1. CANADIAN ENERGY AND THE U.S. - A MUTUALLY BENEFICIAL PARTNERSHIP: ECONOMICS, SECURITY AND THE ENVIRONMENT Oil Sands, Keystone Pipeline and the Environment David McLaughlin, President and CEO National Round Table on the Environment and the Economy February 21, 2012

2. TABLE OF CONTENTS About the NRT Canada-U.S. energy / emissions relationship Oil sands & pipelines Canada-China Oil sands image and risks

3. Finding Sustainable Pathways 3 NRT: BRINGING THE ENVIRONMENT AND THE ECONOMY TOGETHER Through the development of innovative research and considered advice, our mission is to help Canada achieve sustainable development solutions that integrate environmental and economic considerations to ensure the lasting prosperity and well-being of our nation. “ ”

4. Finding Sustainable Pathways 4 4 MELTDOWN

5. Finding Sustainable Pathways 5 CONVENE We convene opinion leaders and experts from across Canada around our table to share their knowledge and diverse perspectives. We stimulate debate and integrate polarities. We create a context for possibilities to emerge. RESEARCH We rigorously research and conduct high quality analysis on issues of sustainable development. Our thinking is original and thought provoking. ADVISE We generate ideas and provide realistic solutions to advise governments, Parliament and Canadians. We proceed with resolve and optimism to bring Canada’s economy and environment closer together. THE NRT PROCESS

6. Finding Sustainable Pathways 6

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8. 8 CANADA’S OIL RESERVES

9. Finding Sustainable Pathways 9 CANADA AS AN ENERGY SUPPLIER Source: CAPP(2011) Canada’s Oil Sands: Creating U.S. jobs and business opportunities. Pg 6. AND NRCan (2011) Oil Sands: A Strategic Resource for Canada, North America and the Global Market “Canada is the largest supplier of crude oil and petroleum products to the U.S., safely delivering 2.5 million barrels per day in 2010, making up 21 percent of U.S. imports” (NEB)

10. Finding Sustainable Pathways 10 ENERGY, ECONOMY, EXPORTS Share of Canadian GDP, 2010 Share of Canada Exports, 2010 Source: Industry Canada and Statistics Canada (2011)

11. Finding Sustainable Pathways 11 U.S. ECONOMIC IMPORTANCE  In 2010 energy products including oil, natural gas and electricity, accounted for $103 billion worth of trade between the two countries. 97% of Canada’s energy exports went to U.S. markets. Source: NRCan; * All monetary values are American dollars based on February 2011 conversion rates.  According to estimates by the, development of the oil sands has the potential to generate more than $483 billion in royalty and tax revenues for Canada’s federal and provincial governments over the next 25 years. Oil Sands Developers Group  On average, U.S. output of goods and services will increase by $45 billion/year from 2011 – 2035 due to increased demand from oil sands activity. Source: CERI 2011

12. Finding Sustainable Pathways 12 CLIMATE & EMISSIONS Canada and U.S. have aligned (GHG) emissions reduction targets: 17% below 2005 levels by 2020 Canada represents 2% of global emissions, the U.S. represents 18% (2005 Mt CO2e) Canada and U.S. emissions per capita are about the same: 22.04; U.S. emission per capita are 22.74 (2008 Tonnes CO2e) Climate change could cost Canada $43 billion per year in 2050 Source: UNFCC, 2010 and Environment Canada, 2011

13. Finding Sustainable Pathways 13 CANADA’S EMISSIONS PROJECTIONS Source: EC. 2011

14. Finding Sustainable Pathways 14 2020 EMISSIONS GAP

15. Finding Sustainable Pathways 15 GHG EMISSIONS BY ECONOMIC SECTOR (MT CO2E) There is an estimated 30% growth in the oil and gas sector from 2005 to 2020 Source: EC. Canada’s Emissions Trends, 2011

