Biden, Keystone XL, and a Green New Deal could shake up Canada鈥檚 energy industry
May 28, 2020
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U.S. Democratic presidential candidate Joe Biden . 鈥淚鈥檝e been against Keystone from the beginning. It is tarsands that we don鈥檛 need 鈥 that in fact is a very, very high pollutant,鈥 he said.
This is just the latest move in a long political game with respect to Keystone XL. In 2015, Vice-President Biden supported President Barack Obama鈥檚 decision to block the pipeline. After the 2017 election, President Donald Trump restored the project. If completed, the 1,900-kilometre pipeline would carry crude oil from Alberta to Nebraska, ultimately feeding refineries on the Gulf Coast.
Now Biden says he would shut it down again if he鈥檚 elected president in November. Canadians need to know that he is really making three arguments against the project, which may require Canada to re-examine its energy sector strategy.
鈥楬igh pollutant鈥
Biden points to Canada鈥檚 oilsands as having 鈥溾 very, very high pollutant鈥 levels. There is some truth to this perception.
In the United States, the production of conventional oil and its transport to refinery gates produce . Shale oil compares favourably , for production, but these figures do not include upgrading and transport, or refining. Long-term studies of Canadian oilsands surface mining suggest greenhouse gas (GHG) emissions (the latter figures include upgrading).
The transport of the oil product to refineries in the U.S. increases the GHG emissions of Canadian oil to between 16-33 g CO2e/MJ, depending on the distance covered and whether the product is moved through pipelines (smaller footprint) or by rail (large footprint). When taken together, this shows that greenhouse gas emissions of oilsands production, upgrading and transport are at least four times greater than U.S. conventional oil.
Alberta and the oil industry have fought back against these negative perceptions. The Canadian Association of Petroleum Producers report that GHG emissions per unit of GDP have , although . Alberta Premier Jason Kenney has invested $30 million into a 鈥,鈥 echoing past campaigns labelling oil from overseas as 鈥.鈥
The scientific literature has provided Canadian producers with some arguments to support oilsands production. For example, the relatively low GHG emissions of shale oil are counterbalanced by a host of , issues of geological instability and earthquakes, and growing concern about the longevity of shale operations.
Yet the Canadian energy sector is still perceived as a poor environmental performer. Earlier this month, Norway鈥檚 Sovereign Wealth Fund from its portfolio, and BlackRock, the world鈥檚 largest asset manager, also in early 2020. Recent research found .
鈥榃e don鈥檛 need鈥 that oil
Biden also suggested that resources, a reflection of the dramatic shifts in U.S. oil production over the past decade. In 2010, the U.S. produced , but it now has the capacity to produce .
A big part of this growth has been due to shale production, which grew to in 2019 from just over . Canadian oil, which amounts to , was once critical to U.S. energy security but has become less relevant.
The current COVID-19 situation has further decreased the U.S. need for oil. As 2020 unfolds, investors are predicting oil production drops of across the U.S. Much of produced oil is being stored, and oil storage capacity is (or, ). Regardless, demand for gasoline and other oil products has reached its .
What will happen to oil demand as we exit the pandemic and the economy restarts? Some speculate that more and more people will , giving governments licence to and increase active transit options.
Others warn that , sparking a resurgence in and other refined oil products, and leading to .
鈥榃e鈥檙e gonna transition 鈥 to a clean economy鈥
Biden鈥檚 comments emphasized the need to transition away from fossil fuels, echoing calls for a , championed by key Democrats such as congresswoman Alexandria Ocasio-Cortez.
The Green New Deal combines a series of goals including , along with full access to health care and guaranteed wages. As one of the most senior Democrats to endorse the Green New Deal, Biden could be expected to support this movement should he win the White House.
But the Green New Deal may be a difficult sell in the post-COVID world. While renewable energy generation costs are increasingly cheaper, it is , and upgrading the grid to deliver renewable energy may result in 鈥 something that may not be easy to manage during a major recession.
Very real concerns about must be also be addressed within a Green New Deal 鈥 and it will take time to do this right. These concerns and challenges will buy countries like Canada time to adapt their own energy sector to better serve a rapidly changing market south of the border.
Biden鈥檚 words should lead Canadians to pause and reflect on the direction that the energy sector is going. Canadian companies depend on the international marketplace, and that marketplace is demanding cleaner energy products.
The U.S. has already become a major oil producer, and it鈥檚 left Canadian companies struggling. A Green New Deal will simply serve to accelerate these trends. Without significant change, Canada鈥檚 energy sector risks being left behind.
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is the Executive Director of the School of Policy Studies, Associate Dean of the Faculty of Arts and Science, and Director of the Queen's Institute for Energy and Environmental Policy. He is a professor in the Department of Geography and Planning with a cross-appointment to the School of Environmental Studies.
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