A

anadian Pe r pective of

hina' E nergy Need

Bogdan Botoi

B. c.

ac ui ty of lc tr m

and clccommuni ca tion , Polytec hni c In titutc f
Romani a, l 92

Projec t ubmittcd in Parti al Fu lfillm nt of
Th e Requirement fo r th e Degree of
Ma tcr of u in c

dmini trati on

The Uni vc r ity ofNo rthem Briti h Co lumb ia
April 2009

© Bogdan Botoi, 2009

u hare t,

A b tract

econdary data to c amine th

Thi
anada and

t nt f the urrent en rgy trade between

hina a w II a c mp lcmcntariti c between the energy ituati n of the tw

c untric .
The purpo e f thi analy i
re arch qu ti n a

~

t

tated in th e

II w

1. Draw att nti n to current
2.

defin e and eva lu ate th e fi c pec ifi e clement

hin c c cc nomic trend and energy need

omparc rc urce ava il abilitic and need [! r b th the

hin e c and

anadian

CCO n OI11 1C .

3. lnve tigate
could aid

anada' fo il fu I rc crvc and tcchn logic , an d co nsid er how th ey
hin a in it future ccon mi deve lopm ent.

4. Outline political and envir nm cn tal implication engend ered by a continuou wcrca c
in tradin g activiti c between the two co untri c , parti cul arl y in th e energy sector.
5. Reco mm end potenti al tratcgic th at could lead to u tain ab lc growth in th e

hin c c

energy ector, given th e country ' current and future need .

The conclusion of thi s research point toward a signifi cant opportunity which, at th e current
time, rece ive in uffici ent consideration to develop to it full potenti al.
The final ection of thi project highli ght area of mutual intcrc t to Chin a and
strategies for closer cooperation between th e two countri es.

anada, and

1.0 lntr du ti 11 •....•.•....••...•......•••...•...••..........•....••.....•......•....•..••......•......•.•......•..•.......•••..•.•.. . ..
l. I R

u ti n ......................................................................................................... .

ar h

1.2 R car h M th d 1 g ................................................................................................... 4
it raturc R

tcw ............................................................................................................. .

ata

and Rc ca r h imitati n ...... .. ................. .... ................ ................ ............. 5

nal

bina and

l.

anad a in th e

t. ................................................. ...... .... ............ 5

bal

hina - Th e and f th e Thir t Drag n ......................................................................... l

2. 0

2. 1 il

R er

and

2.2

atural

2.

al - Rc i al and · n tronm ntal Impac t.. ................................................................. 26

2. 4

n p 1 •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 0

anada -

.0

a

crn and .......................................................................................... l4

R

and

atural R

urc

.I

il and

.2

oa l - Rc r c and

rend ............................................................................ 20

and Tcc hn I gy .................................................................. 5

a ................................................................................................................... 5

4.0 Pre cnt and Future

Tec hn o! gic ..................................................................... .. 4 1

hall ngc and

4.1 anada' "c ol politi

pp tiuniti c ........................................................... . 46

, wa m1 eco nomi c ' .................................................................. 46

4.2

anadi an

4.

Jea n

4.4

thcr ourcc of energy ....................... .. .................. ......... ............................ ............ .... 54
uclcar fi

il -

C\

al -

c nomi c Pro fit
anada'

. - . n iro nm cntal Impac t. ........................ ........ ........ 46

mpctiti vc

dva ntagc ........................................................... 52

ion ................................................................................................................ 54

I lydro-power ................................................................................................................... 55
I-lydrogcn Fu el yc lc ...................................................................................................... 56
Nuclear Fu ion ................................................................................................................ 56
Reference : ............................................ ... ................ .............. ........ .......... .. ... .......................... 59

Re earch Que tion: What will hina ' future energy need be? Might Canada meet ome

of these need , and to what degree? What are th e major obstacle to be overcome in order
to realize increa ed trade between th e two countrie ?

Objective: To analyze exi ting challenge. sp ecific to fo . sit fu els, th e energy indu. try and

environmental u tainability, a. well a th e potential bu ine s opportunities generated by
complem entaritie in th e Canadian and hinese energy sectors.

1.0 Introduction
Thi

ccti n defin e th rc carch que ti n and meth od I gy. Jt al o prov ide a hi gh-leve l

rev iew of worldwide popul ation trend ; th e gl balizati n ph nomcnon; cx i tin g leve l of oil
re ervc and forcca ted con umpti on; and fin all y, th e key dri ver of current trend and
compl cmentanti c between anada and

hina in general, and th e energy ector in parti cul ar.

Under tandin g how thi co mbi na ti on of fac tor affec t both economi c i th e dri vin g fo rce
behind thi s particular tudy.

1. 1 Research Question
To provide a olid co mprehension of the re carch que ti on, thi s paper begin with a detai led
di scus ion of demographi c trends, economic growth , and demand for tratcgic rc ourccs
ver us their availability, hi ghlightin g special area of interc t.

In the c nt

t of gl bal rc

trugg ling t
current I
intcrc t t
t chn I gi

n urc a cc

hina and pr

hina and

ar ity,

hina, a th e fa te t gr wmg c

t rcliabl and ccur

f ec nomi d

nergy

ur c nc

ide a olid platil nn fl r th e deve l pm nt finn

and it

n my in th w rid ,
ary to u lain it

lopmcnt. In c ntra t, an ada i rich in natural rc urce of

particul ar] in th

n iron mental i u
I ch c fl

ur c

ativ

n rgy c t r with th e pot nti al to an w r omc of hina '

hrinkin g p

l of en rgy re rvc .

iI fu el and cl ean u tain abl c techn I gi

a th e focu

f thi

tucl y, bccau c

anacla ar co mpl cm ntary in r p t to th eir energy itu ati n and bcca u c th ere

arc ignificant, long- term opportuni ti c for c
By identifyin g the need and rc ourc

pcrati n between the two co untri c .

f th e c two c untri

, analyz in g c i tin g chall enge

and opportuniti e , and hi ghli ghting politi ca l and environm ental impli ca ti on th at may
influen e future relati n between anacla and

hina, the pre ent tucl y target th e p tcnti al

for trade in th e energy ector.

1. 2 Research Methodology
Th e purpo e of thi

ecti on i to expl ain the re carch meth odology u eel to co mpl ete thi

tudy.

Literature Review
Throughout thi

tudy, a ubstanti al number of books, journ al arti cle , tati tic of

government and multinational corporation , rc ca r-ch ludi c , and relevant web itc
were con ultccl and properly referenced.

4

Data Analysis and Research Limitations
h r
a

ar h m th d u d durin g th i

ilabl

tudy r li I m tly nth a uracy fthc

tati ti

and n th r putati n f the auth r

- h k anal

a perD rmed in rdcr t

anou 1 ubli ati n and

f th e rc[i r nc d literature.

alidat the fi gure and p1n 1 n

cb it

n ultcd, and all data u cd in th

nfirm d thr ugh multiple and reliabl e ourc

tud
r.

uggc ted by th e pr j ct

her ~ r , th r ult , nd c nclu 1 n c uld be i wed a a rclati ely

accurat intcrprctati n o f th e chall ng , and pp rtuniti cs fac d b th tw ab
mcnti ned

untri c ,

1 c iall a: th e ' C relate t th e cncrg

c-

cc t r.

1.3 China and Canada in the Global Context
The Ia t hundred yea r ha
th Indu tri al R
igni fi cant

cc n a cn e

f unprc eden ted eve nt · and change ·pawn d by

Iuti n, th e po1 ul ati n b

on om 1 en

uch

th e

m th e gl bali?.ati n pro c · , and Ia ·tl y th

rcat

cprc i n. In additi n, th e d

a tatin g w rid

war and en ir nmcntal de tructi on rc ulting fr m an unprecedented leve l f globa l
ec n mic growth ha c played key role in th e de clopm cnt of new gc -p liti ca l tratcgic
relation bctwc n nati on and gl bal region of common intcrc t.
Thi world i changin g fa tcr th an ever. Nati n formerl y in igni fi an t in tcm1 of cco n 1111
power arc now mov ing up the hi erarchi ca l ladd er and changi ng th globa l rdcr. u h
reallocation of power arc chi cJl y backed by c plo ivc dcmographi

and large amo unt of

accumulated available capital.
urrcntl y, m t eco nomi c grow th origin

in coun tri c wi th larg p

they arc well p iti ned t ca pitalize on th e benefit

I of heap lab ur, a:

r globali za ti n (including a freer Jlow

of fin ancial ca pital) and thu abl e to build important ca: h rc cr c .

5

To rai c their tandard f li ving to acceptable l el and build the infra tmctur required t
p rat bu ine e cf[i ti ely dev I ping nati n

uch a

hina require va t am unt of

re ource .
More ver, in it que t to a c mpli h uch tremend ou lev I

f ec nomic growth , hin a i

d el pin g a v rac i u app tite ~ r energy. Thcre£1 r , energy need and con umpti n are
latcd to in r a c ub tanti all y in the fore cable futur .
The graphi c reprc entati on ofw rid [ op ulati n dynam ic (in ab
2020 ( [! rcca ted), a

lute number ) fr m 1970 to

ccn in igu r I below, i meant t highli ght th e "hot" area with

ignifi ca nt potenti al to domin ate the gl ba l ec nomy in th e nca r future.
In 1970 world popul ati on wa 3.7 bi lli on. That fig ure ha alrn o t doubl ed in cc th en; A 1a
rcprc cntcd the ma in ou rcc f"ncw bl

d' while

rth

rn crica and "uropc ex pen en cd an

ex tremely mode t grow th rate, if any at all. orne co untric ex hi bited a neg!igibl e level f
popul ati on growth. For exa mpl e, the United Kingdom grew by 0.2%, France by 0.4%, th e
zech Republ ic by 0. 1%, and

crmany by 0% (if immigrati n i n t in cl ud ed,

crm any'

population actually declined by 0.2%). The c trend pl ace a ub tantial que ti on mark on th e
u tainability of future loca l popul ati on.

6

Figure 1

Brllron s
[J st rn [urop
PopuiJtron

8 .000
7 .000

• North Amen J
PopuiJtron

6.000
5.000

• W es tern Curop
PopuiJtron

4.000
3.000

europe TotJI
PopuiJ tron

2.000
1.000

• ASIJ PopuiJl! On
0

lf)

r--

0

C'l

G'\

G'\

r-rl

.....

00

.....

lf)

00
C'l
.-4

0

lf)

G'\
G'\

G'\
G'\

.-4

.-4

0
0
0
N

lf)

0
0
N

00

0
0

N

0

.-4

0
N

lf)

.-4

0

N

0
N

0

World
PopuiJ tr on

N

U.S. Censu.\ Bureau 1

Notably, the A ian demographi c trend wa largely et by the two large t nation , hina and
India, which together cunently account for more than 2.5 billion people (m rc than one-third
ofthc world ' population).

hina' population growth wa followed by an economic boom: a

direct effect of globalization, which quickly tran formed China into " the factory of the
world" and triggered unprecedented infra tructurc development and an exponential
ex pan ion of its energy need .
Consequently, global oi l con umption over the pa t decade marked a tcady incrca e (a
shown in Figure 2) from approximate ly 74 million ban·e] per day (bpd) in 1997 to more than
85 million in 2007. The hine e economic tran formation account

~ r th

va t majority of

the increase.

7

Figure 2: World Oil
Million Barre l
per Day

on umption

\\ . rll Oil ., nsmn1 t1 n 1. . ..t-20 ,-

100.00
80 .00
60.00
40 .00
20.00

BP Statistical Revie11· Of World Energy 2001?:!