16. Finding Sustainable Pathways 16 SHARE OF TOTAL ELECTRICITY GENERATION BY SOURCE FOR CANADA AND THE U.S., 2006

17. HARMONIZING ON CARBON PRICE AND ON TARGETS HAVE DIFFERENT IMPLICATIONS

18. OIL SANDS AND PIPELINES

19. Finding Sustainable Pathways 19 OIL PRODUCTION DRIVEN BY OIL SANDS Source: NEB (2011) Canada’s Energy Future: Energy Supply and Demand Projects to 2035

20. Finding Sustainable Pathways 20 U.S. ENERGY SECURITY RISK INDEX, 1970-2035 Source: Institute for 21 st Centre Energy, U.S. Chamber of Commerce. Index of U.S. Energy Security Risk (2011 Edition)

21. Finding Sustainable Pathways 21 Source: CAPP (2011) Canada’s Oil Sands: Creating U.S. jobs and business opportunities. Pg 11-12.

22. Finding Sustainable Pathways 22 KEYSTONE PROPOSAL NEW PROPOSAL: TransCanada Working with State of Nebraska and Department of State to Finalize New Route for Keystone XL through Nebraska Source: CBC. Canada's main pipeline network; Leach (Nov 2011) Keystone XL: Game Over The original proposal would have seen the pipeline run from Alberta through several states to the coast of Texas. It raised concerns in Nebraska because it would pass through an area that supplies drinking water to millions of people. The XL pipeline is an extension of an existing Keystone pipeline.extension of an existing Keystone pipeline In November 2011, TransCanada agreed to change the proposed route so that it wouldn't pass through the environmentally sensitive Sandhills area of Nebraska, a move that would add up to 65 kilometres of pipeline and another pumping station to the project. Last fall, U.S. officials said they would defer a final decision on the pipeline until the end of 2012 — after the next presidential election

23. Finding Sustainable Pathways 23 EXISTING PIPELINES OPERATIONS + TRANSCANADA KEYSTONE XL PIPELINE + ENBRIDGE NORTHERN GATEWAY PIPELINE U.S. GDP – Potential Additions, 2010-2020 US employment totals are expected to grow from 80,000 jobs to 200,000 jobs in 2020 Employment in Canada (direct, indirect, and induced) is expected to grow from 390,000 jobs to a peak of 800,000 jobs in 2020 Total Canadian GDP impact as a result of the investment shocks is estimated at close to $1,178 billion over the 20-year period. US GDP impact from 2010-2020 as a result of the investment shocks is estimated at close to CAD$138 billion In Canada, the oil sands development affects Alberta more than any other province. The oil sands development also affects, in order, Ontario, B.C., Quebec, and Sask. In US, the oil sands development affects, in order, Illinois, California, Texas, Wisconsin, and Ohio CERI (2011) A decade of staged oil sands growth (2010-2020). Pg XV

24. Finding Sustainable Pathways 24 “WE ARE AT THE WRONG END OF MULTIPLE DISCOUNTS” said Mike Tims, chairman of Peters & Co., the Calgary-based energy investment dealer. Source: Financial Post. Canada loses in oil discount. Feb 9, 2012 http://business.financialpost.com/2012/02/09/canada-loses-in-oil-discount/?__lsa=a5e4079a http://business.financialpost.com/2012/02/09/canada-loses-in-oil-discount/?__lsa=a5e4079a

25. CANADA AND CHINA Prime Minister Stephen Harper shakes hands with Chinese President Hu Jintao before their meeting in Beijing on Feb 9, 2012.

26. Finding Sustainable Pathways 26 PRIME MINISTER HARPER IN CHINA  We are an emerging energy superpower," Harper said. "We want to sell our energy to people who want to buy our energy. It's that simple.“ (Feb 10, 2012)  "It is increasingly clear that Canada's commercial interests are best served through diversification of our energy markets," Harper said.  Current bilateral trade is modest and in 2010 was less than $60 billion, around a tenth of combined Canada-U.S. two- way trade. (Vancouver Sun)

