North America should look to NASA for model to increase sustainability of oil sands
A few months ago, I was invited to a forum to brainstorm “big ideas” with respect to the development of Alberta’s oil sands – in particular, big ideas for meeting the environmental challenges of such development. My suggestion was that we might learn something from another “big idea” of a generation ago, that of putting a man on the moon, and from the organization that was instrumental in turning that big idea from a dream into a reality.
Over 50 years ago, the American government under President John F. Kennedy adopted “getting to the moon” as a national goal. It was a big idea, even if it was one more closely related to national security than scientific exploration, since the U.S. was determined not to let the Soviet Union gain military control of space.
To achieve this goal, the U.S. did not create a Get-to-the-Moon department of government, as we might have done in Canada. Instead, the task was assigned to the newly created National Aeronautics and Space Administration (NASA), a unique contracting organization with a mandate to harness science and technology from both the public and private sectors to the goal of getting to the moon.
Today, the security concerns of both Canada and the U.S. require that high priority be given to reducing North American dependence on offshore petroleum resources by increasing the availability and deliverability of North American-sourced energy. So let’s seriously consider adopting sustainable continental energy security as a mutual goal and establishing a NASA-like organization to pursue it – NASA II, where NASA would now stand for the North America Sustainability Agency.
NASA II would have to focus some of its resources on conservation and accelerated development of renewable energy sources. But given the continued importance of petroleum to the North American economy, it should also focus a major portion of its efforts on bringing massive financial, scientific and technical resources in both Canada and the U.S. to bear on dramatically reducing the environmental impacts of hydrocarbon production and consumption. In particular, it should focus on reducing the environmental impacts of the production of petroleum from the largest long-term source of oil on the continent, the Athabasca oil sands.
Big ideas usually require large amounts of money to finance them, so where are the funds going to come from to finance NASA II, particularly in an era of fiscal restraint? I have two suggestions. First, they could come from a reallocation of our defence budgets, in particular that of the U.S. To persuade our American friends to co-operate with this suggestion, we could make the following argument: the great externality in securing Middle East petroleum supplies for the U.S. and its trading partners is military defence – at a cost of what? Some have speculated up to $50 to $100 per barrel.
The major externalities associated with securing oil supplies from Alberta’s oil sands are environmental – externalities that can be avoided and mitigated at a much lower cost than $50 to $100 per barrel. So the argument, backed by solid research, needs to be made in Washington that if even a small portion of what the U.S. currently spends to secure Middle East oil supplies for itself and its trading partners was shifted into investments through NASA II to mitigate the environmental impacts of oil sands development, wouldn’t North America end up with a more secure and sustainable continental energy supply at lower overall cost?
Second, funding for NASA II could come from revenues generated by applying full-cost or life-cycle accounting and pricing to energy production. (Let’s refrain from using the word “tax” to describe the pricing and internalizing of environmental externalities, if only because it’s an inaccurate use of the term and leads to misunderstanding by the public.)
The industrial world is moving, ever so slowly, towards what has been called full-cost or life-cycle accounting in relation to the production of goods and services, including energy supplies. This concept stipulates that if we want both economic and environmental health, it will be increasingly necessary to calculate the costs of avoiding or mitigating the environmental consequences of energy production and to incorporate these into the cost of the product, whether this is done through the so-called “carbon tax” or cap-and-trade or some better mechanism yet to be invented.
The application of full-cost accounting to energy production is being pushed most strenuously by interest groups and public policy-makers in relation to oil sands development. But what oil sands developers should insist upon is that if this concept is going to be applied to them, it should be applied equally to the production of all other forms of energy: a reservoir levy for the hydro producers; a radiation levy for the nuclear producers; and equivalent environmental levies for solar and wind producers. We need to recognize that no energy source is without environmental impacts, although some are more environmentally friendly than others. Most importantly, a significant portion of whatever funds are generated by this type of accounting and pricing should be directed to NASA II.
Does the political will exist in Canada or the U.S. to pursue such an idea? Not yet. But it might develop quickly if adverse political changes in the Middle East were to create a supply crisis for North America or its trading partners. To follow the Gretzky principle of going to where the puck is likely to be, the thinking and planning needed to create something as ambitious as NASA II has to be done now.
This column was published by Alberta Venture on January 23, 2012