With

hin a in a leadin g role, economi c grow th

f developing nati on ha

lowed dow n

rapidly a a resul t of th e current g lobal rccc ion but can be exp ec ted to rc um c o nce th e
recessiOn 1 ove r. In an y event, it i safe to ay that long term wo rld energy need in genera l,
and o iI con umption in pari ic ul ar, are et to inc rea e .
According to th e Energy Information Admini trati on ,3 in 200 8, proven wo rld o il rc crve
were at around 1,3 42 billi o n ba rrels (as hown be low in Fi gure 3 W orld Oil R c crvc by
ountry).
At the current rate of growth of co n umption, th ese re c rvc will ba re ly cover th e wo rld '
energy need fo r th e nex t 30 to 35 year .

Figure 3: World Oil Re erv

by

ountry a of January l , 2008 ( illi n Barrel )

World Oil Reserves by Country {2008)
300
23 0
LOU

150

100
50

u

ource: " Worldwide Look at R sen ·es and Produ ction. " Oil & Gas Journal, Vo l. I 05,

o. 4R (Decem her 24,

200 7), pp. 24-2 5.

In thi environment, countri e with low oil re ervc will face majo r economic chall enge ,

while opportuniti e will emerge for countri e ri ch in resour es and able to c ver th e demand .

After three decade of globalized producti on dri ve n by developed countri c (prim aril y th e
US),

hina managed to capture a signifi cant amount of th e wo rld ' good manu fac turin g by

providin g inexpensive labour and a relative ly enhanced leve l of quality.
Globali za ti on wa seen a an adequate response to global need , all ow in g all cc nomi c
pl ayer to reali ze th eir full potential by mov ing produ ction to location that pro idcd the
lowe t labour co t. The fin al goal wa to ma imi ze cffi ciencie and crea te grea ter

ea lt h.
9

To ome d grcc, the gl balization pr

c

did deli er in tcnn of wealth creati n; however, it

fail ed t pro id thee pected le cl f pro perity and balance e pee ted around the world
mainly b cau

f anunbalanc ddi tributi n f wcalth. lnfa t, thc proc

detrimental to many of the poor r d
a n thing le

than m dem

I ping c untri

loni ali m, r e en

turn ed out t be

wh rc gl bali zati on wa p rceived

r e a ec nomic impcri ali m.

hi ghli ghted by the c anomie cri i of 200 /2009, globali zati n i prov ing to have (to
omc c tent) the oppo itc effect f what wa
cri i · thi time, h

c cr, the cri i i

riginall y intended, del ivc rin g ye t anoth er

n a mu ch larger ca lc than wa initi all y foreca tcd.4

Primaril y buoyed by a large po l f cheap labour, and by it

tratcgic dcni a I of acce

by hot

pcculativc mo ney t the co unt ry' ccon my and fi nancc, 4

hin a managed to become th e

fa tc t growing economy in thew rld with a co n tant need fo r very imag in able type of
rc ource.
The co mbin ati on of modem infra tructurc and a broad poo l of cheap labour tran [I rm cd
China into th e manu facturing centre of the wo rld , and a magnet fo r ava il abl e global
in ve table capital.
In addition to utilizing its economi ca l labour advantage,

hin a ha built (a nd continue to

build) modern infra tru cturc, and i rapidl y developing into an adva nced indu tri al power.
As of2006, China became th e second large t global pend er on rc carch and developm ent,
urpassing even Japan, and fifth in term of patents fil ed fo r new produ cts and techno logic .
ln the proce s, China i also leav in g Gennany behind and c ta bli bing it elf a a ri ing tar in
world economy.
anada, on the oth er hand , own th e second largest oil reserve in th e wo rl d ( ec Figure 3,
above) in additi on to signi ficant leve l of other natural re ource .Thi , a we ll a pr mi ing

10

innovative technologic , mean that
to

hina

anada ha c ccllcnt potential to uppoti and contribute

growing need D r rc urce and new techno! gie in th ey ar to c m .

In thi conte t, a fundam ental que tion ari e : Ha the bilateral en ergy relation hip between
anada and

hina been fu1l y und er to d and

pi itcd?

Th prim ary purpo c f thi paper i t c pi r what th two ountri c can o ff~ r each th cr,
and whether th e c i ling p lili ca l and environm ental i uc co uld hav a limitin g effect on
th ir p tcnti al l vel of c opcrati n.

i en th

ircum lance , there arc num cr u

opportuniti c t champi n u tain ab lc c operati on by tran fc rrin g "c lean" energy
techn o! gic from anada t

hina.

In the follow ing c ti on we intend t

h w how

hina, "Th e Land of th e Thir ty Dragon," i

lipping nto a dangcrou and un u tai nab lc path of ccon mi c gr wth . on temporary

hina,

with it rna ivc ye t omcw hat c ntro ll cd growth , i ov rl oo king it resource need to

me

extent, and imply di regard th e environm ental impac t engend ered by th e in cc ant need for
continu ou infra tructurc development.
To further hi ghli ght the opportuniti e and challenge created by th e Chin e c ph enomenon, I
will critically analyze Canada's ava il able re ourcc and energy poli cic (w ith th eir politica l
and environmental implicati on ), a well a it emerging technologic . Impot1antl y, uch
technologic could - if properly impl emented - lead to a tremendous redu cti on of air
polluti on in China and deli ver signifi cant benefit for Chin e c enviro nm ental i uc whi ch
have been quite contcnti ou over the pas t few decade .
The fin al ccti on of thi s paper will analyze co mpl cmcntariti cs and pos iblc yn rgiC
between the two co untri c in tem1 of re ourcc and policic , mainl y con id cring the po litica l

Il

and envir omental impact f in cr a d il pr du ction and c port fr m anada to

hina , a

well a the d

ct r.

clopm cnt and deploym nt of inn

ati

tc hn I gic in the energy

1~

2.0 China - The Land of the Thirsty
Dragon
Following th hi gh-lev 1d
(mainl y for il) thi

riptio n f w rld dem graphi c , energy re urce and demand

hapter analyze

hin a' en rgy indu try ituati n and th e effect of

u tained econ mi c grow th n it re ource and lo al en ironm nt.
the fa te t gr wmg cc n my
dri ven indu tri

to d li

energy and oth er natural r

er th e pa t 25 yea r , hina ha d ve lop d va ri u energy-

r it cc n m1 c utput e p n encmg a teady increa e in demand for
urce . I lowe er in th I ng term th e proce

app ar to be both

ineffi ci nt and un u tain ab le.
Thi i illu trated by th e amount of energy u cd by
which i

hin a to pr du ce one d li ar of

P,

ign ifi cantl y hi gher to amount u ed by other co untri e . F r exa mpl e, hin a u e

energy at a rate th at i 4.7 tim e grea ter than

A, 7.7 tim e grea ter th an

enna ny and 11 .5

times greater than Japan. ompared with the world ' average energy co n umpti on per unit of
economi c output, China utili ze three time more energy to crea te eq uiva lent va lu e.
con um e a va t amount of th e wo rld

hina

producbon of key re ource , as hown in Figu re 4

below.

13

Figure 4
'hin a's Res ur t>.' Dt>m aud ( 0 o of \Y rid pr ducti u)
40%
3 5%
30%

~

25 %
20%
15%
10%
5%
0%
OJ I

Iro n

Stee l

Ccrn cnt

Oil

ource: Wenran }ian , "F EL f G Tf !E DRA 0

The fo llowing three ec ti on co n entrate on

", April 2005, page 4

hin a ' energy compo iti o n, chall eng

du e to

increa e in energy demand , re o urce ca rcity , e nv ironm enta l impact and e nergy- ec to r
trategies adopted by th e C hin e e gove rnm ent to u ta in lo ng- term econo mi c grow th .

2.1 Oil - Reserves and Demand
The pa t decade brou ght a m ajor shift in C hin a

energy po iti on, chang in g th e co untry '

pro fi le from an o il exp01ier to th e cco nd large t o il consum er in th e wo rld (a fter th e United
State ), w ith a 40% depend ency on fore ign re o urce that i e pected to reac h 60% ove r th e
5

nex t two decade .

14

In 2004

hina' daily u ag of mde urpa

d i milli n barrel (c ill{ ared with the U

n umpti n f around 20 million bpd). Thi u age i ince antly gr wing, and threat nin g to
become a ignificant i ue and potential hindrance of it continuou economic growth .
With an a

rage rate of c onomic gr wth f about 9% p r y ar o cr an c tended period ,

hina ha rai eel gl bal il demand by omc 40% in c th year 2000 and ontributed
directl y to th

tccp in rca

in cmd c il price

to quadrupl e it cc nomy by 202
r our e ) i

futihcr in rca

in demand for energy (a well a other

p ctcd o cr thi peri d. uch an incrca c in demand will , in turn , deli ver

an thcr ct of change in trading pri c

Figure 5: Oil

vcr th pa t dcca d . With an ambitiou plan

~ r

omm ocliti c .

on umpti on (Percentage of To tal World Con umpti on)

Other, 49.1%

RuS SIJn GcrniJny,
CJnJda , 2 G% lnd1J, 3 3%

FcdcrJ llon , 2.8%
3.2%

Source: BP Statistical Review of World Energy 200 :!

ver the next decade or o, cmd e oil con umpti on is foreca ted to
increase, with

hibit a I 2% yearly

hina ' tran portation ector accounting for about half of Chine c il

c n urnpti on.5
15

cordin g to

hina

conomic Net and

number f privately owned vehicle in

urce within the

6

ational Bureau f tati ti c , the

hina rea hed 22 million in 2006, with an impre tve

1 . % averag year-over-year increa e [! r the pa t decade.
In 2006, 7.22 million new vehicle were

ld - a 25% increa e from 2005.

f th e e new

vehi le , 60% were pri ately pur ha ed and wn d.
In the fir t half of 200 , the hin c e market ab rbed 5 milli n d me ti ca lly made vehicle
(a net increa e f 17.4% o er th e arn e peri din 200 7) and how d little t n effect of
re ent fear about a gl bal rece ion.7
ln tark co ntra t with th ew akenin g ale in the majo rity of w rid ' major auto market , th e
hine e market ha co n i tentl y produ ced d ubl e-di git grow th in ce th e beginning f 2000,
making hina th e ccond large t ca r market in th e wo rld after th e

7

ince January 2009, wh n th e world economy impl oded, cvcral criti ca l change to th e
buoyant

hine c ca r market were ex pected, largely with potenti all y negati ve rcpcrcu ion

However, according to Chin a ar Tim e ,7 th e expected negati ve impac t never actu all y
materia lized. hine e automobile ale remain ed tr ng and again rcgi tcred double-digit
growth (12.3%) compared to th e ame period of 200 , with co mpac t and mini egment
compen ating for lo e in oth er car segment (Fi gure 6).
Despite th e fact that the sa le of luxury car experi enced a ub tanti al decline, th ey remain
relati vely strong when compared with ale in oth er countri es. Furth ermore, whil e th e multi pas enger vehi cle segment is ignificantl y lower th an in 2008, some po iti ve ign can be
cen as numerous small busine s own ers seem to have an increased appetite for thi
particul ar type of vchicleH

16

In th r

gment

u h a compact and mini ar , ale arc a go d a

K rean manufactur r

l arly dominate the c mpa t egmen t f the hinc e market, while

the mini- ar egmcnt i aim

Fi gure 6:

ver. Japane e and

t co mp letely c ntroll d by

hine e manufacturer .

hin a Ca r ale Janu ary 2009 v . Janu ary 2008

r
600,000
500,000
400,000
300,000
• JJn -09

200,000
100.000

Source: China Car Times 8

China's car manufacturing indu try is curren tly ranked third, behind on ly Japan and the U
with enormous growth potential con idering that th e country' average of one car for every
100 people is far behind the world's average of one car for every 12 people.
This rather low average i somewhat mis leading in ab olutc term because of the grow th rate
of hina ' auto market and the number of vehi cle and driver cune ntly on Chin a' road
According to the tati tics rclea cd in 2008 by the hinc c government and publi bed in
hina

ar Time , at the end of2007 the number of vehic le rcgi tercd in

hina rca hcd 160

million, including 60 million car , 7 million motorcycle , and alm o t I milli n trailer .