27. Finding Sustainable Pathways 27 WEST COAST PIPELINE PROPOSED ROUTE The proposed Northern Gateway Pipeline would run from Bruderheim (near Edmonton) to Kitimat with a return condensate pipeline for importing oil sands diluent material. Given heavy crude production profile forecast, Canadian producers require additional pipeline capacity to export incremental production volumes of heavy crude oil to key demand centres. Canadian pipeline companies are considering a myriad of projects to provide potential solutions for Canadian crude oil producers to have sufficient access to appropriate refining markets. In assessment of adding West Coast crude oil export capacity results in the following substantive findings: Additional export capacity connected to heavy crude refining markets is needed to place growing Canadian oil production by 2017; Tidewater access provides an important link to the significant and fast-growing Asian market; Asia is an attractive market for Alberta production on a netback basis Canadian producers not having sufficient access to premium heavy crude 29 refining markets could lose about $8/bbl for every Canadian heavy crude barrel, with a revenue impact averaging C$8 billion per year for 2017 to 2025. Source: Wood Mackenzie, inc. (For Alberta Government) Dec 2011. A netback impact analysis of West coast export capacity.

28. Finding Sustainable Pathways 28 GATEWAY PROJECT Of the Asian markets, China would be the most attractive for the disposition of heavy Canadian crude oils. The projected price for gasoline and diesel in Asia are expected to rise in this region as emerging deficits support the increase in oil product prices. This would support Synbit and Dilbit to have a sustainable netback in Asia competitive against that of PADD II and PADD III, respectively. Source: Wood Mackenzie, inc. (For Alberta Government) Dec 2011. A netback impact analysis of West coast export capacity.

29. OIL SANDS: IMAGE, RISKS, & REALITIES

30. Finding Sustainable Pathways 30 UNEP. Keeping Track of our Changing Environment. 2011

31. Finding Sustainable Pathways 31 CLIMATE CHANGE IS REAL: GLOBAL MEAN TEMPERATURE INCREASED BY 0.4°C BETWEEN 1992 &2010  http://www.cccma.ec.gc.ca/di agnostics/cgcm3- t47/cgcm3.shtml http://www.cccma.ec.gc.ca/di agnostics/cgcm3- t47/cgcm3.shtml  http://www.google.com/gadg ets/directory?synd=earth&pr eview=on&q=climate+change http://www.google.com/gadg ets/directory?synd=earth&pr eview=on&q=climate+change  http://www.epa.gov/climatec hange/effects/polarregions.ht ml http://www.epa.gov/climatec hange/effects/polarregions.ht ml UNEP. Keeping Track of our Changing Environment. 2011

32. Finding Sustainable Pathways 32 Arctic sea ice losses during 2011 were the second- greatest in the satellite record dating back to 1979, according to an official NSIDC report…. However, ice loss in recent years has been proceeding faster than the models predicted. EarthSky 2011 Headline: 2011 already costliest year for natural disasters. Expert: 'We are rewriting the financial and economic history of disasters on a global scale‘ MSNBC, July 2011 Australia, Queensland Arctic Sea Ice Despite an increase in conservation efforts, the state of biodiversity continues to decline, according to most indicators, largely because the pressures on biodiversity continue to increase. Secretariat of the Convention on Biological Diversity (2010) Australian Rainforest UNEP, 2011 Brazil Rainforest ENVIRONMENTAL CHANGES HERE & NOW

33. Finding Sustainable Pathways 33 RISKS July 2008 issue: Alberta’s oil sands Oilsands pipeline protestors arrested near White House- Aug 2011 (CBC) Celebrity protesters blur the Canadian oil sands message - Sept 1 (the Star) EU fuel directive targets oil sands unfairly: CAPP

