Toronto, ON – New research released today highlights the many risks and barriers facing plans for rapid tar sands expansion. The study, Far from Inevitable: the Risks of and Barriers to Tar Sands Expansion, makes it clear that the tar sands are a high risk, high cost resource and that their long-term development is growing increasingly uncertain.
Published by Environmental Defence and the Natural Resources Defense Council (NRDC), the study should make companies and investors re-evaluate continued investment in the sector. It should also encourage the Canadian and Alberta governments to think twice about betting on oil rents and royalties.
“These days we’re more likely to hear about tar sands companies cancelling or shelving projects than announcing new projects or construction. We’ve reached a tipping point where tar sands expansion is no longer inevitable,” said Tim Gray, Executive Director, Environmental Defence. “With increasing costs of production, costly delays and dropping oil prices, the financial risks of investing in the tar sands are considerable.”
In addition to lower oil prices, the study delves into other barriers and risks facing tar sands companies, including:
Aboriginal legal challenges;
A problematic environmental footprint and the possibility of increased regulations;
A growing recognition that tar sands development presents serious public health risks;
Pipeline opposition from the public, provinces, and municipalities across North America;
Current market forecasts making tar sands development uneconomical;
Eroding public support for tar sands expansion. A majority of Canadians believe that “while there is a need for energy in Canada, it does not outweigh the environmental risks with tar sands development.”
Together, these are already leading to declining investment.
The study also discusses the carbon bubble, the notion that three-quarters or more of known fossil fuel reserves must stay in the ground to avoid catastrophic levels of climate change. Key leaders, including Mark Carney, governor of the Bank of England, and Obama’s leading climate envoy Todd Stern, have endorsed the idea that substantial fossil fuel reserves must be left in the ground.
“When President Obama’s leading climate negotiator and the Bank of England warn that the vast majority of fossil fuel reserves have to stay in the ground, investors in one of the dirtiest and most expensive forms of oil had better take stock,” said Danielle Droitsch, Canada Project Director at NRDC. “The tar sands are facing serious headwinds, and investors, companies, and the Canadian government need to take these risks seriously.”
Currently, almost two million barrels per day of oil are produced from the tar sands. The Canadian Association of Petroleum Producers (CAPP) recently revised its 2020 production estimate from four million barrels per day to just over three million barrels.
The report, Far from Inevitable, summarizes and assembles the litany of risks and barriers to continued expansion, and suggests that it’s time for CAPP to admit that its forecasts will not come to pass. It’s time to move on for the sake of workers, investors, and the Albertan and Canadian economies.
Download the full report and executive summary here.
For more information or media requests, please contact:
Naomi Carniol, Environmental Defence, 416-323-9521 ext 258; 416-570-2878 (cell)
Jake Thompson, Natural Resources Defense Council, 202-289-2387, jthompson@NRDC.org