperity: Economic Action Plan 2012. 29 March 2012. 6 March 2012. 6 Organization for Economic Cooperation and Development 24 Carrington, Damian. “UK secretly helping Canada push its (OECD). Policy Brief: Economic Survey of Canada 2008. oil sands project.” The Guardian. 27 November 2011. 2008. 25 Climate Action Network. Dirty Oil Diplomacy: The 7 Howlett, Karen, and Dawn Walton. “Redford’s Energy Canadian Government’s Global Push to Sell the Tar Vision Clashes with McGuinty’s View of Oil Sands Sands. March 2012. Benefits.” The Globe and Mail. 27 February 2012. 26 Stewart, Keith. “Confidential federal tar sands strategy 8 Galloway, Gloria. “Mulcair digs in for long debate on ‘Dutch targets Aboriginal and green groups.” 26 January 2012. disease.’” The Globe and Mail. 18 May 2012. Web: . Peak Oil Market: Price Dynamics at the End of the Oil Age. Report. Deutsche Bank Securities Inc. 4 October 2009. 27 Harper, Stephen. Fundrasing letter sent to members of Web: . 10 Government of Alberta. Premier’s Council for Economic 28 Government of Canada. “First Steps Taken towards Strategy. Shaping Alberta’s Future. Report. May Made-in-Canada Approach.” News release. 13 April 2011. Online at: . Page 6. 29 HSBC Global Research. “A Climate for Recovery: The 11 Harper, Stephen. Address by the Prime Minister to the colour of stimulus goes green.” 25 February 2009. Canada-UK Chamber of Commerce. 14 July 2006. Web: See also Jon Strand and Michael Toman, Green . Stimulus, Economic Recovery, and Long-Term Sustainable Development, Policy Research Working 12 Straub, Brian (President and Country Chair, Shell Paper 5163 (The World Bank, January 2010). Canada Limited). Letter to Prime Minister Stephen Harper. 11 February 2009. Document obtained under Access to 30 International Energy Agency (IEA). Energy Policies of IEA Information legislation. Countries: CANADA 2009 Review. 2010. Pp. 9, 237. 13 Straub, Brian (President and Country Chair, Shell 31 Government of Canada. Announcement. Natural Canada Limited). Letter to Prime Minister Stephen Harper. Resources Canada. 31 March 2010. Online at: 11 February 2009. Document obtained under Access to . Information legislation. 32 Galloway, Gloria. “Tory budget ‘walks away’ from 14 Bramley, Matthew, et al. Responsible Action? An renewable energy, environmentalist says.” The Globe and Assessment of Alberta’s Greenhouse Gas Policies. Mail, 10 March 2010. Pembina Institute. December 2011. 33 Mittelstaedt, Martin, and Gloria Galloway. “Ottawa revises 15 Beale, Mike. (Assistant Deputy Minister, Environment rules of environmental review regime.” The Globe and Canada). “Debrief – Shell Canada”. E-mail obtained under Mail. 31 March 2010. Access to Information legislation, 15 October 2010. 34 International Institute for Sustainable Development. Fossil 16 Beal, Mike (Assistant Deputy Minister, Environment fuels: at what cost? Government support for upstream oil Canada). “Debriefs and update—Shell, elect”. E-mail activities in three Canadian provinces: Alberta, obtained under Access to Information legislation. 20 Saskatchewan and Newfoundland and Labrador. January 2011. November 2010. 17 Straub, Brian (President and Country Chair, Shell Canada 35 Government of Canada. Jobs, Growth and Economic Limited). Letter to Kevin Lynch, Clerk of the Privy Council Prosperity: Economic Action Plan 2012. 29 March 2012. and Secretary to the Cabinet. 13 May 2009. Document 36 Galloway, Gloria. “Don’t gut Fisheries Act, scientists urge obtained under Access to Information legislation. Harper”. The Globe and Mail. 22 March 2012. 18 Data compiled by Greenpeace Canada, based on the 37 Globe and Mail editorial board. “Budget’s new rules federal government’s Registry of Lobbyists. unfairly target environmental groups.” The Globe and 19 Fekete, Jason. “Energy industry fought Ottawa over Mail. 31 March 2012. greenhouse gas regulations: document”. The Calgary 38 Government of Canada. Jobs, Growth and Economic Herald. 3 April 2012. Prosperity: Economic Action Plan 2012. 29 March 2012. 20 Collyer, Dave. “List of participants for June 12 meeting Page 204. between the Clerk of the Privy Council and oil sands industry leaders.” E-mail from Dave Collyer, President of