34. NGO PERSPECTIVE: OIL SANDS Keystone XL in context: oilsands and environmental management Two decades of ineffective management have left their mark on the Canadian landscape There is a growing debate in the United States about the environmental impact of oil sands and the related issue of whether there are effective legal and regulatory frameworks in place in Canada to address these impacts. Filling the proposed KXL pipeline with oil sands will result in nearly a 50 per cent increase in oil sands production. Until environmental management of the oil sands is improved, KXL will cause significant environmental harm due to increased oil sands production. It will take more than rebranding to make tar sands oil "ethical“ by David Suzuki with Faisal Moola On “ethical oil”. Oil has never been about "ethics". It has always been about money. Those who argue the case for "ethical oil" should work to ensure that our energy needs are met in a truly ethical way, now and into the future. In the end, the only truly ethical solution is to phase out oil. The black eye that tar sands oil is sporting can't be remedied with meaningless phrases such as "ethical oil". Due to its sheer scale, all Canadians are affected by the tar sands, no matter where they live. Canada's fastest-growing source of global warming pollution is TARnishing the maple leaf. Tar Sands Pipelines Safety Risks Tar sands crude oil pipeline companies may be putting America's public safety at risk. Increasingly, pipelines transporting tar sands crude oil into the United States are carrying diluted bitumen…raising risks of spills and damage to communities along their paths. The Dirty Truth about Canada’s Tar Sands Industry

35. Finding Sustainable Pathways 35 OIL SANDS VS. COAL  Nature magazine – “The Alberta oil sands and climate”  Andrew Weaver, Neil Swart  “if entire Alberta oil sand resource were to be used…would induce a global mean temperature change of 0.36 Centigrade  Using all world coal reserves would lead to temperature change of 15 degrees Centigrate

36. Finding Sustainable Pathways 36 Water use is found predominantly in nonconventional oil and gas extraction, including the oil sands subsector. The overall oil and gas sector’s water intake showed an uneven trend between 2001 and 2005, with both increases and decreases. Overall, the water-use intensity of the oil and gas sector has been dropping over time, The oil and gas sector as a whole has the lowest water-use intensity of the sectors covered in this study due to its relatively large economic output (23% of output of all sectors) compared with a relatively small amount of water use (0.6% of water intake of sectors covered in this study)

37. Finding Sustainable Pathways 37 Oil & Gas rises from 0.6% to 1.1%

38. Finding Sustainable Pathways 38 EXISTING MONITORING Source: Government of Canada and Government of Alberta (2012) Joint Canada-Alberta Implementation Plan for Oil Sands Monitoring

39. Finding Sustainable Pathways 39 PROPOSED MONITORING BY 2015 Source: Government of Canada and Government of Alberta (2012) Joint Canada-Alberta Implementation Plan for Oil Sands Monitoring

40. Finding Sustainable Pathways 40 NO HARMONIZED OPINION Source: NSAPOCC and Public Policy Forum – Sustainable Prosperity Survey (February 2011) Views of Americans and Canadians on the Existence of Global Warming There is solid evidence of global warming There is no solid evidence for global warming Not sure Americans58%26%16% Canadians80%14%6% Question wording: From what you’ve read or heard, this there solid evidence that the average temperature on Earth has been getting warmer over the past four decades? Perceptions of Government Roles in Addressing Global Warming in the United States and Canada A great deal of responsibility Some responsibility No responsibilityNot sure/ refused FederalUS43%30%22%5% Canada65%24%8%3% State/ProvinceUS35%37%23%5% Canada52%36%9%2% LocalUS29%36%30%5% Canada42% 13%2% Question wording: For each level of government that I mention please tell me if it has a great deal of responsibility, some responsibility or no responsibility for taking action to reduce global warming

41. Finding Sustainable Pathways 41 OIL AND THE ENVIRONMENT No matter where we get oil, there will be some environmental risk Source: Harris Decima (2010) Modern Environmentalism

42. Finding Sustainable Pathways 42 CAN OIL SANDS DEVELOPMENT BE ACCEPTABLE? Source: Harris Decima (2010) Modern Environmentalism

43. Finding Sustainable Pathways 43 IDEAL GOAL FOR OIL SANDS DEVELOPMENT Source: Harris Decima (2010) Modern Environmentalism

44. Finding Sustainable Pathways 44

45. Finding Sustainable Pathways 45 That said, I WHAT IF…

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