The Canadian Oil Sands Industry Under Carbon Constraints

Chan, G., J. Reilly, S. Paltsev, and Y.-H. H. Chen, 2012: The Canadian Oil Sands Industry Under Carbon Constraints. Energy Policy, 50: 540-550.

Posted: 30 May 2018

See all articles by Gabriel Chan

Gabriel Chan

University of Minnesota - Minneapolis - Humphrey School of Public Affairs

John M. Reilly

Massachusetts Institute of Technology (MIT) - Joint Program on the Science and Policy of Global Change

Sergey Paltsev

Massachusetts Institute of Technology (MIT)

Y.-H. Henry Chen

Massachusetts Institute of Technology (MIT) - Joint Program on the Science and Policy of Global Change; MIT Energy Initiative

Date Written: August 17, 2012

Abstract

We investigate the impact of climate policies on Canada’s oil sands industry, the largest of its kind in the world. Deriving petroleum products such as gasoline and diesel from oils sands involves significant amounts of energy, and that contributes to a high level of CO2 emissions. We apply the MIT Emissions Prediction and Policy Analysis (EPPA) model, a computable general equilibrium model of the world economy, augmented to include detail on the oil sands production processes, including the possibility of carbon capture and storage (CCS). We find: (1) without climate policy, annual Canadian bitumen production increases almost 4-fold from 2010 to 2050; (2) with climate policies implemented in developed countries, Canadian bitumen production drops by 32% to 68% from the reference 4-fold increase, depending on the viability of large-scale CCS implementation, and bitumen upgrading capacity moves to the developing countries; (3) with climate policies implemented worldwide, the Canadian bitumen production is significantly reduced even with CCS technology, which lowers CO2 emissions at an added cost. This is mainly because upgrading bitumen abroad is no longer economic with the global climate policies.

Keywords: Climate Policy, Energy Supply, Economy-Wide Analysis

Suggested Citation

Chan, Gabriel and Reilly, John M. and Paltsev, Sergey and Chen, Y.-H. Henry, The Canadian Oil Sands Industry Under Carbon Constraints (August 17, 2012). Chan, G., J. Reilly, S. Paltsev, and Y.-H. H. Chen, 2012: The Canadian Oil Sands Industry Under Carbon Constraints. Energy Policy, 50: 540-550.. Available at SSRN: https://ssrn.com/abstract=3181026

Gabriel Chan

University of Minnesota - Minneapolis - Humphrey School of Public Affairs ( email )

130 Humphrey School, 301 19th Ave. S
Minneapolis, MN 55455
United States
612-626-8910 (Phone)
612-625-3513 (Fax)

HOME PAGE: http://www.hhh.umn.edu/

John M. Reilly

Massachusetts Institute of Technology (MIT) - Joint Program on the Science and Policy of Global Change ( email )

E19-429
77 Massachusetts Ave
Cambridge, MA 02139
United States
617-253-8040 (Phone)

Sergey Paltsev

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Y.-H. Henry Chen (Contact Author)

Massachusetts Institute of Technology (MIT) - Joint Program on the Science and Policy of Global Change ( email )

E19-429
77 Massachusetts Ave
Cambridge, MA 02139
United States

MIT Energy Initiative ( email )

Cambridge, MA 02139
United States

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