17

iat d

ith thi larg f1

and m t rc
fi gure

The

tar 164 mi ll i n dri cr (in luding dri

fwhi h I 07 mi ll i n ar
upp rt pr di cti n

hiclc

9

ar dri

f u tain d

r of m t r

r .

n mi gr wt h

r the nc t tw de adc

111

hina, I adin g t an in rca cd demand [! r ncrg and th r rc urcc .
Th r i a gr win g c ncc rn am ng

hin c ffi cial related t th lc cl fp lluti nand th e

n 1r nmcntal impa t ng nd red by u h an in crca c in th number of chicle

n

r ad . In rc pon , the

Ia t yea r,

unt ry' poli -mak r · r lea d un c mprom1 111g p li i

hinc c

G rcin g b th G r ign and d m ti c aut -maker to brin g t market chi cle with redu ced
cm1

1

n fp llutant .

cc rdin g t th e late t cmi
hinc c 5) cmi

i n law, nl y ca r

i n - tand ard arc appr

ffccti vc March I, 200 , and thr ugh ut
The

hinc c tate . . I ctri city

ga olinc-powcrcd chic!

mpli ant

ith · uro 5 (o r the equi va lent

cd G r a le a new chic le · n th e Beij in g market
hina in c min g yea r .

rid predi ct a ignifi ca nt future hi ft am ng u cr , fr m

t clcc tri ca r ; th ere fore, pl an G r buildin g electri c chargin g

tati n for all type of ve hi cle have lately been accelerated. Th e c , tati on will be
impl emented in c era I major citi c (includin g hanghai, Beij ing, and
a in many mall cr citi c ( uch a Dalian,

uangzhou), a we ll

in gbo, Qin gda t nam j u t a few). Initi all y,

th e e tati on will target mainl y electri c bu c , and later, electri c ca r and tramway . Th e
expectation for uch technology arc hi gh: by 2010,

hin a i pl annin g t produ c and

II on

the intern al market around I milli on electri c ve hicle per yea r and redu ce omc of th e hcav
polluti on generated by ga olinc-powcrcd ca r . Bac ked up by a tr ng tatcm nt during the
2008 ummcr

lympi c held in Beijing, wh en 55 electric bu c plu 4 10 electric and h brid

ar wer u d n a dail ba i , hina i d finite! m
tra k

ith a hie ing it ambiti u g al .

fa t-gr

ing aut indu tr in

numer u oth r heav indu tri
p !Iuter in th w rid .

njun ti n

ith an unpr

ha tran [I rm ed m d m

lth ugh a ignat r

fth e K

I ping c untr m an that it i n t ubj e t t

de
PI

ing [! rward and appear t be on

hina int

el pm nt in

ne f th bi gge t

t Pr t c I, hina '. tatu · a a

m1

n r lu cti n tandard .

nergy Wat h, 11 th e a erage ea rl y fu el c n umpti n per ar 1

m I 0 t 2 % hi gher th an that f ar in th

1 fd

d nt d le

cc rdin g t

ti rn a ted t rema 111

'a nd twice as hi gh a th at or Japanc ·c

ca r ,5· 12 bcca u c fth c lac k fl cgi lati n targ tin g cmi . i n o fp ll utant .
urth m1 rc, al

f c n um r g

d (a ir co nditi ncr , r fri g rat r. and thcr elec tri c

cncrgy- ba cd de icc ) in crca ca t unprecedented ra te , buoyed by a large r p pul ati on th at i
in cc antl y n a hunt [I r m dcrn convc ni cn

and com fort.

'i

urrcntl y, 25 rcgi n and pro incc arc cx pcri cn in g regul ar bl ac kout and all maj r citi c
arc confro nted with power hortagc on a dail y ba i . Thi force · fac tori c. to move th e bulk
of their produ cti n pr cc

to ni ght hi ft in rd r to avo id pea k energy demand peri od. and

co mpl ete cut-off: . Power cut arc part o f everyday life in modem

hina, with demand

con tantl y ut trippin g th e uppl y ca pac ity and outdated di tributi on netw rk pre cnt in
numcrou regi n throughout th e country. 5
hina' per capita energy co n umpti on i c tim atcd t be
and con idcrin g it

me 20 tim e low r th an in th e

tcady growth rcprc cnt a matter of gl bal conce rn .

If onl y one fourth of people li vin g in

hina reach co n umpti on lc el

imil ar t th at of the

, hina will require (a t today' con umpti n lc cL) around 20 milli on barreL or crude oil
per day

con cqu cntl y generating a majo r energy cri si . Morco cr, a cenario in \V hi 'h the

19

entire p pulati n f hina on um
un u tainable - potentially deli
w uld require

rc urcc at

per apital le

ring an in tant gl bal co llap c.

me 0 milli n barr I

l would b

t that point, hin a al nc

f crud oil p r day, whi ch i equi va lent to the cun·cnt

demand of the rc t of the world co mb in d.
on idcring the gap between
there i

hina and th e

in term of c i ting demand and c n umption,

till time D r orrc ti ve ac ti n to be impl emented to achi eve ome degree f

u tainability (e.g., large- ca lc impl cmcntati n f r n wab lc en rgic and dra ti c reducti on in
energy con umpt1. n) .5

2.2 Natural Gas- Resources and Trends
With futu re oil uppli c in que ti n and th e need fo r a ignifi cant rcd ucti n of 1-1
cmi sion , the current focu i

hi ft ing towa rd en ironm cntal concern related to th e u age

of coa l and natura] ga . A th e con ump ti on of coa l and natura l ga i tl rcca ted t doub le,
environmental concern are qui ckly becoming a igndi cant p lit ica l cha ll enge; therefore,
China is enacting and impl ementi ng tough new law meant to curb th e furt her cmi sion of
damagi ng pollutant .
Currently, coal still represents a ub tantial portion of

hina' energy produ cti on,

accounting for more than 60% of the tota l energy mix, fo ll owed by oil (24%), hydro-e lectric
(6%), natural ga (3 %) and nu clear energy (onl y 1%) as hown below.

.2 U

Figure 7

China Energy Composition

3% 1%

So urce: Li Zheng. T inghua BP Clean Energy Re. earch and Education

enter!l

atural ga come with it own pec ifi c probl em . on idcring th e geographi c, fin ancial and
ge politi cal chall enge of routing pipelines through entire co untri e , tran portati on top th e
li st of concem - forcing natural ga trade to remain mainl y regional.
The altem ati ve is liquefi ed natural gas (LNG), whi ch all ow for tran port over large
di stances without th e usage of pipelines.

pert predi ct an increa ed hare for LNG in th e

natural ga trade, but they till ee a signifi cant amount traded in regional market becau e of
diffi culties related to LN

proce ing before and after tran pmiation . 14

Catalyzed both by hortages in dome ti c ga
quality, proposals for new LN

upplies and the de ire to improve loca l air

fa ill ti e multiplied in the beginnin g of thi dcca d .

.... I

(tcm) of ga were old in th fon11 f L

In 1995 , nly 3.3 trillion cubi c rn tr
the

. and mo t of

upplie wer bou ght by electric utility c mpani e in Japan, outh Korea and Taiwan.

By 2002, the fi gure had ri en t 5.4 tcrn ;6 thi i pr ~ ec tcd to increa e to over 10.5 tern by
2010 and 14.4 tern by 2020. If the c predi cti on arc a curate, m rc than one- third of all ga
mo eel a ro

c untry bord er in 2020 wi11 be in th e [! rm of L
liqu facti n facilitie ar being built or

n the produ cti n id e, more th an 60 new
pl ann d w rld wide. Thi

grow in g demand for ga 1n
advancement in LN

pr du cti on capa ity wa catalyzed both by rapidl y

urg in L
ia and

orth

meri ca and by major techn I gica l

11 .

Th ere have been many tudi e that have a e eel L

' grow th p tenti al. cenan o

plann er at Roya l Dutch/ hell beli eve th at ga may urpa
important energy

urce by 2025.

oil a the wo rld ' mo t

ome exec uti ve foreca t th at th e indu try will in ve t

over 100 billion in c paneling L G by 20 14. 15
All in all, natural ga accounted fo r onl y 3% of hina' energy mi x in 2005 , with th e

hin e e

govern ment etting an ambiti ou target of 10% by th e yea r 20 J 0. According to BP tati ti ca l
Review of World Energy, 2 hin a' proven natural ga rc ources at th e end of2007 were
around 1.88 tern, while it co n umption grew three time fro m 1997 (approx im ately 20
billion cubic metre [bcm]) to 2007 (approx imately 65 bcm) . If China tay on track to
achi eve it goal and in crease NG 's share in the energy mi from 3% to 10% by 20 10, it
wi ll require in excess of 200 bcm per year - whi ch wo uld make th e co untry a net im p rter in
the nex t decade.

Figure 8
Chi na' s NG Con u mpti on

Billi n

ubic Meter

70
60
50
40
30
20
10
0
1997

1998 1999 2000
200 1 2002

I

2003
2004

2005

2006

2007

Source: BP Stati. tical Review of World Energy 200R 2

Natural ga reserve arc co ncentrated in large pocket and typi ca ll y loca ted fa r away
(thou and of kilometers) fro m main con umpti on centre , th u pos in g tran por1ati on
challenge . 15
The ri che t region in NG rc crves i the Middl e ast ( cc Figure 9 fo r geographi c
di stribution), furth er complicating suppl y logi ti c du e t politi ca l vo lati Iity in the area.

Figure 9

~ril l i n
80

60
40

20
0

S&

nl rJ I An
N

J

l

·"

n

IJ PJ 1f 1c

A fn J
[ u iOp

o ur ce: BP

I

r

'1-\ nl

& [ UI J S!tll ldcl l

[J Sl

ta ltsl ico / Re1·ie11' 0/ /Vorld Energy 200r tfl

In th wint r of 200 /200 , deli
krainc' ten
a oc iatcd with

relati on

ry probl m

nc untcrcd in : ur pc and created by th e

ith Ru ia crv a a g

d exa mpl e fth c c mpl c ity and ri k

uppl y when pipelin e tran it cvcral co untri c fro m so urce to de tin ati on.

