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On the edge of ‘bitumen cliff’, report warns Canada to diversify

A failure to regulate the Canadian bitumen industry is putting Canada on a dangerous economic and environmental trajectory, warns a new report released February 21, 2013 by the Canadian Centre for Policy Alternatives (CCPA) and the Polaris...


A failure to regulate the Canadian bitumen industry is putting Canada on a dangerous economic and environmental trajectory, warns a new report released February 21, 2013 by the Canadian Centre for Policy Alternatives (CCPA) and the Polaris Institute.

Entitled “The Bitumen Cliff: Lessons and Challenges of Bitumen Mega-Developments for Canada’s Economy in an Age of Climate Change”, the report suggests that Canada is creating a “carbon trap” by relying on bitumen export as international markets continue to diversify. The trap locks Canada into a carbon dependent development path that will make future climate adaptation much more difficult, the report’s authors say.

“We must overcome the false polarization between the economy and environment, and recognize that the future course of these enormous developments cannot be left to a largely deregulated market and the self-interested choices of private industry,” says economist Jim Stanford, a co-author of the report.

The study uses data to show negative side effects of unregulated bitumen developments for Canada’s trade, exchange rate, productivity, and income distribution performance. The authors propose a two-track approach to steer away from the “bitumen cliff”:

[1] Regulate more tightly the bitumen industry to slow the pace of extraction, enhance Canadian content in upstream and downstream activities, and attain a better balance between sectors and regions of the economy.

[2] Re-orient Canada’s economy around more balanced, innovative, and low-carbon industries.

The report echoes Alberta Premier Alison Redford’s use of the term “bitumen bubble” in her January 26, 2013 television address to Albertans. The government indicated that growing oil interest was a “sudden” and “unprecedented” development that has driven down the price of Alberta oil sands products.

Redford said the discount will cost the provincial treasury $6 billion in lost royalty revenue in the coming fiscal year.


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