We did not have a PowerPoint presentation, so I hope you received the notes. Talking about the oil sands and sustainable development at the same time seemed like quite a challenge.
We changed our name last year. Nature Québec is therefore a transition. The UQCN was founded in 1981. Within the first two years, it adopted the World Conservation Strategy of the World Conservation Union, also known as the IUCN. It was at that time that sustainable development was mentioned for the first time in an international document. We have been working in this area for the past 23 years. Sustainable development is included in our charter and our primary activities. We work in the agriculture, forestry, and energy sectors.
I occasionally give lectures to the Quebec Mining Association. We work with that organization on a regular basis. Our contact with the Mining Association of Canada is much less frequent.
After listening to Mr. Peeling, I would say that, in our view, the approach taken by the Mining Association of Canada constitutes an excellent example of environmental management, as opposed to managing for sustainable development. This is also somewhat true in the case of the Canadian Chemical Producers Association, for which I serve as an auditor. This is still not a question of sustainable development. Rather, it is a matter of sound environmental management. I use the term “environmental” here in a very broad sense.
My notes on sustainable development are rather brief. I stopped developing the subject approximately ten years ago, after the publication of a book that gives 211 definitions of sustainable development. I do not wish to appear critical, but Mr. Peeling's document had a certain effect on me. Personally, I feel that environmental management is what must really be respected. It is often the forerunner.
Marylène Dussault and I prepared the notes. We will gladly answer your questions following my presentation. The French term for sustainable development is in dispute. The translation used by the Brundtland Commission, of which we were a partner and responsible member, is “développement soutenable” (as opposed to “développement durable”). That decision was made in Switzerland. We therefore have a new term. In English, the term is sustainable development. In any case, the French term “développement durable", which has been in use for approximately 25 years, is really the term that should be used. The question is rather simple. Are our actions sustainable or not?
I would now like to move on to the second point. The basic principle is that mining, in general, is not sustainable. This is not a criticism, merely an observation. The resource will eventually be depleted. The industry often responds by developing technologies aimed at exploiting increasingly smaller deposits to extract more of the resource. I believe the problem concerning the oil sands, especially oil in the broader sense, as well as coal, is that, since we have already been using these resources for several hundred years, we cannot consider the possibility that they will not last forever.
A rather popular principle is that we should exploit a non-renewable resource only at the same rate as we are developing the resource that will replace it. This could mean another non-renewable resource, but recently, this more often means renewable energies.
Four years ago, Ralph Torrie wrote a paper for the Suzuki Foundation and Climate Action Network Canada on how to manage greenhouse gas emissions. He proposed a plan to reduce emissions by 50% by 2030. According to Mr. Torrie, between 1970 and 2000, we produced more energy through energy savings and energy efficiency than by new energy production.
At that time, during the same 30 years, savings totaled $50 billion. Thus, we could say that it would be easy, in terms of replacement resources, to turn to energy efficiency.
With respect to the 50% reduction in emissions, Mr. Torrie did not take into account our exports. I called him to confirm. He did not know what to do about the oil sands. Yet, that week, in fact the same day that I was contacted, the Pembina Institute published a report entitled Carbon Neutral by 2020. It tackles explicitly and specifically the question of how to manage the oil sands.
The approach recommends either carbon sequestration or the purchase of carbon credits. We will come back to this matter and discuss it further. What is interesting about the oil sands compared to oil in the Middle East or elsewhere is that the input-output performance, in other words, what is produced compared to what is needed to produce it, is getting worse. In the case of oil, approximately ten barrels are produced for one barrel of energy input. It is difficult to obtain data concerning the oil sands. I asked two or three people on our energy board and they indicated it would be two or three barrels.
Carbon sequestration will further reduce the performance of the oil sands in terms of energy. This is not grounds to put an end to their development. It is a question of recognizing what I call an indicator. The fact that the production of two barrels of oil requires one barrel of input indicates that the days of oil production are numbered. This is what some people claim. I have here a few references in this regard.
It is therefore in our best interest to reduce our oil dependency. At present, American and Canadian society, and that of other developed countries, are completely dependent, whether for transportation, industrial processes or other uses. We are in a situation of increasing scarcity. The price of a barrel is currently $70. I predict that it will increase to $100 or even $150 in the near future. The fact remains that the industry is doing rather well at present.
Our first suggestion involves doing away with the tax incentives introduced by the Chrétien government in 1995-96. They totalled $8 billion over 20 years. This industry is doing very well. It must deal with all sorts of restrictions, but the fact remains that it is at the end of its reign. It does not need any incentives. The renewable energies sector, however, does need incentives. Thus, we are proposing that those incentives should be transferred to renewable energies, which would not generate any additional budget costs. Furthermore, we are becoming increasingly aware of the impact of exploiting the oil sands. The same is true for the industry, as indicated by Mr. Peeling. There is the problem of water, which is just as significant as the emissions problem. There is also the problem of the loss of areas of boreal forest.
