Canada's oil industry is producing more greenhouse gas emissions per barrel than it did five years ago, despite Alberta regulations aimed at curbing them and growing political pressure on the industry from governments in the United States and Europe concerned about climate change.
In an environmental report card released Tuesday, the Canadian Association of Petroleum Producers said industry per-barrel GHG emissions were up 21 per cent since 2008, as a growing share of the country's production came from the oil sands and other non-conventional sources that are more emissions-heavy than conventional sources.
The carbon-intensity of the oil sands was reduced from 2008 to 2011, but increased slightly last year, the report said.
Oil-sands producers have been investing heavily in technologies to reduce costs and energy use, which in turn has resulted in lower per-barrel GHG emissions in the oil sands. That sector has reduced its per-barrel emissions by about 8 per cent since 2008, and 26 per cent since 1990.
But that success was overwhelmed by growing bitumen production, as total industry emissions rose from 90 million tonnes in 2008 to 109 million tonnes last year.
With its growing emissions profile, the industry has faced a political backlash in the United States and Europe that threatens its access to key markets.
The Obama administration has sent clear signals it wants to see greater progress on emissions as it decides whether to approve TransCanada Corp.'s Keystone XL pipeline to the U.S. Gulf Coast.
The European Union, meanwhile, is still considering imposing a fuel quality directive that would penalize oil-sands producers.
The Canadian government released a report last week that shows the country is far off track on its commitment to reduce greenhouse gas emissions by 17 per cent from 2005 levels by 2020, with the increasing emissions in the oil sands forecast to offset progress made elsewhere.
"We have a challenge in front of us," said David Collyer, president of the Calgary-based Canadian Association of Petroleum Producers. "We need to drive intensity levels down further to offset the increase in production that we're anticipating."
A separate report from Cambridge, Mass.-based research firm IHS Inc. said some new oil-sands projects produce only slightly more emissions than the average barrel consumed in the United States, and are certainly no worse than production in places such as Venezuela, a key competitor to Canada on the U.S. Gulf Coast.
Some new Alberta mines, such as Imperial Oil Ltd.'s Kearl project and Suncor Energy Corp.'s planned Fort Hills, are adopting new technology that bring emissions close to that of the average crude sources used in the United States, said Jackie Forrest, Calgary-based IHS director, global oil.
As well, producers that use steam-assisted extraction methods are hoping to reduce energy costs and emissions through the use of solvents, though those strategies have yet to be commercially proven.
"Longer term, you begin to see technology have the potential to bring down emissions," Ms. Forrest said. "But it has to be piloted, proven successful economically, and then deployed more widely to bring down the aggregate emissions from the oil sands."
The IHS research said the industry will be driven by economics – including the need to reduce costs – but some policy push from government, such as regulations and higher carbon costs, could help provide incentives.