Correspondence | Published:

Emissions

Carbon cost will not stop oil-sands work

Nature volume 511, page 534 (31 July 2014) | Download Citation

Wendy Palen and colleagues propose a moratorium on new oil-sands projects until regulations are in place to ensure compliance with carbon-emissions commitments (Nature 510, 465–467; 2014). We question whether such a ban is justified on the basis of the criteria they propose.

Emissions from oil-sands production are generally less than 0.1 tonne of carbon dioxide equivalent per barrel, so production costs would increase by at most US$6.50 per barrel if social costs were accounted for as the authors suggest. The social cost of carbon is estimated at about $65 per tonne of CO2 equivalent over the lifespan of an oil-sands project (see go.nature.com/9ztmyu).

However, many projects would remain viable despite this production-cost increase, in part because it would be offset for developers by tax and royalty deductions. The energy company Suncor, for example, estimates that a similar carbon policy would decrease its return on investment on a new mine by just 0.4%.

A moratorium is neither sufficient nor necessary for Canada to meet its greenhouse-gas commitments, or to achieve global carbon stabilization at 450 parts per million (see also N. C. Swart and A. J. Weaver Nature Clim. Change 2, 134–136; 2012).

To meet its target, Canada would probably need to set a carbon price that exceeds the social cost of carbon estimates — say, more than $100 per tonne (see go.nature.com/dswyma) — and apply it nationally to all sources of emissions. Even then, oil-sands production could continue to grow.

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  1. University of Alberta, Canada.

    • Andrew Leach
    •  & Branko Boskovic

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Competing interests

A.L. holds the Enbridge Professorship at the University of Alberta. This position and associated funding have no impact on this or other research output, and falls under the University of Alberta’s guidelines for the protection of academic freedom. However, Enbridge is involved in the oil-sands industry, so some may perceive a conflict. No representatives from Enbridge or any other oil-sands company or interest have had any involvement in this work, nor have they been made aware of it. A. L. also holds stock in some firms involved in the oil-sands industry, all of which is publicly disclosed as suggested by the American Economics Association on A.L.'s website at http://andrewleach.ca/conflict-of-interest-disclosure/.

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Correspondence to Andrew Leach.

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DOI

https://doi.org/10.1038/511534a

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