Tri ggered by hi gher pri ce and incrca cd intcrc tin clea ner fu el , L G fac iliti c arc
c peri en in g tcady growth , with th e number f countri c pur uin g uch pp rtuniti c
d ubi ing over the pa t decade. Furth ermore, traditi nal pr ducc r arc al o co n idcri ng
cxpan ion of th eir produ tion capac iti e and building additi onal liqu efac ti on fac iliti c .
Jn 200 5, a ub tanti al drop in co t at e

ry tagc of the L

liqu efacti on, hippin g to re-ga ifi ca ti on) rc ultcd in LN
dome ti c pipelin e ga (in both ~ uro p c and the

chain ( fr m produ cti n to
pri ce dropping bel w th o c of

), thu making cc nomi c en e ~ r

e pan ion f pec ifi c infra tructure. lndu try e p rt predi t flll1h cr

t reducti on. duet

techn logica l improvement (mainl y On th e ide o f tanker ), whi ch

ill aiJ O\ pr du ' CrS to

rea li ze hi gher pr fit a pri ce paid by CU ' tOlllCrS is C pcc tcd tO f Ilow that of pipcl111c g <L '. 1~

mark t i

Th L

cry differ nt fr m the oil market in regard to ize and character f

patiicipant a well a in the nature fin c tmcnt and trade pattem , and pr cnt certain
advantage . The indu try i n t immune to accident , but the rather lo alizcd impact,
increa d mark t iz and th number f e i ting player may lead t a pot nti ally more
efficient and ccur market than that f i I.
ted by cc nomi c growth , limited il rc rvc , and envir nm cntal i ue , natural ga
c n umption i c pcri encin g an upward trend . T

ati fy demand and enab le th e

de velopm ent and growth f afc and reliable trading route c untri c arc [! reed to lo k
out id their border . Trad in L
tern in 2002 ; according to a

ha incrca d fr m a J w fi gure of

tcm in 1995 to 5.4

cnari dcvcl pcd by R ya l Dutch/ hell ana ly t , it i predicted

to hit 14 .4 tcm by 2020 in order to upport th e globa l demand . The tudy goc as far a to
ugge t that by 2025, ga wi ll urpa

oi l a th e mo t impmiant energy ourcc. 15

Figure 10

200
150
100
50

Billion Cubi c Meter

Tl1p 10 Exp Lrter s

0

Source: Daniel Workman , International Trade 17

2.3 Coal - Revival and Environmental Impact
Hi t ri all y,

hina relied on

al a it mam

urc of energy with more than two-third

f

t tal (en rgy) produ ti n ba d n thi t pe f fo il fu I (Figure 7).
D pite th fact that hina '

hare of renewable energy i on the ri e

maintain it pre nt tatu in the energy mi ,
co t a c mpared with th er typ

of[!

nsidering it relative abundance and lower

iI fuel .

Thi repre ent th reality of energy devel pment in
the E
AI

th e

f rban

hin a, a e plain ed by

rd on Fell r,

g In titut . 1x

epa1iment of n rgy (D

) Admini trati n e tim atc th at ver the nex t 20

year , th am unt of nergy th at hina produc
Briti h Thermal

al i e pe ted to

nit (BT

u mg c al will d ubl e - from 50 qu adri llion

) in 2007 t 95 quadri II ion T

by 2030 .

Fig ure I 1: C oa l Con sumption in C hi na by ector 2004, 20 15 a nd 2030

-

:;'0::10

Sour es: 2004: Energr In/ormation Admin. (EIA).
2015 and 2030: EJA, "System for the Analysis
of G/ohaf Energy Markets" (2006)

hi

in g th

al pr du ti n r quir d t

un

rtaint i r lat d t th ultimat l

th

li in g t ndard

hin
UITcn tl
maJ rit

r t th

c al pr du ti n 111

upp rt u h gr

th i

II within

h in a' rca lr,

f n rg pr du ti n need d t bring

c fth indu tri ali zcd nati n

IR

hina i 1n r a in g at a breathtakin g pace. II we cr, th e a t

f th e op rati nal c al plant Ia k 111 dcrn

rubb r (fi lter ) for r 1110 1ng gro, a1r

a crba ting ' n 1r nm ntal pr blcm and hi ghli ghtin g concern ab ut

p lluti n, thu

2

pr ducti n.

Figure 12:

hin a

• Coal

nergy

o Oil

on um ption 1980-20 15

L Hydro

• Gas

u Nuc lear

60

.... .. ..... . ·· ····· ··· ······ ..... .. ...... ... .... .... ..... . ······· ··· ·

40

.... .. ..... . ·· ····· ··· ······ ·· ····· ··· ······ ··· ···· ···· ····· ··· .... ... .

30

.... .. ..... .... ..... ... ...... ...... ... ..

20

.... .. ..... ... ..... .

..... .. ... ... . .

1980

1990

··· ··· ··

..... ... .... ... .

~000

2005

.... ... .

10

0

1985

1995

~0 1 0

2015

ource: Cordon Feller, China's Energy Demand, courtesy of
the U.S. Energy Information Admini. tration 1CJ

It i very po iblc that the black

pcration in

t rclca cd by coal-fired power plant and mining

hina cou ld land on the arc ti c icc, th ereby acce lerati ng the warming procc,, or

the north ern p lar region and globa l warmi ng in general.

~7

Th

t f remo ing p llutant

u h a nitrogen di

ide ulfur dio id e, carbon mono ide,

and oth r particulate ub tance and t

ic metal thr ugh th e utili zation of filter and

crubb r prior t power g ncrati on i

ignificantly lower th an th e co t of try in g to capture

and climin at

2 emi

ion a a by- pr du ct of th e pruv•~·' ·' · The rcquir d technology i full y

de eloped and ava il able. The mi in g pi e c are th e will and de ire t impl ement the c
potentiall y cl im ate- a in g tcchn l gic

n a large

ale, in cludin g all coa l-ba cd pcrati on

from mining t pow r pl ant .
t curr nt progrc
hare in

rate , it will take decade fl r renewa bl e tec hn ologic t rc1 lace c al'

hina' energy mi ; th rcforc, clea nin g up cmi

io n and preventi ng pollutant from

occurrin g in th e fir t pla c i a t p pri ority ~ r the nca r term.
Proven coa l r ourcc in

hina arc large enough to su ta in th e co untry' energy need for the

ne t two decade , but th e cnvir nm cnta l co t arc already alarmin g. With furi hcr in crca c of
coa l u age, th e itu ati on may beco me cri tica l. The bigge t threat come from ulfur dioxi de
(

2) and nitrogen ox ide (

x) cmi ion . The c arc rc pon iblc fo r th e ac id rai n

encountered on almo t a third of hina' land ma , with a ignifi cant negative impact on it
agricul tural output. 18
Cunently, China' C0 2 cmi sron have urpa ed tho c of the U and fu r1hcr co mpromi cd
global environm ental su tai nabili ty. A recent World Bank analy i of China' coa l indu try
revealed th at coa l minin g is in urgent need of restructuri ng and modcmi zation.
In terms of economi c effi ciency, techno logy and management, coal lag fa r behind the oi l
and ga

ub-sector . There are in cxce s of 30,000 active coal opcrati n (m ine ) in China;

aro und two- thirds of them arc small in size and togeth er th ey deli ver omc 33° o of the
country' coal.

Mo t f the problem fa ced by hina in thi indu try c me fr m the
pre ent a eri u

mall operati n . They

afety thr at be au e f the lac k of adequat legi lati n and utdated

operating conditi n (6 6% f th e annual 6,000 rep rt d fa tali ti e arc cnc untcrcd in mall
min e ), n ir nmcntal damage (p or infra tru etur

with nl y a limit d numb r of mall

min e wa hing their raw oa l), and Ia t but not lea t in effi cient e pi itati n and wa te f
rc ur e . 18
F ig ure 13

I

Photo: Peter Van den Eo sche, Jin Hua Gong Min e, Datong, Shanxi,

hina

The small-mine i sue i an extremely cnsiti vc one in China, becau c of th e economic and
ocial impact of coa l. The c operati ons are controlled mainl y by town hip and vill age
governments. The industry represents a major employer in many area of the country, which
in additi on to coa l's po iti on in

hina' energy mi x, bri ng to th e table a new ct of concern

(s uch a local em ployment and ocial tabili ty) . 18

2.4 Synopsis
hina

rapid ec n mtc

pan ion dri c burgeoning energy dem and in

maJ r upply reliability c nccm acr

hina , and produce

th entire energy cct r. The m t acute chall enge

relate t power gcnerati n and c n umpti n off,

il fu el .

me f th m dium-tcrm k y pri ori ti c and chall nge arc: IR
(I)

n unng encrg

uppl reli ability t meet gr win g demand

(2)

n unng 1 wcr uppl y rcli abilit/

( ) Managin g th e e urity f il uppl y"
(4) Managin g the en ironm ntal im pac t f coa l
(5) Reducing cnvir nm ntal damage by in rca in g th e pro porti n of ga and ren wa bl c
in the energy mi
(6) In crca ing cfft icncy of energy u age fo r generatin g cc nomi c outpu e 11
(7) In crca in g effi ciency in the hea tin g ec t r1"

i Ranked a

th e c ond large t produ ce r f cle tri city in the wo rld , hin a' total in tail ed

capac ity in 2002 wa clo e t 320 gigawa tt , c pcctcd to reach 500 gigawatt by 20 I 0 and a
much a 900 gigawatt in 2020. However, electri city demand con tantl y exceed th e annu al
growth in in taiiccl capacity, with all ca tern eaboarcl prov inces ( uangdong, Fujian,
Zh ejiang, Ji angs u, and Shanghai) conn ected to hin a' manu fac turin g ector ubj ect to
regu lar power hOiiages and cut-offs. In addition , overall capac ity and reli abili ty of th e
outdated tran mi s ion grid rcpre cnt anoth er bottl eneck and an area of maj or concc m.
11

Given the ever-growing pa scngcr vehi cle fl eet, inl and freight and inclu tri al output, oil i

poised to maintain it

tatu a a prim ary energy ource in

hina. Accordin g to

hin

government estimate , by 2020 th e country' clcpcncl cncy on foreign oil rc ervc (import )
could be as hi gh as 60%. To avo id po ible uppl y eli ntption , China UITc ntl y imp lemen t a
tratcgy of di ver ifi ca ti n and clevcl p

trategic oil rc ervc , acq uiring up trcam oi l a

"L

_o

from ev ral oil-pr ducin g countrie around the w rld. The country al o enforce fuel
effici ncy tandard
111

[! r all th e

hi le liccn d t cir ul ate n it road .

De pite thee i ting in cffi cicncie in energy u age,

the pa t thre de adc . In 2002,

hin a u cd 0. 2 ton

hina made ignifica nt progre

[ il equi valent to produce every

1,000 of DP, igni fica ntl y down from 2.49 t n per I ,000
In the long term

hina fa c grea ter chall cng

over

DP in I 980.

regardin g it en rgy cffi ci ncy, both becau e

of it growth rate and it comparati ve ly 1 w per-capita con umpti n ver u oth er
indu triali zcd nati on (Figu re 14).
F igure 14

CHINA

INDIA

USA

EURO

1 288

1 064

291

306

1 4 17

571

11.0 13

6.978

Water Us.e
(cubiC 1\ome e s)

526

500

467

185

Energy U•o

52

23

97

50

1 100

536

37 .844

22 803

088

004

0 03

39.9 26

8.808

.21 0

470

, 606

605

2

333

164

Population
(m 1110

)

GNP
(S- lhons)

(quad 1lhoo BTUs)

GNP/Pop
( per ca!)!ta lf'lcomc )

Water/GNP
0 37
(cu biC me ers wa er per S1 00 ol GNP)

36.717
Energy/GNP
(BTUs per S 00 ol G P)
Water/Pop
(pe capita

408
t u$e 1 cubloC m

t$)

Source: Gordon Feller. China's Energy Demand19

1

vAround half of hina' population li ve in noti hcrn region , rcq um ng omc I 0 million

ton of raw coa l per yea r fo r pace hea tin g of rc idcn tial and com mercia l building bccau c

- I

of the l w t mp rature enc unter d during th winter ea

n (below 5°

for at lea t 90 da y

e ery year).
M t f the itie located in thi pati of the c untry face major pub! ic health concem a a
dir ct ffe t f emi

n fr m the wide pread u e of

al-ba ed heating.

