Thank you.
Thank you for inviting me here today to speak.
My name is Gillian McEachern. I manage the climate and energy program for Environmental Defence. We are a national non-profit organization. We work on a range of issues, including climate and energy, toxics, and land use, among others.
We were asked to present on energy security, and specifically as it relates to the federal government's role in the tar sands. According to the International Energy Agency, the definition of energy security is the uninterrupted physical availability of energy at a price that is affordable, while respecting environmental concerns. So according to the IEA, energy security inherently means addressing the environmental and economic issues with energy production and consumption.
We would argue that in addition to addressing the local environmental impacts of energy production, any definition of energy security needs to also include climate security. A federal plan to address energy security needs to address the risk posed by climate change. There is no such thing as energy security in a catastrophic climate change scenario; therefore, our working definition of energy security includes climate security and dealing with the economic and environmental impacts of energy production.
The environmental risks of the tar sands are growing, and these risks are not contained to the local region where the production occurs. It includes the Northwest Territories, the Pacific coast, and important watersheds in the United States.
I understand that my colleague, Simon Dyer, was here last week presenting from the Pembina Institute concerning a report that we jointly produced called Duty Calls, which clearly outlines the area of federal jurisdiction as it relates to tar sands. I won't repeat much of what he said. We would echo his statements regarding the climate impacts of planned tar sands expansion--how, even with an optimistic role for carbon capture and storage, the planned expansion will blow the current government's carbon budget and force other sectors to do more than their fair share.
Today I'm going to focus in more detail on two areas from that report: first the risk of a major tailings spill, and second the economic implications of our current unspoken energy policy—rapidly escalating tar sands production and export.
The massive toxic tailings lakes in northern Alberta pose a threat to human health, the environment, and the economy, given the risk of a breach of one of the dams that holds the toxic waste back from the nearby rivers. Currently nearly one billion cubic meters of toxic tailings are contained in these lakes. They now cover more than a 130-kilometre square, an area larger than the size of the city of Vancouver.
The tailings contain chemicals harmful to humans and aquatic organisms, including naphthenic acids, polycyclic aromatic hydrocarbons, heavy metals, and arsenic. The contaminated material is held back by unlined earthen dams reaching as high as 300 feet. Worldwide, tailings dams are ten times more likely to fail than other types of dams, and there have already been problems with some tar sands tailings dams.
Given the proximity of the ponds to down-river Saskatchewan and the Northwest Territories, a major spill would have trans-boundary impacts as tar sands tailings entered the Athabasca River and made their way into the Athabasca delta, which is a world heritage site and an important nesting ground for migratory birds from across the continent. It would impact the Mackenzie River basin, which drains about one-fifth of Canada's water supply and is the traditional homeland for dozens of aboriginal communities.
Yet despite this potential risk, the federal government currently has no emergency response plan to deal with a catastrophic spill and is mostly hands-off in terms of dam safety to prevent a spill from ever happening. The Alberta government says that companies have emergency response plans for tailings dam failures, but none of these is open to public scrutiny to allow independent assessment of how effective they would be in the event of a dam breach.
We've seen tailings dams like these fail, with devastating consequences: most recently in Hungary, a couple of years ago in Tennessee. Until the federal government takes responsibility to prevent this type of catastrophe, the legacy of tar sands production is creating a serious risk to the security of people living downstream of the tar sands.
The potential for a major spill, of course, is in addition to the ongoing spill happening in the tar sands. An estimated 11 million litres of tailings is leaking from the ponds every day.
It's hard to call this a secure source of energy, given these risks.
Now I'm going to turn to some of the economic impacts associated with tar sands. The tar sands industry is undoubtedly providing economic benefits in the form of jobs and government revenues; that's not disputed. But what we rarely hear much discussion about is some of the negative economic implications of rising oil exports on other parts of the Canadian economy. So far there's been no robust federal discussion, analysis, and response to deal with this.
Jeff Rubin, the former head of CIBC World Markets, recently asked whether Canada can afford Alberta's tar sands, citing the extent to which Canada's dollar has become a petro-currency. Increasing oil prices and tar sands production will continue to strengthen the Canadian dollar, which when coupled with a continued sluggish economy in the U.S. will have an impact on other sectors in the Canadian economy, most notably manufacturing.
If the tar sands play an increasingly large role in the Canadian economy, we're at risk of succumbing to what is known as Dutch disease, in which increased exploitation of natural resources impacts the nation's currency, thereby making export of other products more expensive. In fact there's evidence already that Canada is suffering from some of the symptoms of Dutch disease. A study published last year by Serge Coulombe at the University of Ottawa found that between 2002 and 2007, 42% of manufacturing job loss in Canada due to rising currency had been the result of Dutch disease stemming from oil exports. The majority of this impact is felt in Ontario and Quebec, the regions where the sectors hardest hit by Dutch disease are located.
As Dan Trefler, a research chair in competitiveness and prosperity at the Rotman School of Management, recently put it,
Canada has regressed. It is time to step back and ask ourselves whether this is what we want. The choice is ours: Sit back while world commodity demand drowns us in our own tailings, or react aggressively and strategically.
Norway, which is the world's third-largest exporter of oil, provides an example of a country that has acted aggressively and strategically in response to a resource boom. Norway set up the government pension fund, which is now worth more than $400 billion. It invests the vast majority of oil wealth overseas to avoid driving up the value of the currency, and only 4% of oil wealth is spent every year. Norway's GDP per capita is nearly double that of Canada's. The manufacturing sector is thriving. They have among the highest disposable incomes in the world. And when the oil runs out there will be a very large trust fund to help map out an energy future for them.
It's the role of the federal government to look at these impacts, both positive and negative, and come up with some type of plan that is fair for all regions of the country. So far that has not happened.
In Canada we're still feeling the hangover effects of the National Energy Program, which is now decades past. It's prevented us from planning our energy future. In the absence of a plan or policy to map out energy security in Canada, we've put all our eggs in one basket: tar sands growth. The federal government is allowing tar sands production to rapidly expand, granting approvals for new mines and projects. It is also permitting massive new infrastructure to ship tar sands to consumers, and some of these new pipelines will also ship jobs out of the country.
In light of the looming federal decisions about whether to approve these new mines and pipelines or allow oil tankers off the north coast of B.C., it's time to step back and map out our energy future rather than locking ourselves into decades of expanded fossil fuel production at a time when other countries are recognizing the need to transition off oil to clean energy. We need to decide what pace and scale of tar sands development makes sense.
In terms of the small group of people advocating to get off oil, which was referred to by the previous witness, that small group of people happens to include the President of the United States, the Intergovernmental Panel on Climate Change, and many other countries around the world.
Thank you.