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Jeffrey Simpson (Brigitte Bouvier For The Globe and Mail)

Jeffrey Simpson

(Brigitte Bouvier For The Globe and Mail)

JEFFREY SIMPSON

There is a way to clean up 'dirty' oil's problems Add to ...

Canada’s bitumen resources have a problem, and neither the companies that wish to exploit bitumen or the governments trying to help them seem to understand it.

Bitumen, from which oil is produced, takes more energy per barrel to get at than conventional oil pumped from the ground. Because it needs more energy, bitumen-derived oil produces more greenhouse gas emissions that cause global warming than conventional oil.

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That gap – between bitumen-derived and conventional oil – is the problem the industry and governments don’t seem to get. And that gap will widen as more steam-driven in-situ production comes on line, since in-situ uses more energy than open-face mining of bitumen.

There’s not much the oil industry can do about opponents who don’t like any fossil fuels and seek their elimination. These opponents are going to do what they can in an open society to stick spokes in the industry’s wheels. They can do so in a free society in a way not available in dictatorships, autocracies, kingships and other authoritarian regimes. It’s the price Canada (and other democracies) pay for something called freedom within the law.

But there’s another group of opponents that could be assuaged if that gap were eliminated. These people know that the demand for oil will remain considerable around the world and that renewable energy cannot meet it. A market will therefore exist for oil from bitumen, but they worry about the gap. They are the ones who label bitumen-derived oil “dirty oil,” and they are not going away.

That gap led people in the European Union (where climate change is taken more seriously than in Canada) to propose modifying a fuel standard to make refiners and marketers reduce the carbon content in their fuels. The new standard would have singled out bitumen-derived oil because it was more carbon-intensive in emissions. One study, from Stanford University, used by the European Commission, put the gap at 22 per cent.

An EU committee deadlocked Thursday over the proposed designation of bitumen-derived oil. The matter now will be kicked up to EU ministers, where Canada’s lobbying efforts will be directed. The European market doesn’t matter much for the bitumen folks. They’re worried that a European precedent might embolden certain U.S. states to discriminate against bitumen-derived oil because of its dirtier quality.

The European fuel directive, the postponing of the Keystone XL pipeline in the U.S. and the prolonged fight that awaits Enbridge’s Northern Gateway Pipeline from the bitumen deposits to the Pacific Coast all point to a nightmare scenario for the industry: lots of oil, lots of foreign markets, but no way to get the oil there.

Thus far, the industry has taken the dual route of public relations and lobbying to persuade foreign governments or populations and, in the case of Northern Gateway, aboriginals. Jobs, too, are on offer, but pipelines create jobs mostly during construction and not many thereafter.

Industry has also enlisted governments, although that enlistment hasn’t been difficult. The Harper government and the Alberta government are at the industry’s beck and call, so that the diplomatic resources of Canada have been extensively deployed in the U.S. and Europe. Prime Minister Stephen Harper’s recent visit to China was partly about talking up a China alternative for bitumen-derived oil.

The Chinese, given their ravenous desire for resources, don’t care about the source of the oil – conventional or bitumen-derived. That one creates more greenhouse gases than the other means nothing to them.

But it does to certain opponents in North America and Europe. Or at least, the proponents of the bitumen industry and its political defenders would have an easier time of it if they addressed this core problem, instead of relying on public relations and lobbying.

For that to happen, the governments would have to put some pressure on the industry through tighter emissions regulations or a higher price on carbon, and the industry would have to pinch itself. Neither has happened. Until the gap is eliminated, or good-faith efforts are seen to be made to move toward its elimination, the industry will have a hard time of it.

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