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European Energy and Climate Security pp 155–182Cite as

Does the Trade-off Between Energy Security and Climate Change Protection Matter? The Canadian Tar Sands Case

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Part of the book series: Lecture Notes in Energy ((LNEN,volume 31))

Abstract

Energy security may have different meanings. In addressing the energy security question from an economic perspective, a standard definition “as reliable and adequate supply of energy at reasonable prices” may be accepted once the meaning of “reasonable prices” is given. Since the problem concerns the society as a whole (be it a single nation or the European Community or the OECD countries), prices to be considered are those for the society as a whole. This is to say that external costs have to be added to the market prices and that they are represented by the negative impacts on climate change, i.e. GHG emissions. The Canadian tar sands are analyzed as a case study to investigate how each viable energy mix for Europe performs with respect to both energy security and climate change. The minimization of the risk of supply disruption and of GHG emissions being the optimum target. Needless to say, those choices that produce positive impacts on both are preferred ones while choices having opposite impacts need a comparison among their economic costs and benefits.

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Notes

  1. 1.

    For a good review of definitions, see Winzer (2012). Winzer proposes narrowing the concept of energy security to the concept of energy supply continuity. In either case, we think the reference to prices is necessary.

  2. 2.

    IPCC, WGI (2013). p. 4, 13 and 14.

  3. 3.

    For those interested in the economics of climate change, see Tol (2014).

  4. 4.

    IPCC, WGI, (2013), p. 17.

  5. 5.

    Institute of Environmental Sciences (Leiden University), Wuppertal Institute for Climate, Environment and Energy, and CE Solutions for Environment, Economy and Technology.

  6. 6.

    OECD (2002), Institute of Environmental Sciences (CML), Wuppertal Institute for Climate, CE Solutions for Environment, Economy and Technology (2005). The OECD has to be credited for being the first international body to have adopted the concept of resource decoupling and for having considered it as one of the main objectives in their policy paper, Environment Strategy for the First Decade of the 21st Century, 2001. According to their definition, decoupling consists in breaking the links between economic goods and environmental bads.

  7. 7.

    Probably the ‘ecological footprint’ could be considered a good approximation or a good candidate for such an aggregate indicator, although it has several problems, including the subjectivity of the parameters. However the concept is gaining momentum and with respect to water resources, for example, the water footprint is now widely used even at the stage of policy design. The idea was firstly elaborated by Wackernagel and Rees (1996).

  8. 8.

    Policy Review on Decoupling (2005), p. 6.

  9. 9.

    The Green Economy Initiative, UNEP and International Resource Panel (IRP) (2011).

  10. 10.

    This is true for the European Union. See Fig. 4 in Sect. 6. Obviously, the figure shows a ‘local’ decoupling while it does not say anything about a ‘global’ decoupling.

  11. 11.

    Steger and Bleischwitz (2011).

  12. 12.

    UNEP-International Resource Panel (2014).

  13. 13.

    EC (2014c), European Energy Security Strategy, EC (2014), In-depth study of European energy security.

  14. 14.

    EIA 10 October, 2014.

  15. 15.

    Gerlagh (2011).

  16. 16.

    Van der Ploeg (2013). Van der Ploeg and Withagen (2013).

  17. 17.

    CERA 2009 estimated that they emit about 5–15 % more carbon dioxide than conventional oil, while in the same year the IEA produced a much higher estimate of 20 %. The US Government reported in 2005 that, with the technology in place, conventional oil produces around 40 kg of carbon dioxide per barrel against the 80–115 kg for unconventional oil . According to Brandt (2011), the amount is 22 %.

  18. 18.

    Hamilton (2005), Cunado and Perez de Gracia (2003), Jemenez-Rodriguez and Sanchez (2005), Barsky and Kilian (2004).

  19. 19.

    Fattouh (2011).

  20. 20.

    In 2013, The Energy Journal published a Special Issue on Financial Speculation in the Oil Markets and the Determinants of the Price of Oil, vol 34, n. 3.

  21. 21.

    Ibrahimov and Azizov (2011), “Oil market structure and pricing. Crude oil and oil products marketing and pricing: what is the price of crude oil?”, IPEDR vol 22 (2011), IACSIT Press, Singapore, p. 59.

  22. 22.

    Grubb (2001).

  23. 23.

    IEA, Energy Technology Perspectives 2014.

  24. 24.

    However, if the price of carbon were around 40/50 euros, CCS would be adopted automatically.

  25. 25.

    Chignell and Gross (2012).

  26. 26.

    Oil and Energy Insider. Investment Opportunities and Strategic Energy Intelligence. https://oilprice.com/premium. An idea of the mood in the oil industry in the field of undersea technologies can be gleaned from the fact that last October the 15th annual exhibition for the oil and gas industry held in Bergen was called Off-Shore Technology Day (OTD).

