Canada's Oil Sands Innovation Alliance: Strategic Rationale and Effects

Abstract

This paper examines the strategic rationale behind the formation of Canada's Oil Sands Innovation Alliance (COSIA). COSIA's members account for ninety percent of the total production in the Oil Sands. COSIA's main goals are to improve the industry's environmental performance and to increase oil production in the Oil Sands in a sustainable fashion. The analysis shows that knowledge sharing reduces each member's pollution abatement cost. The total amount of knowledge shared within COSIA rises as membership expands. If COSIA coordinates R&D activities, free-riding effects are mitigated, and COSIA's environmental performance improves. COSIA generates win-win effects for industry and global society.

Keywords: research joint ventures, knowledge sharing, green R&D, oil and gas, greenhouse gas emissions

JEL Classification: C72, D62, D78