Figure 15

Photo : NA SA , Air pollutionfrom hina can ea ily be seenfrom
.
outer pace as a plume ofsmoke thousand'! of nules
long-'0

The number of re idential buildings in China wll l double over the ne t 20 year , with
increased negative effect on environment and health .
urrently there i an energy code in place, wi th th e potential t halve the energy u age per
unit of fl oor area; however, the hou ing d ve lopmcnt indu tty ha littl e inccnti c to adopt

en rgy-effi i nt bui lding de ign material and practi c . A

uch, impl mentation cou ld

lead to ignificant incrca e in co t . 18 The alternati e (n t t imp lement uch inn vative
change ) wi ll alm t certain ly lead t a continuou deterioration of the local and potentially
globa l, environment.
In general, hina ha achi e ed it growth at the co t of it natura l re urcc ba c, whi ch in
time will lead to th e depl eti on f th va t maj rity of it res urcc .
To addre

u tainabili ty i ue , hina pr pared an energy deve lopm ent program, appro ved

by the tate oun cil that cover the peri od from 2004 to 202 0 (medium and long term) .
Thi pl an con i t of a co mbinati n of approa he ranging from enh ancement of traditi onal
energy uppli c , reducti on of energy demand , and co n ervati on and di ver ifi ca ti on of energy
re ouree .5
hine e offi cial in charge of D reign relati on pl ace a heavy empha i on energy, and
uccc fu lly ign agreement around th e wo rld to ecure
with avail able strategic re ourcc

hina

acce

to multipl e loca ti on

uch a oil. In recent yea r , to ga in co ntro l or at lea t parti al

ri ght over ome potenti al petroleum field , Chin e c co mpani c have continuou ly increa cd
th eir invc tm cnt abroad. Th ese tran ac tion , cunentl y mea ured in billi on of doll ars,
repre ent a great effort in th e country' que t to ecure its future energy

urce .

In addition , China opened its dome tic energy market to multinati onal corporati on

(ExxonMobil, Shell, GE Energy), to allow the e giant to participate in the loca l economy,
integrate th e country with the world 's energy stru cture and take adva ntage of orn e of the
otherw ise unava il abl e rc ource ( uch as tho c found in the Gulf tate ).5
While con tru cti on of nucl ea r power plant ha

lowed throughout the wo rld becau e of the

potenti al impact on peopl e and the cnvir nmcnt, bina pl an to build 40 uch plant by 2020.

33

hinc

cicnti t claim they ha e found a new way f u ing nu lear energy [! r power

generation with n ham1ful effect
the

cr in crea ing n d :fl r en rgy

n eith er hum an or en ironm nt. In the meantim e, given
on tm tion f m rc oil - and coal- ba cd power pl ants

will not l w d wn ignifi ca ntly.
In a continu u effort t dimini h environmental impa t hina, in coopcra ti n with
Grecnpeacc, run a large

al wind fmm project to generate an in crca cd amount of

r ncwabl c and u tainabl c cnergy.5 I wly but urcly, the anc ient ilk Road to th e We t i
being tran fo 1mcd into an Eura Jan energy upp ly r utc.

34

3.0 Canada - Natural Resources and
Technology
anadian rc urc

and teehn logic abl e t fu el th Thir ty Drag n may rcpre cnt a viable
onomi c gr wth , and al o to prov id e orn e

luti on t en rgy n d g nerat d by
degree f envir nm ental reli ef. In thi
and te hn logi

ecti n, I w ill hi ghli ght

anada' ava il able r

urce

and build a fo undati n ~ r co nclu i n and r co mm endati n .

3. 1 Oil and Gas
ec nd onl y t

audi

rabia in pro en oil re

rvc (F igure 3), and containin g oil recoverabl e

by curre nt techn o! gica l and economica l mea n , ana di an oil and arc on th e verge o f
bee ming th e ingle large t ource of new upply by the nd f the decade. The oil and
located in

lbcrta hold orne 60% of the " in ve tabl e" oil re ervc in thew rid today.21

Jeff Rubin , fo rm er chi ef trategi t and chi ef cconomi t at IB C World Market de cri bed
Canada

oil and a " the fi nal fro ntier fo r in vc tor keen on profi ti ng fro m dep letin g

conventional crude re crvc ". He ecs the co untry as a maj r global produ cer by 20 10, ba ed
on its more than 170 bill ion barrel of proven reserve .
In 2005 , de pite oari ng price , conventional oil capac ity dropped fo r th e fi r t tim in hi tory.
Thi s decline is expected to continue for th e fore eeabl e future ; th erefore, th e projected 3billi on barrel a day increase in world produ cti on un til 20 I 0 will have to come from nonconventi onal ource .
The questi on i if anadi an producti on can grow that fas t, and if o, what are the
environmental co t invo lved.

on idering the p litical in tabi lity in other oi l-rich region
and

uth- a t

uch a the Midd le a t,

fri a

1a, anada become an increa ingly attractive ourcc f rude oi l.

pite

calTying a ignificant premium for it oil produ ti n, anada i
c mvc
·
10r
tment purp

c

·

I

tn t 1e energy

ti ll a very appealing place

ec tor. 2 1·

a tratcgi re urcc oil com e with it fair hare of politica l c ntr ver y even tn
ountric lik

anada.

An a1iiclc [parti cul ar inter t tit! d " il ' n t well in
Ru ell in tb e Winnipeg r c Pre
the il indu try in

anada" and publi bed by ran ee

n Febru ary 25 t11 , 200922 e p c one of th e dark ide of

anada and hi gb li ght

orn e f th major hurdl e faced by th e co untry in

th e energy ector.
A

tatcd by th e author:

''When a nati on ca nnot afegua rd it citi zen aga m t freez ing in th e dark, nor co nt rol how
much energy it e ports, nor et th e pri ce at whi ch citi zen ca n buy back th eir own energy
from foreign tran nati onal corporati on , it i not an energy uperpowcr, it is an energy
atellitc."
Quoted in the sa me article22 are some rath er al armin g co mments made by G rdon Laxer,
political economi st and director of th e Uni ver ity of Alberta' Parkl and In titute:
"Canada i pro hibited from usin g its oil to upply half it citi zen during intern ational
shortages. No oth er country is forbidd en from u ing dome tic re ource to prov ide it own
citizen !"
"I think the anadian government want to fo cus on en uring Ameri ca n energy ecurit , not
anadi an, beca use th ey ce th eir interc t n t a protecting anadi an , (but) a being
con onant with the corporate intere ts."

uppo11ing th e omm cnt i the 200 rep rt i ued by th e Intern ational
which tat

that th e era f Peak

il i imminent. 22

With ut undere timating the imJlica ti n of the current
it i only temp rary.

n e com and go,

e cntuall y th du t cttl

nergy Agency,

; cco nom1

on mtc en

, it mu t be aid th at

me leaving deeper car th an other , but

eventua ll y rcc ver and tar1 gr win g aga in . However,

thi tim th e ituation may be mu ch direr than at any th cr given tim e in th e pa t. M
current prcdi ti on c nclud c that once the current cc n mt en

t

vcr th ew rid will be

confro nted with a nc er-cnding and potenti all y wo r cning eri c of oil

UJ pl y

h ck .22

Na tural ga doc n ' t cem to fare any better in

anada, with proven intern al rc crvc ex pected

to cover onl y about a d cadc f c n umpti on.

trac ti on f il fro m th e tar and al

reqUire a ignifi cant amo unt of

, and pl ace more pre ure on th e already depl eted

internal rc crvc

In the energy ector, an ada face a paradox : it i a country rich in rc ourcc but tr ipped of
its energy overeignty, and with no Strategic Petro leum Re crvc mainl y bcca u e of it
export to the U (65 % of its oil and 59% of it natu ra l gas) .
With reduced control over allocati on of it own rc ource ,

anada in 2007 had to import 50%

of its refin ery need , mos tl y from un table OPEC nati on such a Iraq and Algcri a. 22
The Samia- to-Montrcal pipeline, built by the Trud eau gove rnm ent, wa initi all y meant to
carry wes tern oil eas tward . However, th at trend was rever ed in 1999; today, th e p ipeline
carries mainly impo rted oil we twa rd .
uncnt plan arc to reverse it fl ow aga in, to target the US ca tcm caboa rd (from where
tanker wo uld hip to rcfin cri e loca ted in the

ul f o f Me ico) rather than ca tcm Canada,
7

which heavily relic on imported oi l (e.g., Quebec at 92%, Atlantic

anada at 75 %, and

Ontario at 36%).
Bound by the

orth

available interna l re ourcc [! r it

wn nationa l intcre t i dra ti all y redu ed .
T ) give th e

Th proportiona lity !au e (part of
ga ; th erefor

anada' ability to u c

men an Free Trade Agreement (

durin g eventu al intern al hotiagc

propotiion of it c p rt t th e

fir t accc

anada' oil and

anada ann t redu ce or limit th e

. . below a determin ed thrc -yea r mov in g ave rage level.

uttin g c poti will nl y be all owed if ace 1111 ani ed by a propoti ional cut f dome tic u age,
whi ch preclud e

anada fr m full y utili in g it re urcc for it

developm ent, and deliberately pl ace th e intcre t o f the
On the other hand , energy trade with

hin a i

wn need and economi c

. . above th o c of anad ian .22

low ly but urcly ga inin g ignifi cant gro und in

Ca nada. The magnitude and impli ca ti on of uch deve lopm ent arc expl ain ed by
Hur t, a politi ca l-military re earch analy t with th e Foreign Military tudi c

ind y

ffi ce in a

repOii for the Institute for th e An aly i of Global ecurity.23
In the qu est to increase it own energy ecurity, China made noteworthy effort to win acce
to some of the mos t prized oil re erve in No rth Am eri ca, and parti cul arl y in

anada.

In April 2005, the China Na tional Offs hore Oil Corporati on acquired (for 135 million)
16.67% of the Canadi an-based MEG nergy Corp ., th ereby ga inin g accc

to omc 32,900

acres of MEG-owncd oil and whi ch are th ought to contain two billi on ban e! of
recoverabl e oil.
th er igni:fi cant
Li ght

hin e c deal in

anada includ e in opec' a qui iti on of 0°o

r

orthcm

il and s Proj ect in Albetia, with producti on c pcctcd to begin omc ti mc in 20 I 0, a ,
J

w ll a th e pl ration ri ght

[! r a 260-acr

Petroleum

rporation) .23

Moreo er

hina i pr ac ti ve in de

tract in Alberta won by NP

loping e p Ii r ute from

( hina Nation al

anada: "Petro hina o. Ltd .

and "' nb1id ge In c., anada' number tw pipeline c mpany, ign d a memorandum of
under tandin g to c op rate on th e de el pm ent o f the

ateway pipelin e whi ch i e pected to

tran port appro im ately 400 000 bpd of oil pr du ced from th e
"' dmonton to a port n th e we t coa t of rit i h
tanker to

hina a well a to oth er

much a half of the pipelin
deal between Petr

lberta oil and from

lumbia, where it ca n th n b

ia-Pa ifi e market . hina will p

hipped via

ibly contrac t for a

capac ity of 200,000 bpd , whil e -- nbri dge will broker th e suppl y

hin a and th e oil and produ cer ." 23

The grow ing pre ence of hin a on th e energy map ha produ ced mi ed reaction and
comment from analy t .
Becau e the va t majority of anadi an oil export head

uth to th e U via a pipeline,

China's involve ment in the area co uld potenti ally ca u e un ca in c

between anada and it

southern traditi onal trading partner.
A di fferent take on the matter i proposed in an arti cle by Tam m arli le, publi hed Jul y 12,
2006 in The Wall Street Journal. 24
A stated in the article, some promin ent U.S. energy analy ts consid er that the rece nt Chine e
investm ent in Canadi an oil sand , pipeline projects, and other a ct de igned to ec ure
aeccs to in ternational petro leum reserves, will have a po iti vc effect on global upp ly and
ccurity in tead of bein g a threat.