It is fair to say that planning was completed without considering all of these consequences, although they were more or less known. It is unfortunate. This is precisely the problem. The life cycle, which Marylène discussed earlier, gives us the opportunity to determine the consequences and measures that should be taken to improve the situation or at least avoid making things any worse. In order to do so, the principles of the Canadian association should be followed to some degree.
We are also proposing that external costs be considered during the planning, and not after the fact. In our view, the only way to do this would be to resort to the polluter-payer principle, although I detest the term. “Consumer-payer” would be the more accurate term, given that the price is integrated, regardless. The cost of the consequences should be integrated into the price. The only real way to achieve this would be to create a market. The current government does not want to create a market. The previous government talked about it.
We are proposing that the company or the industry be given the opportunity to purchase credits when the technology used does not produce the required reductions. Such an approach would be useful in that a consumer who selects one product over another would have to pay the price. The cost would be integrated. I will come back to this in a moment and give further details on the matter.
The third problem is that we are not yet ready in terms of replacement energy. A banker who manages tens of billions of dollars in energy investments has just released a book. He asserts that Saudi Arabia does not have the reserves that it claims to have. We must prepare ourselves for a post-oil future. This will happen within the next 20 to 40 years, which may not be tomorrow, but the crisis will be upon us more quickly. The cost of oil will rise and we will not have any replacement energy. The notion of transferring incentives to renewable energy sources, which I mentioned earlier, would help to find substitutes for nonrenewable resources and promote such substitutes.
Point no. 6 of my notes responds to the concern expressed by Mr. Peeling. It is regrettable that the debate is focusing on whether or not we adhere to the Kyoto protocol or on proposals aimed at slowing or stopping the development of the oil sands. We, on the other hand, try to be much more realistic and realize that no one is going to stop it. You met with representatives from the National Energy Board last week. The figure discussed was $94 billion. During the round table, that figure was $70 billion. Barely two weeks ago, the figure was put at $150 billion by 2020. In the case of the National Energy Board, the $94 billion targeted for investments by 2015 could be rounded off to $100 billion. That is the problem with politicians, whether Liberal or Conservative. No one is going to put a stop to that. We are not here to suggest that this is what should be done. We are proposing, rather, that the oil sands be placed in a market context, which does not yet exist. At least, an emissions credit trading market does not yet exist and there are subsidies that allow the industry to avoid planning its own development.
In the Pembina report and other such reports—and Mr. Peeling touched very briefly on this—sequestration is discussed. This concerns a range of technology that has yet to be developed and tested, but that will be needed to store the carbon directly in underground reservoirs, hoping that it will stay there for a few thousand years without escaping. This is an enormous challenge and businesses are working together on it. This is discussed at the end of Mr. Peeling's document. In any case, we are not proposing that the government subsidize this research. We are proposing, rather, that restrictions be placed on the industry in order to bring everything together, to ensure that research is conducted on technology and other aspects of the production.
The Pembina report also mentions the purchase of credits. Yet, we do not even have a market. I took part in the round table with Bob Page, vice-president of TransAlta, and who also represents several companies. He appeared on television not even two weeks ago. We regularly hear that industrialists would like the medium-term perspectives to be made clearer for investment purposes. When planning the installation of piping for future oil sands development, these people do not even know whether to head towards the Pacific or the United States.
I have already mentioned Peak Oil. I find it interesting that you have put the oil sands and sustainable development together. There is no need to discuss the Kyoto protocol. That is a rather different debate, except that it underscores the problem of greenhouse gases. Matthew R. Simmons, an American banker who has been managing tens of billions of dollars worth of investments for the past 30 or 40 years and who has his own Web site, stated several years ago that he was unaware of the scope of the risk involved in his investments. For the past 20 years, OPEC has no longer been publishing the state of its reserves, its sources of supply, and so on. It is a global unknown.
Mr. Simmons knew that petroleum engineers were meeting regularly and publishing technical reports. He analyzed 225 of those reports, especially those dealing with the Middle East, and wrote a book called Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.
The author is a banker, not an ecologist. He believes that Saudi Arabia does not have the reserves it claims to have and that it is unlikely new reserves will be discovered. Even oil is much less abundant than Saudi Arabia claims. Mr. Simmons concludes that even if we have not yet hit peak oil yet, it will not be long before we do. It does not matter whether we reached it last year or this year, or whether we will reach it in five years. The decline of supply has begun and demand is increasing. We have to be better prepared than we are.
Oil sands extraction is three times less efficient than traditional oil extraction. That is what is going on in Alberta right now. It is a huge challenge, but will probably be a profitable one, especially if the price per barrel continues to climb.
How can we prepare ourselves to deal with this impending scenario in which oil becomes so expensive we have to make major adjustments to the world economy? Like you, I did not have time to read Mr. Stern's report. He is not an ecologist either. He is the former chief economist of the World Bank. He says that that is where we are right now and that the risks are enormous.
Rather than talk about sustainable development, I chose to begin from the assumption that oil is not renewable and then figure out how to deal with that scenario. The oil sands might last 20, 30 or 40 years, but we are already facing scarcity.