32 39 Ethical Oil. “Environmental Lobby Group Violating 60 Van Loon, Jeremy. “Canada’s Oil-Sand Fields Need Charities Law.” Web: . 7 September 2011. 40 Dembicki, Geoff. “Who’s Behind New Pro–Oil Sands Ad 61 Oliver, Joe. “An Open Letter from Natural Resources Blitz?” The Tyee. 8 September 2011. Web: . Web: . political-connections-part-1-conservatives-go-newclear/>. 62 Ljunggren, David. “Harper vows to ensure Enbridge’s 42 Chase, Steven. “Peter Kent’s green agenda: Clean up Northern Gateway pipeline is built.” The Vancouver Sun. oil sands’ dirty reputation.” The Globe and Mail. 6 January 10 February 2012. 2011. 63 West Coast Environmental Law. “Tar sands, Tankers 43 Blackwell, Richard. “Canada will look elsewhere to sell oil and Pipelines.“ Web: . and Mail. 29 October 2011. 64 Swift, Anthony, et al. Pipeline and Tanker Trouble: The 44 Chase, Steven. “Harper’s embrace of ‘ethical’ oil sands Impact to British Columbia’s Communities, Rivers, and reignites ‘dirty’ arguments.” The Globe and Mail. 8 Pacific Coastline from Tar Sands Oil Transport. Published January 2011. by the Natural Resources Defence Council, Pembina Institute and Living Oceans Society. November 2011. 45 Wells, Paul. “Canada’s Crude Awakening.” Macleans Magazine. 20 January 2012. 65 Stueck, Wendy. “Native leaders vow to block Northern Gateway pipeline.” The Globe and Mail. 2 December 2011. 46 Pierce, Susannah. “Follow up from Wilson’s garden party.” E-mail to Minister of Defence Peter MacKay. 7 July 2010. 66 Yinka Dene Alliance. Save the Fraser Declaration. Document obtained under Access to Information legislation. November 2010. Online at: . 47 McCarthy, Shawn. “Russia, Pumped.” The Globe and Mail. 6 November 2007. 67 Mitchelmore, Lorraine. “Shell: The Next Hundred Years.” Speech to the Calgary Chamber of Commerce. 28 48 Simpson, Scott. “Canadian oil ‘discount’ surpasses $30 October 2010. a barrel.” The Calgary Herald. 28 March 2012. 68 Keith, David. “Dangerous Abundance.” In Carbon Shift: How Peak Oil and the Climate Crisis Will Change Canada 49 Marshall, Christa. “Debate Intensifies Over Climate (and Our Lives). Eds. Thomas Homer Dixon and Nick Change Aspects of Canada’s Oil Sands Pipeline.” Garrison. Toronto: Vintage Canada Editions. 2010. Pp. 30 The New York Times Energy and Environment Blog. and 52. 25 July 2011. Online at: . Emissions from Canadian Oil Sands as a Feedstock for European Refineries. Report. Department of Energy 50 Vanderklippe, Nathan. “Streamline pipeline approvals or Resources Engineering, Stanford University. 18 January lose business, oil executives warn.” The Globe and Mail. 2011. 25 January 2012. 70 Shell International BV. Shell Energy Scenarios to 2050. 51 Canadian Energy Research Institute. The Impacts of Report. 2008. Web: . Economy. October 2009. 71 Stockman, Lorne, Andy Rowell, and Steve Kretzmann. 52 Alvarez, Pierre R., Michael Cleland, and Roger Gibbins. Shell’s Big Dirty Secret. Friends of the Earth Europe. National Energy Security from an Exporter’s Perspective: June 2009. Web: . Agency. 15 December 2008. 72 Amunwa, Ben. Counting the Cost: Corporations and 53 Weyler, Rex. Greenpeace: the Inside Story. Vancouver: Human Rights Abuses in the Niger Delta. Report. 3 Raincoast. 2004. 453 pp. October 2011. Web: . Energy Dialogue. 8 April 2010. Web: . . The Globe and Mail. 27 July 2010. 74 McCarthy, Shawn. “Shell, Iogen kill Canadian biofuel plant 56 Canadian Association of Petroleum Producers (CAPP). plans.” The Globe and Mail. 30 April 2012. Market Access through Canada’s West Coast for Natural 75 Macalister, Terry. “Shell Wants to Produce Five Times Gas & Crude Oil. November 2011. More Oil from Tar Sands.” The Guardian. 18 March 2008. 57 Mitchelmore, Lorraine. “Shell: The Next Hundred Years.” Web: . October 2010. 76 Mitchelmore, Lorraine. “Shell: The Next Hundred Years.” 58 Vanderklippe, Nathan. “Rush to build pipelines aims to Speech to the Calgary Chamber of Commerce. 28 break crude logjam.” The Globe and Mail. 28 March 2012. October 2010. 59 Blackwell, Richard. “Canada will look to sell oil elsewhere 77 International Energy Agency (IEA). World Energy Outlook if U.S. balks at Keystone XL: Oliver.” The Globe and Mail. 2009. Report. 2009. P. 44. Available at: .

