Climate and Greenhouse Gas Implications of Energy East
The following is from the report "Climate Implications of the Proposed Energy East Pipeline: a Preliminary Assessment" by Erin Flanagan and Clare Demerse of the Pembina Institute. (released in February 2014)
Click here to read the complete report (1 MB)
Executive summary
In August 2013, energy infrastructure company TransCanada announced its intention to build a$12 billion pipeline and export terminal project called Energy East.1 The proposed route wouldrun from Hardisty, Alberta, to the Canaport crude terminal near Saint John, New Brunswick. Thepipeline would have the capacity to transport 1.1 million barrels per day of crude oil, includingoilsands and conventional crude production.2If it proceeds as proposed, Energy East would be a very significant new piece of oiltransportation infrastructure. Indeed, Ontario's Minister of Energy, Bob Chiarelli, called theproposal "certainly the most significant east-west energy transportation initiative in a generation"and "the largest pipeline project in Canada in over 50 years."3This report provides an initial assessment of one of the potential environmental consequences ofthe proposed pipeline: the effect of Energy East on Canada's greenhouse gas (GHG) emissions.Although pipeline infrastructure, such as pump stations, produces greenhouse gases, theoverwhelming majority of the emissions associated with oil pipelines come from the productthose pipelines carry. These GHG emissions occur both upstream and downstream of thepipeline itself.While the precise mix of crude oils that the Energy East pipeline would transport is not yetknown, it's clear that oilsands products would make up a significant part of the pipeline'scontents from the outset.While conventional oil production in Canada is projected to plateau by 2015 and remain flat to2030, oilsands producers plan to nearly triple their production between 2012 to 2030.4 Thus, overtime, the share of Energy East's capacity devoted to shipping oilsands would be likely toincrease.Oilsands production is Canada's fastest-growing source of the GHG pollution that causes climatechange. According to Environment Canada, oilsands GHG emissions are projected to nearlytriple between 2005 and 2020, an increase large enough to cancel out all emission reductions thatother parts of Canada's economy are projected to make over the same period.
The Energy East pipeline would represent approximately a one-third increase in the capacity ofthe pipeline network carrying crude out of western Canada today, thus significantly increasingoilsands producers’ access to markets. Crucially, Energy East would also carry oilsands totidewater, where it could be exported on ocean-going tankers to wherever it fetches the bestprice.By providing predictable access to desirable markets for oilsands products, a large-capacitypipeline like Energy East would make the economics of oilsands production more compelling —and thus help to unlock the GHG emissions that increased production would create.Our assessment quantifies only the emissions from producing the crude that would fill thepipeline. By not including emissions that occur after the crude leaves the pipeline — those fromrefining the crude and then burning the finished product — we exclude the vast majority its lifecycle emissions impact. However, our decision to focus on upstream emissions means that ouranalysis concentrates on emissions that take place in Canada.The same cannot be said of the downstream emissions that would be associated with EnergyEast. At this point, it is far from clear that the bitumen transported on Energy East would berefined in Canada. Of the three refinery facilities that TransCanada plans to connect to thepipeline, none is currently equipped to refine extra heavy oil.TransCanada’s current plan would see the Energy East pipeline also transport lighter crudes, andeastern Canadian refineries can process those products. However, the capacity of the Energy Eastpipeline proposal is greater — by a significant margin — than the current capacity of the threeCanadian refineries it would connect to. Thus, in order to produce a conservative assessmentfocused on the GHG impacts in Canada, we have left refining emissions outside of our analysis.Similarly, given oilsands companies’ focus on reaching world markets via tidewater, it is likelythat a significant fraction of the emissions from burning the crude oil transported on Energy Eastwill occur outside Canada’s borders once the oil is exported.Because the precise contents of the proposed pipeline are not known, we modelled a range ofemissions scenarios. Our assumptions produce a preliminary estimate of the Energy Eastproposed pipeline’s upstream GHG impact of between 30 and 32 million tonnes of annualemissions.For an individual piece of infrastructure, this is a very significant impact. It is equivalent to theannual emissions of adding over 7 million cars to Canada’s roads, which is approximately thetotal number of cars on the road in the province of Ontario.5 The volume of new oilsandsproduction associated with the Energy East pipeline’s capacity would represent a 34 to 39%increase from current (2012) oilsands production levels.As a result of these very significant GHG implications, we recommend that any regulatoryreview of the Energy East proposal should include upstream impacts — the environmentalconsequences of producing the products that would flow through the pipeline — within its scope.
In addition, we recommend that the federal government adopt stringent regulations to reduce oiland gas sector GHG emissions.6 Such regulations are urgently needed to curb Canada’s fastestgrowingsource of GHG emissions and to help get Canada on track for its national 2020 climatetarget. Stringent emission regulations in the oil and gas sector would also provide the incentivecompanies need to invest in significant improvements to their emissions performance.Overview of the reportThis report describes the Energy East proposal in Section 1. Section 2 covers the projected GHGgrowth in the oilsands in the context of Canada’s national emission picture. Section 3 describesthe link between pipeline proposals and oilsands production growth. Section 4 provides anoverview of our methodology in assessing the Energy East pipeline proposal’s upstream GHGemissions impact, and Section 5 presents our conclusions. (Additional information aboutcalculations is provided in Appendix B.) Section 6 offers recommendations to address some ofthe issues raised in this analysis. Appendix A lists some areas for further research.