Alberta needs an open public inquiry into how the province ensures oilsands producers can pay to clean up after themselves, says a report released Wednesday by a group of university researchers.
Co-author Martin Olszynski of the University of Calgary said the agreement at an international climate meeting to transition away from fossil fuels makes it all the more imperative that there's enough money left to clean up tailings ponds and other impacts when the mines complete their useful life.
"We are in a changing time," he said. "(The current system) is deliberately, entirely blinkered to this structural change to the global oil market."
For the first time, a United Nations climate summit of nearly 200 countries agreed this week to the need to move away from coal, oil and gas.
The report, from the university's School of Public Policy, concludes the provincial government's Mine Financial Security Program is inadequate to ensure Albertans won't be picking up the tab for oilsands cleanup, estimated at anywhere from $45 billion to $130 billion, with $2 billion currentlyin reserve.
That cleanup isn't expected to start for decades and the current regime allows companies to delay posting surety until their mines are near the end of their lives. That means there will be less money for cleanup just as it starts to be needed, Olszynski said.
The current program relies on oilsands companies to remain healthy decades into the future, he said. He points to major environmental problems with bankrupt coal companies in the United States as a cautionary tale.
"Companies can and do enter into financial distress," he said.
As well, even though the Alberta Energy Regulator has called plans to remediate tailings ponds scientifically unproven, there's no Plan B other than leaving tailings in place and covering them with fresh water. Regulatory documents show tailings are already seeping into groundwater outside the ponds.
"We're told seepage is normal. But yet when it comes to those concentrated tailings that are toxic, that somehow there's not a problem," Olszynski said.
Alberta Environment spokesman Ryan Fournier said the government is committed to ensuring industry cleans up its own mess.
"The large difference in total reclamation liability to security held by the regulator is due to the fact that no oilsands mine has yet reached a point … where financial security is required," he said in an email. "They are using mostly collateral to secure their reclamation liabilities."
Kendall Dilling of Pathways Alliance, a group of oilsands producers, said producers will reclaim all the land they now use.
"The Mine Financial Security Program secures the full liability for the reclamation of these sites," he said.
That program is currently undergoing review by the provincial government. But Olszynski said that review is too secretive.
"Right now, everything is being done behind closed doors."
He said a public review is being held into renewable energy, an industry whose reclamation issues, if any, are decades in the future and far less complex. Why not for oilsands reclamation?
"It's a question of fair treatment," he said.
Carla Conkin, a lawyer with decades of experience in mine regulation, said Albertans should be concerned.
"There's no question that what they've set out in this report is well based," she said.
Conkin said Alberta is developing a similar pattern to what she's seen in other jurisdictions that have been stuck with hugely expensive bills from unreclaimed mines.
"As the mine becomes less profitable, reclamation is one of the things that isn't going to get funded."
Environmental risk from mines can't be simply left ignored until their resource is gone, she said.
"If you don't have a system to deal with ongoing risk, you're running into a situation where those liabilities are compounding without notice."
This report by The Canadian Press was first published Dec. 13, 2023.
Comments
Good luck with that for two reasons. Historically, the oil & gas industry has just abandoned their wells and suspect even with the tar sands, it will be impossible to clean up the disaster they created. The second reason, Danielle Smith or any UCP government will do very little to enforce a cleanup and pay up. The UCP won't ask the industry to show them the money for the cleanup in advance.
Both oil & gas and UCP will expect the tax payers to ultimately pay up and live with the years of consequences created by the oil & gas industry and mismanagement by the UCP. I suspect when the time comes, they will expect they will demand the feds hand over tax payers' money to clean up the disaster left behind.
It's very frustrating to read about the biggest players in the room that may get away without cleaning up their mess after decades of unprecedented profits. I've been involved in much smaller municipal and private projects where a general contractor does not receive final approval to proceed after a tender bid process until a materials and performance bond, and a labour bond or surety is posted for an amount determined by the owner of the site based on the value of the project. If there are too many delays or the contractor doesn't have enough credit with a bank or surety issuer, then the next bidder gets the job under the same process.
It doesn't take much imagination to fathom that adequate bonding and legal / financial assurances should be made for cleanup and reclamation during the land lease process that approves the exploration and extraction of fossil fuels within its jurisdiction. Or that each company would be required to contribute a defined minimum amount to a reclamation fund, perhaps monthly or quarterly as it brings its filthy products to market. The fact the Alberta government doesn't have a big reclamation fund built up after many decades, let alone a sovereign trust fund as large or larger than Norway's $1.3 trillion fund, is blatant evidence of just how deeply the government is embedded into the pockets of Big Oil that controls the agenda and ability to plan for the common good of all Albertans.
Nearly 80% of oil industry activity in Alberta is done by majority foreign-owned companies. How many of them will follow their Texas head office instructions to sell and pull out quickly before cleanup begins? The Alberta government may have as little as five years (more likely 10) to force companies to contribute a legislated minimum amount to a big cleanup fund. Once the decrease in oil demand slides in earnest as clean power rises to take its place in their export markets (witness the profound changes Biden's IRA policy is already having in a little more than a year), the plans to depart quickly would shock everyone in government and the till-then submissive punditry into silence. After that, expect to hear a building wail for the feds to do something, like pony up even more hundreds of billions upon the mountain of subsidies it has already forwarded on behalf of Canadian taxpayers who have been kept in the dark.
The people of Alberta's resources have been grossly mismanaged by successive provincial governments ever since Peter Lougheed left office. In my view, the federal government should issue a policy statement today that effectively limits its future risk by stating categorically that it (i.e. the people of the rest of Canada) will not pay for the cleanup of huge oil industry development sites that are legally under Alberta's jurisdiction, and also that it expects all cleanup efforts to follow federal environmental laws within a defined timetable.
That would be the fairest approach for all Canadians.