33 78 Teske, Sven, Dave Martin and Keith Stewart. Energy 98 Ibid. [R]evolution: A Sustainable Energy Outlook for Canada. 99 Simieritsch, Terra. Letter to Alberta Environment on behalf Greenpeace, and European Renewable Energy Council. of the Oil Sands Environmental Coalition. 2 October 2008. 2010. 100 Gorrie, Melissa. Letter to Shell Review Panel Secretariat 79 Chan, Gabriel et al. Canada’s Bitumen Industry under on behalf of the Oil Sands Environmental Coalition. 19 CO2 Constraints. Report number 183 of the MIT Joint August 2011. Program on the Science and Policy of Global Change. Massachusetts Institute of Technology. January 2010. 101 The Pembina Institute. Shell Breaks Global Warming Promise for Oil Sands Projects. Report. 8 April 2011. 80 Personal communication. The author has raised this Web: . point directly with senior executives on two occasions (19 November 2009 and 30 May 2011), at Shell- 102 The Pembina Institute. Shell Breaks Global Warming sponsored dialogues with environmentalists, industry, Promise for Oil Sands Projects. Report. 8 April 2011. academics and government officials. Web: . 81 Oil Sands Developers Group. Oil Sands Project List: 103 Shell Canada. About Quest12. Web: . Sands-Project-List-January-2012.pdf>. Accessed 26 March 2012. 82 International Energy Agency. World Energy Outlook 2009. 104 Energy Resources Conservation Board (ERCB). “Notice Report. 2009. of applications: Shell Canada Limited, Quest Carbon Capture and Storage.” 2 August 2011. Web: . oilsandsdevelopers.ca/wp-content/uploads/2012/01/Oil- Sands-Project-List-January-2012.pdf>. 105 Severson-Baker, Chris. “Bonus credits for CCS weaken Alberta’s greenhouse gas regulations.” Web: 84 Swart, Neil C., and Andrew J. Weaver. “Commentary: The . Alberta oil sands climate.” Nature Climate Change. Published online 19 February 2012. 106 Government of Alberta. “Alberta inks deal for Shell Quest CCS project.” Press release. 24 June 2011. Web: . consequences, IEA warns in its latest World Energy Outlook.” Press release. 9 November 2011. 107 Shell. “Athabasca Oil Sands Project: Managing Water.” Web: . Vancouver Sun. 26 January 2012. Accessed 27 March 2012. 87 Macalister, Terry. “Shell Wants to Produce Five Times 108 Simieritsch, Terra, Joe Obad and Simon Dyer. Tailings More Oil from Tar Sands.” The Guardian. 18 March 2008. Plan Review—An Assessment of Oil Sands Company 88 Royal Dutch Shell. Delivery and Growth: Annual Review Submissions for Compliance with ERCB Directive 074: and Summary Financial Statements 2007. 2007. Web: Tailings Performance Criteria and Requirements for Oil . Matters. 2009. 89 Shell Canada. Oil Sands Performance Report 2011. 109 Advertising Standards Authority (ASA). “ASA 2011. Page 14. Adjudication on Shell International Ltd.” 13 August 90 National Energy Technology Laboratory. Development of 2008. Web: . table 2-4. 110 Ibid. 91 Strategy West Inc. Existing and Proposed Canadian 111 Shell Canada. Canada’s Oil Sands. Issues and Commercial Oil Sands Projects. January 2011. Also see Opportunities: Community. Web: . Pp. 8, 13. upstream/oil_sands/>. 112 Athabasca Chipewyan First Nation. “Shell’s 92 Energy Academy and Centre for Economic Reform and Environmental Impact Assessment Fails to Protect the Transformation, and Herriot-Watt University. BP Statistical Environment and First Nation Rights.” Press release. 