  27. 27.

    To enter into force, ratification was needed by at least 55 % of the signatory countries with their emissions amounting to 55 % of total emissions. The ratification by Russia at the end of 2004 allowed the Protocol to enter into force in 2005.

  28. 28.

    However, as we argue in Sect. 4, innovation is not necessarily low-carbon.

  29. 29.

    According to the Conference Board of Canada, in a ranking of 17 OECD countries with respect to GHG emissions per capita, Canada in 2010 held the 15th position and scored a “D” grade on a scale from A to D. www.conferenceboard.ca/. In a ranking of 140 countries with respect to GHG emissions per capita in 2000 for the World Resources Institute, Canada’s were the 7th highest. www.wri.org/. Another report by Michelle Mech in 2011 states that Canada is in the top ten of the world’s GHG emitters and is the second on a per capita basis. Moreover, in the same report it appears that “Canada’s GHG emissions in 2008 were 24 % higher than in 1990 and 30 % higher than the country’s Kyoto commitments. While many other industrialised countries have committed to emissions reductions of 20–40 % below 1990 levels by 2020, the Canadian government’s current target—17 % below 2005 levels by 2020—translates to 2.5 % above 1990 levels. …..Canada does not have a low carbon growth plan. Out of 57 countries that together are responsible for over 90 % of global energy-related CO2, Canada ranks 2nd last in climate protection”. In “A Comprehensive Guide to the Alberta Oil Sands. Understanding the Environmental and Human Impacts, Export Implications, and Political, Economic and Industry Influences”, p. 7/8. www.greenparty.ca.

  30. 30.

    It is practically impossible to explain the price movements between 2003 and 2008 without considering the role of speculation. As is well known, the demand for oil is practically inelastic in the short run. See Sect. 3.

  31. 31.

    Canadian Association of Petroleum Producers, 9 June 2014, www.capp.ca.

  32. 32.

    Many observers consider approval to be more probable after the mid-term election results that saw the Republican party gain the majority in the Senate and increase its majority in the House.

  33. 33.

    Fuel Quality Directive 2009/30/EC.

  34. 34.

    Brandt (2011). Available on the web.

  35. 35.

    The lowest intensity oil sand process is less GHG intensive than the most intensive conventional fuel (as noted in recent reports by HIS-CERA, Jacob Consultancy and others). Importantly though, the most likely industry-average GHG emissions from oil sands are significantly higher than the most likely industry-average emissions from conventional fuels.

  36. 36.

    The Pembina Institute (2012) www.pembina.org/.

  37. 37.

    The news appeared in several sites on the net and also in the national Italian newspaper Il Sole 24 Ore, 27 September 2014, under the title “Arriva in Italia il primo carico di petrolio “made in Canada”.

  38. 38.

    http://ec.europa.eu/trade/policy/in-focus/ceta.

  39. 39.

    In one of its latest publications, the International Energy Agency addresses energy storage technologies. It also presents a decarbonised electricity scenario making use of electricity storage. “Technology Roadmap: Energy Storage”, 2014. www.iea.org.

  40. 40.

    See European Commission, COM (2014a) 689 final, “Progress towards achieving the Kyoto and the EU 2020 objectives”.

  41. 41.

    See European Commission Climate Action 2030 framework for climate and energy policies and Roadmap for moving to a low-carbon economy in 2050.

  42. 42.

    EEA (2014), http://www.eea.europa.eu/publications/why-are-greenhouse-gases-decreasing.

  43. 43.

    Notice that the EU 2020 commitment of a 20 % reduction could become 30 % in the case that other economies agree to participate in the global reduction effort.

  44. 44.

    The large number of permits in circulation, given the unforeseen prolonged crisis and perhaps the underestimated effect of a growing share of renewable in total production, are pushing the carbon price down to less than 6/7 euros.

  45. 45.

    EC (2014b), p. 3.

  46. 46.

    IEA (2014) p. 4.

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Authors and Affiliations

  1. University of Rome “Tor Vergata”, via Columbia 2, 00133, Rome, Italy

    Laura Castellucci

  2. via Flaminia 109, 00196, Rome, Italy

    Laura Castellucci

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  1. Laura Castellucci
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  1. Management, University of Florence Department of Economics and, Florence, Italy

    Rossella Bardazzi

  2. Management, University of Florence Department of Economics and, Florence, Italy

    Maria Grazia Pazienza

  3. Department of Political and Social Sciences, University of Florence, Florence, Italy

    Alberto Tonini

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Castellucci, L. (2016). Does the Trade-off Between Energy Security and Climate Change Protection Matter? The Canadian Tar Sands Case. In: Bardazzi, R., Pazienza, M., Tonini, A. (eds) European Energy and Climate Security. Lecture Notes in Energy, vol 31. Springer, Cham. https://doi.org/10.1007/978-3-319-21302-6_8

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