39

For that matter

hina

10

c tment w rldwid e arc c pected t b

t production and

in rea e global a ailability f il , and al o to act a a ignifi cant timulu

[! r the oil-

pr du cing countri c .
recentl y c pre cd by Dani I Ycrgin
A oc .tatc to th c

. . Ld ou c

" It i imp Jiant to get hina'
timul ating th w rld
Meanwhil e,

hainnan of ambridge _, ncrgy Rc ca rch

·
mm1ttcc
n ncrgy and omm crcc: 24

ituati n in to per pcc ti c, and cc how it

ncrgy need arc

ccon my."

hina i bu y l in g d al w ith cvcral other anadi an c mpani c , with th e

potenti al to incrca c it market hare. The c anadian firm arc not ex pec ted to reject th e
hinc coffe r fo r th e ole rca
di ver ify it

n of pro tectin g

intcrc t , a

anada need to deve lop and

ourcc of revenue and income.

With a growing interest in ex pandin g it cco n mi c reach in order to fu rth er it ex port , and
co n iderin g the lowing eco nomi c of Japan and th e
moment and increa e it oil upply to

, Canada an and hould cizc th e

hina.

There are till signifi cant barrier impeding th e oil trade between anada and

hina, uch a

long-ten11 agreements, upply deals with oth er potenti al shipper , and oil -tanker traffi c
prohibition along mo t of Pacifi c Coa t; however, in the long term , Canada need to co n idcr
hina as a key strategic partn er based on it demand and financia l power.
In addition, more techni cal challenge lay ahead- wit h Chine c rcfin cri c on top of th li t.
They are de igned to handl e the hi gh grade crude oil co ming from Middl e a t, rather than
th e heavy crude from anada, and need additi onal infrastru cture if Chin a ha any hope of
di ve rsifying it oil ources. 23

40

3.2 Coal- Reserves and New Technologies
al rc ource ar
India ,

cry un

u tralia and outh

en ly di tributed, with the ' Bi g i " - th U , Ru ia ,
fri a - in control f

(anthra itc and bitumin u ); combined with brown

me 5% f world
a! , th

hina,

hard coal r crvc

ig i actually control almo t

90% f gl bal oal re ourcc .

Aft r the c maj r pr ducer and xp rt r , th e larg t coa l-e portin g nation are Indon c ia,
olombia and
In

anada .

an ada , th e richc t c al-bca ri ng rcg i n arc I catcd in the we tern part of th e c untry,

prim arily in th e pro tncc of
olumbi a·

lberta (70% ft tal coa l re c1 c ), a katchcwan and Briti h

va c tia i al o on the c al map with omc bitumin ou c al rc crve .

According to BP tati ti ca l Rev iew of World ""' ncrgy, the total pr du cti on of anada was 66
Mt in 2004 and down to 62.9 Mt in 2006, with Alberta deli vering alm o t 50% fit.
In 2006 , anada coal c port reached 2 Mt, almo t all o f it ( 16 Mt) bein g cokin g coal

de tin ed prim arily for A ia. A ignifi cant amount goc every year to Japan to feed it iron
and steel indu try, with the rc t of th ee port addre in g Europea n and outh Am erican
demand .25
The rich dome ti c coa l re erve provide hina with orn e degree of security, and limit it
dependence on foreign uppl y, but th ere i

till a noteworth y opportunity for Ca nada to

capitalize on th e hine e coa l energy sector in th e fi eld of adva nced clean technologic .
Given th e relati ve abund ance and lower co t of coa l in the face of dimini shing rc ourcc and
incrca in g pri ce of oil and ga , coa l i in crea ingly attrac ti ve.
A stated by Na tural Rc ources

anada: 26 " ... ncrgy pol icy maker world wid e icw c al a an

important and tratcgic energy rc ource, one that i c enti at to maintainin g w rid energy
ccurity at an economi ca ll y co mpetiti ve pri c.
41

anada c uld

ntribute to the critical nergy infra tructurc throu gh techno logy dcvcl pmcnt

and kn wledge gcnerati n both ford m tic u c, and fortran fer to countric like

hina and

India .'
encrally ac eptcd i the fact that environm ental impact rcprc cnt the main chall enge for
thi indu try too ere me in rd r t maintain it

apacity to provide

entia! crvicc at

affordabl e rate .
f pec ial intere t i clea n coal-fired p wcr ge nerati n techn ology, whi ch over th e Ia t
decade ha been the ubj c t of in rca ed attention and d ve lopm ent.
The mo t re ent

anadi an-built coa l-fired g ncrator

enc ee

beca me operati onal in

March 200 5 nca r dm nt n, Alberta.27 The fir t f it kind in

anada, thi power pl ant i

u ing upcrcriti ca l-pre urc pul cri zed coa l c mbu ti on tec hn ology.
Gene ec 3 u e it

tea m boiler to hea t wa ter to upcrcritica l tempera ture and pre ure, whi ch

allow for increa ed effi ciency of the power pl ant, and redu ce fu el
a oc iat d GH

nsumption and

emi ion by about 18% co mpared to older coa l-fired power pl ant . The

plant also has built-in pollution control equipment ; in additi on, th e operat r agreed to bu y
carbon off: cts to h lp reduce th e net GHG em is ion to the leve l of a tate of the art
combined-cycle natural gas-fired fac ility.
In the fi eld of clean power generati on, the upercriti ca l-prc sure pulveri zed coal combu tion
is consid ered to be a low-ri sk mature techn ology, and is th erefore recomm end ed fo r new
power pl ant .
There arc two other alternati ve technologic able to prov id e simil ar rc ults: flu idi zed bed and
integrated ga ifi ca tion co mbined cyc le (IG
unccrta inti cs.

). Both have a oc iatcd chall enge and

Point Ac 111

o a c tia i

peration .27

t the heart f thi techn logy i the proce

lime t nc, whi h eliminat
c mbu tion temperature.

anada' only comm r ial fluidized-bed power plant in
of mi ing burning c al with

ulfur and decrea e the formati n ofN
nfortunatcly thi pr ce

i the techn logy

by redu ing
maj r weakne

a direc t effect of lower combu tion t mperature, fu el effi ciency i reduced and produ ction
of ca rbon di

ide xceed th at fa upercriti ca l c at-fired power plant with imilar lectric

output.
The I

techn o! gy i ba ed n c al c nve r ion into ynth e i ga , whi ch i a m1 ture of

carbon mono ide and hydrogen.27

co mbu ti on turbine i th n p wered u ing th e ynth e i

ga . Th e pro e s pr vid e multiple benefit , ra ngin g from increa ed effi ciency in power
generation to the crubbing of pollutant (th e like of ulphur and heavy metals) fr m the fuel
before it hit the combu ti on turbin e.

Increased effic iency redu ce both the amount of fuel u ed for energy produ cti on and th e
generation of greenhou ega es .

43

Figure 15:

Facility

chematic of a Typical I

.
I· I
dl
• y

'•

'1

rf

r

'/ ~

'

'

I

Ho• I

'

[

l'l

r r,
r-,r.r t

r

I,'
tt

I' t

''

•t r ~

'.'t

I

,.

'I

I

•

ource: Em erg ing Technologi 'S in Electricity Generation. EB 2006

IG

i a relative ly new concept, and pre cnt uncertainti c regardin g co n tru ction co t and

reli abili ty, but al o ha th e p tenti al to become the preferred tec hn ology fo r lean generati on
of electricity u in g coa l.
Even with th e e new clean technologic , GHG emi s1on rcmam a cn ou concem- thu
making carbon capture and storage a ve ry attrac ti ve and important additi on to the coa l-fired
power plants.
GHG emi sion can be reduced in two ways : by crubb ing 0 2 befo re tran mt 1011 , or
scrubbing it after. Prc-co mbu ti on crubbin g i u ually more effi cie nt but depend heav il y on
th e reli ability of carbon di ox ide capture in tallati on.
Thi type o proce

ui tabl e fo r JG CC plants, and combin e ga ifi cati on wi th C0 2 capture .

44

P t-c mbu ti n i lc

effc tivc compared with pre-

mbu ti n, but of£1 r

b nefit: it enable the plant t run a a c nv nti nal fa ility when the

2

nc maJOr
crubber arc n t

functional.
fter it capture,

2 can be

hipped via pip line t

uitable area where it can be tared in

geological formation , uch a depl eted or a ti vc oil and ga rc ervoir

r in deep aline

aquiD r .
2 rc ulting fr

m th e procc

of power gcncrati n an al

recovery, which could help to off: ct
In Ca nada ,

b u cd [! r enhan ced oi l

me of the apturin g and to ring c t .

lberta i th undi putcd leader in th e deve lopment of n w coa l-fired generation .

In addition to the

cnc cc 3 plant ncar clm onton (in opcra ti n incc 2005), another pl an t i

under con tru ction : Keep hill 3 whi ch ha 450 megawa tt (MW) of in tail ed power, u in g th e
arne upcrcriti cal-prc urc pulverized coa l combu tion techn ology. It i expected to be in
erv ice by earl y 20 11 .27
Coal-fi red generation i an important part of the energy mix in both China and Ca nada, but
currently face

ignificant chall enge du e to conccms abo ut ai r quality, global warmin g,

uncertainti e related to future GH

regulation , and compet iti on from oth er ourcc

uch a

nuclear, renewables and NG .
With all these issues on the table, coal wi ll retain it

hare in th e energy mi for the

fore ccable future; th erefore implementati n f clean, u tai nablc technologic i a critical
i sue to be aclclrc eel .

45

4.0 Present and Future Challenges and
Opportunities
Thi fin al ccti on analyze

urrent and future challenge and opp01iuniti e for trade in energy

and r lated te hn l gi , ba ed n complementariti e un

er d in th prev iou

hapter a

we ll a on th p t nti al p Jitica l and en ironm ental impac t f increa ed tradin g level
hina.

betwee n anada and

4.1 Canada 's "cool politics, warm economics "

In contra t with th e

bama admini trati n, whi ch pl an to broaden hin a' engag ment,

Harper' gove mm ent pl ay the card of"c ol politi c , wam1 eco nomic "w ith the potenti al to
fLiliher damage th e alrea dy wo bbl y relati on hip between th e two co untrie

15

.

" ool politic ' ranged fro m pro-T ibet po iti n, per onal inv lvement of anada' pnm e
mini ter in a ce1iain con ular ca e, human right and the lac k of de ire to c tab! ish clo e
wo rking relati on with top
"Warm economic " ha

hin ese offi cial .

een a very different progre s path , with e tended upport for A ia

Pacific Gateway and Con·idor initi ati ve, a maj or projec t abl e to integrate anada into th e
Pac ific upply chain s.
Harper government ' pos iti on toward Chin a has provoked deep concem among

lbertans,

because of th e detrimental impact on bitumen export , potenti al limitati on on

hin c ~

in ve tment in th e energy sector, and bidding fo r major infra tructure proj ec t in

hina .

