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The oil sands will see carbon output rise by 62 megatonnes, tripling its 2005 levels, according to an Environment Canada forecast.Jeff McIntosh/Associated Press

The development of Canada's oil sands will single-handedly undo greenhouse gas gains made by weaning the country's electrical supply off coal, a government study predicts.

The Environment Canada forecast of Canada's carbon output over the next decade casts in stark terms the challenge facing the country as it pursues major energy development at a time of continued global efforts to bat down emissions.

The report, called Canada's Emissions Trends, was released quietly in July. It tracks changes in greenhouse gas output for a number of sectors between 2005 and 2020.

Over that period, it projects that electricity generators will see their emissions fall by 31 megatonnes of carbon dioxide equivalent, largely as a result of coal-fired plants giving way to natural gas-fired power.

But that figure is far eclipsed by the oil sands, which will see carbon output rise by 62 megatonnes, tripling its 2005 levels. Of that, 25 megatonnes will come from new so-called "in situ" extraction methods that inject steam into underground wells to extract oil sands crude. A further 11 megatonnes will come from expansion of oil sands mining. The rest is expected from additional upgrading, a process used to transform the thick, heavy oil sands bitumen into a lighter crude that can then be refined into end products like diesel and gasoline.

Over all, the oil and gas sector will see its emissions rise by 46 megatonnes, after taking into account expected reductions from pipelines, refining and the production of non-oil-sands crudes.

In total, Environment Canada expects the country's greenhouse gas emissions to rise by 54 megatonnes, as other sectors, including transportation, buildings and agriculture, also see increases.

But the massive gains in oil sands emissions output are perhaps the most remarkable figures in the report.

"This is the first time we've seen just exactly the difference between the different sectors, and just how out of line the oil sands emissions are," said Simon Dyer, policy director at the Pembina Institute.

Mr. Dyer points out that, by 2020, the oil sands will account for 12 per cent of national emissions. "That's more than any province other than Alberta and Ontario, and is 40 per cent more than Quebec's total projected emissions in 2020," he said.

By 2020, Canada is expected to exceed its carbon output targets by 178 megatonnes, or nearly 30 per cent.

Industry, however, argues that technological advances are likely to make the Environment Canada estimates too high.

"You'll see some significant reductions going ahead," Steve Laut, president of Canadian Natural Resources Ltd., said in an interview. He pointed to a new system under development at the company's Horizon oil sands mine that will see carbon captured from one of its plants and buried with liquid mine waste.

That alone will provide "up to a 20-per-cent reduction" in per-barrel emissions, Mr. Laut said.

Alberta, which is home to virtually all of the country's oil sands development, has also worked to defend – and insulate – its biggest industry against greenhouse gas legislation. The province charges companies that exceed certain targets $15 a tonne for carbon output – but in an interview, Energy Minister Ron Liepert said Alberta does not want to see Canada meet its commitments to international greenhouse-gas-reduction protocols.

"I'm not interested in Kyoto-style policies. That's something that was the previous Liberal government. We're working with the current government to ensure that we do what we can, but at the same time we're not going to cripple the Canadian economy," he said.

Mr. Liepert pointed to industry efforts to reduce per-barrel emissions, although those efforts pale in comparison with the rapid expansion of the oil sands, which is seeking to double its crude production over the next decade.

Mr. Liepert argued the oil sands are too important to be slowed. He pointed to last week's economic numbers, which saw Alberta create 12,000 jobs, making it one of only two provinces to show employment gains.

"You might want to take a look at who is fuelling the Canadian economy right now," he said. "If we didn't have the resource base of Western Canada, we'd be in exactly the same [situation]as the U.S. is in."

Environmental groups, however, say the rise in oil sands emissions poses numerous problems. Not only could it create regional strife – should Alberta, for example, be allowed to use up the country's carbon allowance while other areas achieve reductions? – but critics argue that industry itself could suffer from major emissions gains.

Mr. Dyer pointed to delays in the U.S. over approval of the Keystone XL pipeline, which have stemmed in part from concerns over rising oil sands emissions, and to efforts in Europe to legislate against oil-sands-derived crude.

"Canada's failure to act on greenhouse gas pollution is starting to be an economic liability," he said.