20 Review of World Energy. Report. June 2011. Web: December 2011. Web: . com/2011/12/20/shells-environmental-impact- 93 Strategy West Inc. Existing and Proposed Canadian assessment-fails-to-protect-the-environment-and-first- Commercial Oil Sands Projects. January 2011. nation-rights/>. 94 Ibid. 113 Klare, Michael T. Rising Powers, Shrinking Planet: The New Geopolitics of Energy. Holt. April 2008. 95 Athabasca Chipewyan First Nation. “Shell’s Environmental Impact Assessment Fails to Protect the 114 Dutto, Paolo R., Rodolfo Guzmán, and Environment and First Nation Rights”. Press release. Srinivasaraghavan Suresh. New Business Models for the Web: . The Wall Street Journal. 22 May 2010. 96 Ibid. 116 Canadian Association of Petroleum Producers. Report 97 Government of Alberta. “Meeting with Shell Canada of the Dialogues on the Oil Sands. April 2011. Web: (Shell)—May 10, 2011.” Briefing note. Obtained by . 117 Royal Dutch Shell. The Shell Report 2004: Meeting 132 Sankey, Paul, Silvio Micheloto, and David T. Clark. The the Energy Challenge—Our Progress in Contributing Peak Oil Market: Price Dynamics at the End of the Oil to Sustainable Development. Report. 2004. Web: Age. Report. Deutsche Bank Securities Inc. 4 October . 128_Deutsche Bank - The Peak Oil Market.pdf>. 118 Pals, Fred. “Shell Closes Book on 2004 Reserves 133 A December 2010 update from Deutsche Bank Scandal as Claims Deadline Passes.” Bloomberg. 5 reiterated this basic argument, saying “Taken together, November 2010. Web: . greater near-term gasoline demand, but also increased 119 Natural Resources Canada (NRCan). “Confirmed confidence in the pace and breadth of the long-term shift Companies’ Activities and Interests in Canada’s Oil to a more efficient transportation system.” Sankey, Paul, Sands.” Briefing note. Document obtained under Access Silvio Micheloto, and David T. Clark. The End of the Oil to Information legislation. Age: 2011 and beyond: A reality check. Deutsche Bank Securities Inc. 22 December 2010. 120 Stockman, Lorne, Andy Rowell, and Steve Kretzmann. Shell’s Big Dirty Secret. Friends of the Earth Europe. 134 Ibid. June 2009. Web: . Page 12. Alberta’s Future. Government of Alberta. 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Web: . aspx?id=388>. Table 3.2, on p. 142. 143 Angela V. Carter. “Cursed by Oil? Institutions and 125 International Energy Agency (IEA). Medium-Term Oil Environmental Impacts in Alberta’s Tar Sands”. Paper Market Report. Ed. David Fyfe. 29 June 2009. Web: prepared for the Canadian Political Science Association . P. 48. Conference, May–June 2007. Page 13. 126 International Energy Agency (IEA). World Energy Outlook 144 Vongdouangchanh, Bea. “Feds set Canada back 50 2010. 2010. Web: . P. 147. 30 April 2012. 127 Greenpeace. Energy Revolution: A sustainable 145 Hansen, James E. “An Open Letter to Norwegian pathway to a clean energy future for Europe. Greenpeace Prime Minister Jens Stoltenberg.” Aftenposten. Oslo. International. September 2005. 19 May 2010. Online at: . IPCC Special Report on Renewable Energy Sources and 146 Intergovernmental Panel on Climate Change (IPCC). Climate Change Mitigation. 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January 2010.

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