Last week’s New York Times has an summary of a report by the Council on Foreign Relations about Canada's enormous oil sand reserves. The Council’s report encourages the coordination of climate and energy policies between the United States and Canada. The oil sands are estimated by the government of Alberta to contain about 170 billion barrels of ‘technically recoverable’ oil. These reserves would make it second only to Saudi Arabia.
However, extracting and refining oil from the tar sands is typically much more water and energy intensive (and expensive) than pumping crude straight out of the ground. Consequently, the report also recommends that the Canadian government invest more heavily in developing carbon capture and sequestration technologies to make the oil sands less dangerous to the climate. Since last year’s economic downturn and oil price collapse, investment in the tar sands has collapsed, but recently Exxon-Mobil announced they are resuming investment activity, indicating their confidence in the tar sands as an economically viable source of oil despite the uncertainty over what the US Congress will pass on climate change and carbon.
Additionally, the report suggests that any US carbon trading framework (like the new Waxman-Markey bill) includes Canada; it should at least result in similar carbon prices on both sides of the border. Of particular relevance to the ongoing debate in the United States Congress over Waxman-Markey is the article's contention that carbon permits should be freely allocated to companies developing the oil sands. In terms of US energy security, the report highlights how purchasing oil extracted from the tar sands could potentially cut into OPEC's revenue stream as well as reduce US dependence on oil from the Mideast.
This debate on the merits of the tar sands highlights the complexities of balancing environmental and energy concerns (see: Greenpeace's attempt to lobby Norway to divest from the Alberta tar sands).”