CALGARY—When Swedish central bank Riksbank announced on Wednesday it had sold its investments in Alberta over concerns about Canada’s climate impact, the United Conservative government returned fire in characteristic fashion.

Industry representatives and the Alberta government routinely insist the province’s oil and gas industry is among the cleanest, most ethically responsible of its kind in the world. Shortly after Riksbank’s announcement, a spokesperson for Alberta Premier Jason Kenney said the central bank should actually invest more money in the province’s oil and gas industry because of its track record of reducing greenhouse gas emissions.

Kenney often compares Alberta’s environmental performance to those of oil-producing juggernauts such as Saudi Arabia and Russia.

While it is true that newer oilsands facilities have reduced their emissions over the last decade, data collected by Environment and Climate Change Canada suggests the amount of greenhouse gas emissions in Canada’s oil and gas industry have actually increased.

Production (and reduction) of emissions in Alberta

“It is true that there’s been huge progress in reducing the carbon intensity of mining bitumen and other processes of extraction,” said Yrjö Koskinen, professor of finance at the University of Calgary’s Haskayne School of Business. “But overall, climate emissions are still going up.”

Total emissions from Canada’s mining and upstream oil and gas production rose by 32 megatonnes between 2005 and 2016, according to data from Environment and Climate Chance Canada (ECCC). This is mainly due to a massive spike in production activity: During that time, output at oilsands facilities spiked by 145 per cent. Technological and efficiency improvements between 2010 and 2016 brought down emissions intensity by 15 per cent, but experts say it isn’t enough.

Benjamin Israël, senior policy analyst at Calgary-based energy think tank the Pembina Institute said oil companies in Canada have come a long way toward reducing emissions intensity over the past several decades, including within oilsands operations, by far the most carbon-intensive aspect of the industry.

Through he said Alberta and the federal government have good regulations in place to handle emissions, the carbon intensity of the oil and gas industry as a whole is still very high. He said the increase in oilsands production specifically means any gains they’ve seen in the past few years have been offset by increasing pollution.

Getting oilsands crude to the point where it can be used requires a lot of carbon emissions. Canada produces the fourth-most carbon intensive oil in the world after Algeria, Venezuela (which also has oilsands deposits) and Cameroon, according to ECCC data cited in a Pembina Institute report.

“At the end of the day, we produce heavy oil. There’s no way around that,” Israël said.

The report also noted that newer oilsands mining projects can achieve “noteworthy” emissions performance, but said the sector is still dominated by more carbon-intensive projects.

Lack of regulations, differing calculations

Israël also said efforts to reduce the impact of oilsands operations on local communities and the environment haven’t progressed much over the past two decades. He used tailings ponds as an example: The first regulations governing the water formations filled with clay, toxic waste, metals, and leftover bitumen came into effect in 2015.

“We had no regulation for almost 50 years,” Israël said.

A recent study also raised questions about how the oil and gas industry calculates emissions. A series of airborne tests over the Athabasca oilsands region found about 30 per cent more carbon dioxide drifting from major facilities. The authors of the study published in Nature Communications earlier this year said the unaccounted-for CO2 totals roughly 17 megatonnes a year, the equivalent of all greenhouse gas emissions from a metropolitan area the size of Toronto or Seattle.

The way the study’s authors tested for CO2 emissions is very different from how oil companies track their emissions: a combination of sensors in the stacks of major oil facilities and United Nations-accepted calculations for fuel consumption. In response, the Canadian Association of Petroleum Producers, a lobby group for the oil and gas industry, defended the industry’s practices.

On the whole, Koskinen said Canadian-headquartered oil and gas companies tend to fare better than American ones on environmental, social and governance scores — metrics used to determine the sustainability of investing in a specific company. He cited Suncor and Cenovus as particularly good performers, but said the type of oil found in each country also influences emissions.

“American companies, they extract lighter oil, which is less energy intensive to convert into gasoline,” Koskinen explained. “They don’t have oilsands and heavy oils, which is really very energy-intensive to convert into gas.”

The European view

In a speech on Wednesday, Riksbank deputy governor Martin Flodén said the Swedish central bank had shed bonds from Alberta and the Australian states of Queensland and Western Australia, saying both countries are “not known for good climate work.” He singled out Alberta specifically.

“Greenhouse gas emissions per capita are among the highest in the world, but vary considerably between the different states,” Flodén said during his speech. “For instance, greenhouse gas intensity is more than three times higher in production in Alberta than in Ontario and Quebec.”

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Differing emissions intensities are likely due to the concentration of Canada’s oil and gas industry in Alberta. By comparison, Ontario and Quebec’s economies are predominantly geared toward manufacturing, agriculture and forestry, all of which produce emissions, but not to the same magnitude as oil and gas.

Koskinen said investors in Europe also tend to look at a much bigger picture than just lower emissions intensities among newer oilsands operations. They’re concerned about the overall carbon emissions of a particular region, as well as the impact of older facilities that emit more. He said European investors don’t think highly of Canada’s oilsands — and do their research when building their portfolios.

“They are always suspicious when they hear only the good news from oil and gas companies,” he said.

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