46

The biggc t int ma l challenge faced by anada i h w to rc t re an e ten i e and productive
relation hip with
t

hina with a publi g n raJ attitud e that fo ter

anadian alue and want

ec th m implemented internationally.
hi gh-1 el i it to

hina alread y ha been prorni ed, and the commitment ha to b

foil w d ac ordingly b the prime mini ter.
cnc

r uch initiati ve t have any

f vi it by th e en ior member of th go crnm cnt ha t

anadi an leader will pl ay a pi otal role in

rt of uccc , a

cur in advan ce.

0

plainin g to a c nfu cd and un certain d me ti c

publi c the co mplc ity of th e hinc c rea lity and it

ignifi ca nl r lc in global affair 15 .

The · ovcrnm cnt f anada foreign poli cy cmph a izc human ri ght , democracy and
freedom with a vari ety of abin ct mini tcr inclin ed towa rd th e fun cti nal part of th e
rclati n hip.
Thi approach i not rea ll y appreciated in Beij in g,

hin a' A i tant Foreign Mini tcr

makin g a loud and clear tatemcnt in Febru ary 200 7 regardin g the itu ati on: "th e eco nomi c
relati on hip goc hand in hand with the politi cal relat ionship" 16 .

4.2 Canadian Oil- Economic Profit vs. Environmental Impact
Population gro wth ver u economic growth i perh ap th e be t way to de cribc cunent global
situation. onsidering the two countri es in the wo rld with the large t number of inh abitants
( hina and Indi a) and the probl em they face (i n Indi a, about 800,000 million peop le li co n
le s th an $2/da/ 8) it is afc to ay that popul ati on i winnin g.
The growin g need of uch countri es arc and will remain major dri ve r of demand in man
indu tri e , in cluding energy, fo r the fore cca bl e future.

47

hina e tabli hcd it elf in recent year a

anada '

econd large t trading partner, behind

on ly the

, but thcr i

anada to

hina provide a good reprc cotati n of th e I vel f energy product tradin g

ti ll a ignificant gap between th e two. Recent il e port from

between

anada, the

and

e ported

uth f the b rd cr.

hina with the a t maj ority f oil pr du ccd in

anad a bein g

Accordin g to fi gure rclca cd by the nergy lnformati n Admini trati n in th e yearl y rcp01i
for 200 , more th an 50% of oil pr du ccd in

anada wa c ported into th e U , for a t tal of

55 ,000,000 barrel , in tark co ntra t with

hin a whi ch nl y acco unted for 376,000 ban cl

for the entire yea r, di idcd in two mall hipm cnt during th e winter.
In 2006, Canada produ ced orn e 3.2

mi lli on ba1Tel per day (mbd ) of oil , with an average

of2.353 mbd (or 72% of th e oil producti on) c ported to th e

, h win g a tccp in cr a e

from prev iou yea r when onl y about 50% o f total oi l produ cti on wa
bord er. 23

cnt outh of th e

un·cntl y, the U account fo r approx im ately 75% of total ex port and around 65%

of total Ca nadi an imp01is; 34 however, with th e U eco nomi c lowdown amplifi ed by th e
crisis of2 008/2009 tradin g leve l have dropp ed, mainl y impac tin g lum ber and energy
exports.
The slack has mostl y been picked up by China, dri ve n by its intern al need fo r energy and
other resources. To ome degree, thi s i offse tting the los e attributed to dccrca cd tradin g
levels with the US.
Trading strategy i , 111 c sence, imil ar to an in ve tm ent portfo li o whi ch need to be
immunized through di versifi cati on, from the type of rc our c and good traded to the
number, loca tion and potenti al of tradin g partn er .

4

ut of the three major

ught-a fter energy pr duct - oil, ga and c al -

anada i well

pia cd to capitalize on two f th em, namely oi I (fl r a ailabl re urce ) and coal (for clean
techn logic )0
n id ering it [ oliti cal tability and ecurity, a well a ava il able oil rc ervc , anada may
play a major role in th e global future f fo il fuel and particularl y in
tratcgy, whi ch i dri v n by the need to ecure long tenn acce

hin a' energy

to reli able rc ourcc

0

Through it cutTcnt and pr p ed in ve tm cnt in th e anadia n energy ector, hin a i ready
to upport a majo r part of th e infra tru tur d velopm cnt o t , th ere fore enabling hi gher
producti on level and ca e of deli very of anadian oil to internati onal market via a new ly
propo cd pipeline from Alberta t a port on th e Paci fi e

a t.

Challenge arc num ero u and very en ou in nature, and include NAFTA agreement whi ch
tic anada t the U ; limited acce

~

r oil tanker to port on Pac ifi

needed for explorati on, producti on and tran potiation; th e nccc ity of upgrading th e

hin c e

refinery network to enable u age of anadi an oil (di fferent from th e hi gh-grade oil co ming
from the Middle ast); and las t but not lea t, th e i uance and implementati on of mea nin gful
contract in thi

ector.

An article publi hed by Anna Hopper in the 2008 fa ll editi on of Harvard Intcm ati onal
Review highl ighted everal noteworth y i ues related to the environm ental impact of
extracting oi l from bi tumen depo it from Alberta's tar and

0

Moreover, issues related to the US energy policie regarding th e purcha e of "dirty" energy
pr duct 29 continu e to make headlin e

0

49

Furthe1n1ore the

re

urc

(tar and ) remained relativ ly untapped until rec ntly becau

f high pr du tion co t ; h we cr a oil price
operation b am extremely pr fitablc.

piked v r the pa t few year , c traction

umcrou

il compani e m ved in and capitalized

on the opp rtunity and a are ult, il producti n level
billion barrel rec

r d dail y) durin g th

111

anada rca bed record level ( 1.3

ummcr of 2008.

While the pr fit were ignificant, th en ironm cntal impa t f th e il peration in Albc1ia
wa al

ub tanti al, off etting to a large degree the r ali zed ga in .

The c i ting oil in

lbe1ia'

il and i a I w-grade produ ct and recovery proce

av rage three time more energy than conventi nal oil ; th erefore th e am unt o f
relea ed in the atmo ph cre arc a!

requ1rc on
2

three tim e larger th an for e trac ti on o f hi gher-grade

crude oil.
Anoth er major co ncern relat

to the amount of water required to eparatc oil and and ( vcr

12.7 billion cubi c feet per yea r) with direct imp Iicati on for local ecosy tem . igni fi ca nt
depleti on of water re ource in th e area and deformed fi h found in th e tox ic lake

ituated

ncar th e extracti on perimeter f-urther hi ghli ght the negati ve impact on the loca l environm ent.
As stated in the ame article:29 "The area (Albe1ia's oil sa nds) i now the mo t rapidl y
in crea ing ource of greenhouse gas cmi ion in Canada'', and is draw in g th e attenti on of
environmental and politi ca l leaders fro m around th e world .
During the 2008 presidential ca mpaign th e U , both ca ndid ate Barack Obama and John
Me ain adopted trong positi on again t th e purcha c of environm entall y ditiy energy, from
source

uch a Alberta' oil and .

long th e ame lines, aliforni a go emor

mo ld

chwa rzencggcr recentl y ag reed to limit import of oil from pr du ccr with large carbon

_o

£ otprint . In addition 1 000
area with ignificant
that

H

may r rea hed an agreement t rcJe toil imp rt from

cmt ion ( lberta included).

n idering the e fact , it appear

anada' p li y to c tra t il at ub tantially any en ir nmental co t i now backfiring

and c uld I ad to potentially rc tri ctive mea urc again t thi parti cular type of pcration .
In re pon c to the c concern the

practical olution . In 2007,

anadian govcmm ent mad e

lbcrta b ca me th e fir t North

lcgi lation gea red t ward limitati on f
goa l of thi initi ative i to red uce tb
During th e umm er of200 ,

H

me attempt to provide

mcri can regi n t adopt

cm 1 i n of large indu trial fa ci liti c. The fin al

c cm1 10n by 12% before th e end of tbc deca de.

lbcrta gove rnment announ ced plan to in vc t 4 billion into

publi c tran p rtation crv icc and rc carc h targeting more environm entall y friend ly
technologic (e.g., carbon capture and toragc) in ord er to clea n up Alberta' oil -producin g
area.
In the ab encc of a clear pl an with a clea r budget allocation, direction of rc carc h, tructurcd
goal , and concrete deadline , th e propo cd inve tm cnt doc not appear to effecti vely
co mpensate for the continuous cxpa n ion in the area.
Thi pres ing is ue is very complex in the lon g run and dependent on

energy pol icy. If

the US prioritizes it energy ecurity, oil import from Albc1ia wi ll remain a top priority and
environmental concerns will play a secondary rol e; however, if th e U adopt hi gher
environmental standards or a cap-and -trad e y tem, a decline in uch oi l impoJi from
anada cou ld be expected.
Oil industry rcpre cntati vc argue th at under uch circ um tancc ,

lbcrta wi ll prefer to -ell

it oil to countri e with lower environm ental tandard ( uch a

hina and potentially India),

51

D r a long a

anadian Prime Mini t r teph en Harper d e not foil w throu gh with hi

campai gn promi e t curb il
hina ' need t
concern 1n

ccurc ac c

p rt to
to reliable

untric with inad equate cmi i n
urcc

29

tandard .

f en rgy lead t increa ed envir nmental

anada, and the c untry' ( an ada) dcpendcn c n trading in natural rc urcc

may reate om c inter ting ccon mi and p liti cal challenge .
H we cr, it i within thi c nt

t that c mpl cm ntariti c bctwe n the two c untri e could

paw n the dcvcl pm cnt f agr cmcnt regardin g rc urc

and tec hn ology tran fer, and

ultimately crvc the c n mi and en ir nmcntal intcre t

f b th .

In thi rc pect, a higher lev I f long- term

hi ne c in v lvcment in th e rcgi n hould be

conditi ned by invc tm cnt in environm ental re torati n and developm ent of new
technologic

uch a ca rbon capture and to rage, to help clean up cxpl oitati on area

th e Alberta tar and . Th e

uch a

till need to be con id crcd a an e enti a! part o f th e " bi g

pi cture', bccau c it will probably remain Canada' main trading pa1i ncr for yea r to co me;
therefore, adopting an environmentall y co n ciou approach will onl y olidi fy

anada

po ition a main oil uppli er to the U .

4.3 Clean Coal- Canada's Competitive Advantage
An arti cle publ ished in cientifi c Am erican on Au gu t 4, 200 prov ide
about

hoc kin g tat i ti c

hina' unprecedented level of energy tran fo rmati on, which cern to be "fired up by

an engineering optimi m remini cent of th e U.S. in th e 195 0 ".30
To keep up with the electri ci ty demand s of it l .3 billi on inhabitant and the ma ny indu tric
manu fac turing in expensive goods for the U and

urope, n a erage China open , nc large

c al-fired p wcr plant c ery week- thereby con tantly increa ing the amount of p llutant
r lea d in the atmo phere.
p llutant by 10% over the ne t 5 year i air ad y in place but the propo al

A plan to rcdu

imp ly de igncd t rep lace mall ineffici ent plant with larger and more effici ent on e ;
h nee, it pr vid

I uti n to th e gr wm g concern

only a pa1ii al

uch a publi c health and

globa l warming.
The hi gh lc

1

f air p lluti n and po r wo rkin g c nditi n for th e maj ority of th e

1 pul ati on invo lv d in th energy ector arc main c ntribut r t

health bill - curr ntl y in e cc
environment ae ro

o f 100 billi on - and prov id e a grim im age o f th e state of th e

th e co untry. '0

No twith tandin g th e fac t that ave rage per capita GH
than in the

hin a' mas ivc yearl y

cm1

ton

111

hin a arc mu ch lower

and that th e country i not forced by any intern ational ag ree ment to redu ce it

emi ion , the hine c government initi ated in 2007 a pil ot carbon capture and toragc
program fo r coal-based energy genera ti on at a pl ant named GrccnGen. Thi program i
primarily based on IG CC.
Based on Canada'

ucce

with imi lar initi ative , th e opportunity to implement clean

technologic where mo t needed (China) and Chin a' abundant capital ( ver 2 trilli on
availabl e) creates the potenti al fo r significa nt economi c pro pcct (for Canada).
As prev iously described, Canada's favourite techn ology - upercritica l-pre sure pul veri zed
coa l combu ti on - is effi cient, proven and mature, with a low leve l of ri k and ma ny
noteworth y benefits; therefore, it may repre cnt an attrac ti ve altcmati ve for

hina .

5

n tructi n of thi type f power plant i co tly (appro irnately I billion); h we er, it al o
pr mi e a po iti c an wert a pre ing qu tion:
Bene fitin g from
energy

an c al and clean air coex i tin

hina?

hine c int re t in clean and u tainable way of producin g mu ch needed

anada h uld c ntinuc building a new generati n of clean c al p wer plant

111

hin a (and ev ntually back h me) and furth r u c the re ultin g profit to fund future
rc arch, with the ultim ate g al t incrca e th
and c pand it r a h int

th cr im~

ati

ve ra]] effi ciency of the techn logy di cu ed

olution .

4.4 Other sources of energy
Rccogni in g th e unavo idab le fo il fuel n

many g

ernm cnt other than hina are

eva luatin g altemati e u tai nabl e and potenti all y rencwabl
di scu ion expl ore

our e

[energy. Th e foll ow ing

. I c1101
.cc,. 11
cvcra I potcnt w

Nuclear fission
nee deemed to produce energy "too cheap to matter", nu clear fi

ion currentl y acco unt

~ r

orne 7% of the wo rld ' power. It e i t in a limited number o f countri c , with France a th e
mam user.
Despite th e enthusiasm that urround ed th e introduction of thi technology, it later proved to
be an cxpen ive and dangero us endeavour a leak of radi oacti ve materi al turn ed out to be a
rather harsh reali ty. Wh ile uch occurrence were once perceived to be merely th eoreti ca l
threat , th e Chern obyl nu clea r power pl ant di a tcr of 1986 changed th i initi all y ro y
per pecti vc into one of doo m and gloom.
Oth er ignifi cant sa fety ri ks arc al o as oc iatcd with the technology. Among th e mo t
notabl e is the radi oacti ve by- produ ct of norm al operati on , whi ch re main dangerous for

_4

appro imately 100 000 yea r . he problem f how t di po e of it afcly c nfi und

cienti t

ar und thew rid . Wor e, the technology threaten interna tional afi ty and w rld peace a
the react r

an be u cd to produce nucl ear mate ri al fi r weapon

f mas de tru ction , namely

atomic r nuclear bomb .
N twith tandi ng th c cn ou

afety i uc , nuclear fi i n ha it own appealin g point : it

provide a compact, practi al and

H -free alternative to fo il fue l .

Hydro power
Hydro-power accou nt for around 2% of the world ' electrica l power, and uccc fully
avoid the afcty i uc a
corn

with it

cia ted with nuclear II

ion . However, thi type f energy al o

wn ct of pr blcm , which may be impo iblc to overcome in many area

with un uitable geography and cli mate.
Environmental impact, which u ually entai l contcntiou political i uc , cannot be neglected
either. The con truction of new dam require large area to be f1 odcd, which affect l cal
ceo y tern and po ibly regional microclimate .
The o-call ed "green energies" (wind, so lar, wave, bioma

and geothermal) have rapid ly

incrca ed in popularity in recent time , but currently make up Ic s than 1% of world '
generated energy.
The main di advantage are related to the very nature of the c energies.

11 of them c hibit

low power den ity and mo t of them are intcnnittcnt; therefore, they require c pen ivc
energy storage faci liti e de igned tor lease captured energy over period of low power
avai labi lity (e.g., overnight for so lar powcr-ba cd y tem ).

55

. . ten

cu

many ca
bre z

ha c a negati ve impact on the cnvir nm cnt; in

f u h t chno l gtc may al

n cqu n e ar rather hard t anti ipatc.

are ery attra tivc [! r wind farm

but th e p

a tal area with tr ng teady
iblc chan ge in weather pattern In

the c and adjacent region duet deer a d air irculation arc diffi cult to c timatc and
quantify.
Th e arne applic for olar panel in tailed in unn y rcg1on
g

uch a Arizona , which offer

d potential for tcady produ cti on. In the I ng term, large- ca lc implcmcntati n may

change the heat balan c in th area, with unkn wn ffcct and p

ibly irrc cr iblc change

to th cnvir nmcnt.

Hydrogen Fuel Cycle
The much coveted hydrogen fuel cyc le, ccn by man y a the final frontier for ati fyin g our
grow in g energy need with zero harmful cmi

ion , a! o rai c

orne que tion

Whil e the zero cm i ions part i true, can hydrogen be afc ly produced in large enough
quantitie with no em i ion ?
All the e alternative are, to ay the lea t, difficult and problematic to implement on a calc
that would allow for compl ete replacement of fo il fuel currently u cd in the energy
production proce .

Nuclear Fusion
With the exception of geoth erma l and nuclear fi ion, all oth er source

f energy di cu cd

come from one common origin : th e un , which i p wcrcd by a proce

ca ll ed nuclear fu sion .

56

F ig ure 17: N uclear Fu ion

ourc : General Fusion Inc. 11

Thi lead u to th e ultimat

ource f renewabl e energy, with th e potential to prov id e th e

w rld wi th an unlimited am unt of clean power fo r th e yea r to co me. A number of
ambiti ou

anadi an eo mpani e are operating in th e non-polluting fi eld of clean energy

production. One in parti cular - General Fusion, ba ed in Burn aby B. .

11

-

hold th e promi se

of takin g th e wo rld to the Holy Grail of energy: th e mi ghty nu clear fu ion. Thi proce
could recreate the un effect in a controll ed environm ent, therefore produ cin g an output many
time higher than th e input needed to initi ate th e origin al reacti on.
This technology is currentl y being con idered by everal other countrie . In Europe, an
impressive multin ational, multi-billi on-dollar proj ec t wa initi ated ome yea r ago. It
explored a fund amen tally di fferent idea than Genera l Fu ion, but targeted th e ame end
re ult: electri city generated th ro ugh nucl ear fu ion.

57

In a recent intcrvi w aired by

Doug Richard on made the very

cnera l Fu ion

TV

b ld tatement that fu ion p wer i only year away: "We bcli ve we can generate net gain
(of electricity) in three t fi c year , and get power n th e grid in ten year ."
en ral u i n' mam c mpetiti e advanta ge o er the mu lti-billi n-d llar fu i n
megaprojcct initiated el ewherc, i that it mod
reaction at a fraction f ompetiti on '
A proof-of-

nccpt de icc wa

project require
In 200

uggc t it can pr du ce th e de ired

t.

uccc full y bui lt Dr nl y

00,000 but th e nex t pha e of the

ignifi cant capita l, with initi al c tim ate ca llin g for 50 mil lion.

Ri chard on e pl aincd th e techn o] gy in an interview publi bed by th e community

new paper Burnaby

ow. 32 On an th cr occa io n, H.. II. Prince Albe1i TI of Monaco

recogni zed the company with an awa rd fo r _. cell cn

in th e Fi eld of _. nvironmental

Technology Rc ca rch at th e March 2009 Jean Equity Monaco conference

11

on emergin g

environmental technolog ic .
Fa ter progre

ofcompani c like General Fu ion i impeded by a combin ati on of hi gh ri k

and lack of capital, whi ch in turn delay the developm ent of potenti all y winnin g

luti ons for

th e en ergy indu try and the environm ent .
By attracting capital from countrie

uch as China and uccc full y brin ging to market

technologic of thi kind, Canada could emerge, along ide China, a both a global power and
a major contributor to the world ' welfare.

5

References:
. . en u Bureau , www .ccn u .g

/cgi-bi 1 ip /agggen

2

BP tati ti al R icw f World nergy 200
http ://www .bp.c m/pr du ctlanding. d ?catcg ryid=6929 c ntcntld- 7044622

3

ncrgy InG rmati n dmini tration ,
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4

harl c W . L. ll iJI & Th ma M Kaig,

bal Bu in c

T day, 5-8, 25- 0

5

Wcnran Ji ang "F LI
T
DR
hin a
ue t for ncrgy ccurity
and anada' pp rtuniti c ',
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6

China Eco nomi c ct,
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7

hina

8

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9

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ar Time , http ://www.chinaca rtime .com/ca tego ry/ tati ti c I

10

hin a ar Time , http://www.chinacartim e .co m/200 8/09/ 16/th c-rcvo luti on-bcg in -nowprc-to-get-el ctric-car-charging- tation I
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12

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13

Li Zheng, T inghu a BP Clean Energy Resea rch and Edu ca ti on Center, "Polygcncrati on
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14

Toni John son, ouncil of Foreign Rclati n - Challenge t
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l bali zc Na tu ra l Ga ,

15

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59

16

BP tati tical Review fW rid ncrgy 200 ,
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17

Daniel Workman International Trade, http ://www. uite l 0 !.com

al- The Reality of ""' nergy Dev I pm ent in
ordon Feller hina'
http ://www.ec world. om/ feature /200 /0 l/21/china -c all

hina,

19

ordon Fell er hina ' nergy D mand ,
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20

NA A, http ://earthob ervat ry. na a.g v!J TD/view.php?id=4950

21

IB

World Market , http ://www .ri gz n .com/new /article.a p?a_ id- 39063

22

France Ru II, il n t well in anad a,
http ://www.winnipegfreepre .com/opini n/co lumni
40273877.html
23

indy Hurst,

hin a'

iI - not- we ll in canada-

loba l Que t for Energy, http ://www .iag .org/china qu e tO I 07 .pdf

24

Tam in arli le, Canada and Yield More Oi I D r
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25

M ikael Hook, Werner Zittel, Jorg chindl er, Kj ell Aleklett, A uppl y driven foreca t for
the future global coa l production, Uppsala Univer ity, weden
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26

Natural Resources anada , anada ' Clean oal Technology Roadmap,
http ://canmetenergy. nrcan .gc.ca/eng/clean _ fo il _fuel /clean_ coallroadm ap.html

27

National Energy Board, oal-Fired Power Generation : A Per pective, July 200 ,
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28

M ira Kamdar, Plan et India, 4

29

Anna Hopper, Canada ' Oil and and Pollution,
http ://hir.harvard .edu/ index .php?page- article&id- 1788

10

Dav id Bi ello , an oa l and Clean Air oexi tin hina?,
http ://www.sc iam.com/arti cle.cfm?id- can-coal-a nd-c lea n-a ir-coe i t-c hina

11

enera! Fu ion Inc., http ://genera lfu i n. om

60

2

Mia Thoma , Burnaby
w
http ://www2.canada . orr burnabyn w/new /bu we I tory. html ?ida700-fa 76e87 a0444&p=2
33

lean

34

tati tic

35

B

07-a2e l-4e4e-

quity, http ://www.cl anequitym naco.eom
anada, http ://www40 . tatca n.gc. a/10 1/c tO 1/gbl ec02a-eng.htm

Paul . . an , Road to Beijing run thr ugh
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lberta,

36

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61