Due to lack of
pipeline capacity Canada suffers enormous financial losses. Environmentalists
and US officials object to our pipeline proposals because they doubt that we
can live up to our Copenhagen agreement. A carbon tax would alleviate those concerns. The general public objects to pipelines and tanker
transport based on previous disasters. Little is published about the new
regulations and advanced technology. I have skimmed hundreds of articles on the
internet regarding these matters and copied important aspects. Most articles are
very negative. In 3 E mails to the Government with copies to Enbridge I have
stressed that the public should be made aware that a carbon tax is not as bad
as it is portrayed and that far more published technical information on
pipelines would help our objectives. While I got satisfactory answers to my e
mails I feel more can be done. The 2 articles below are backed up by some 120
pages of material copied from the internet. If you are interested to see the back up material I will provide it
Neil Heesterman
North Vancouver BC
Climate change and carbon tax
Even though 20%
of the world’s greenhouse gas emissions are covered by a carbon price, the
total emissions still increase every year. Between 1990 and 2011 the emissions
rose by 58% and in 2011 the forecast was still at 2.6 % per year. In 2011
China’s emission grew by 9.9%.This will lead to more and more climate change.
The main problem is that no uniform carbon pricing has been established. This
frustrates some 100 multinational companies including Shell,
Unilever, Cathay Pacific, EDF Energy, Braskem, Statoil, Swiss Re, Ricoh and
Skanska. The companies have called on governments to introduce a price to
"drive the investment needed to deliver substantial reductions in
greenhouse gas emissions. A price on CO2 can open the door to
increased ambition. Putting a clear, transparent and unambiguous price on
carbon must be a core policy objective," said the companies. British Columbia
has a revenue neutral carbon tax which since 2008 rose gradually to $ 30 per
ton of CO2. It has reduced the use of petroleum products by 17%
without loss of GDP. The BC tax is used in Britain and in the US as an example to show how much
easier it is to adapt and administer than a cap and trade system. So far it has
not been used to tax exported coal and oil because other counties don’t do it
either. The purpose of the carbon tax is to drive up the price of carbon so
that green energy becomes economical. This purpose is completely lost when we
export tax-free carbon to countries who try to curb their emissions. China is
seen as a major problem. As their economy grows so do the emissions. In 2005
their per capita emissions were only !/5th of ours and they are now considering
a carbon tax to curb emissions. They have more installed wind power capacity
than any other country. They help the green power development by producing 23%
of the world’s solar panels. Most important, with the help of Europe and
several multinational companies, they are well ahead to develop Carbon Capture
and Storage {CCS) facilities. They have the largest number of pilot pants in
the world and proposals for 6 large scale integrated projects. For coal fired
power plants The CCS system reduces the Global Warming Potential (GWP) from
4.44 to 1.8. It can be further reduced to .25 GWP if biomass power is used to
drive the carbon underground. The CCS system will allow China to switch to
electric cars charged with much greener energy than presently available. All these developments could be slowed down if
China can, for years to come, depend on cheap tax-free oil imports from Canada.
It is therefore essential that Canada adapts a national revenue neutral carbon
tax and participates in the discussions to also apply it to exported oil, coal
and natural gas. Studies have shown that taxing carbon does not harm the
economy and if all countries do it at the same level there will be no need for
import duties to level the playing field. At the same time a good part of the tax
proceeds can be used to help countries which have no taxable carbon but have to
live with the higher energy prices and the effects of climate change.
The opposition to a carbon tax is based on misinterpretation
of the principles. Many people see it as a drain on their income and don’t
realize that all the extra money they pay for the carbon is reimbursed via
lowered income tax rates and special credits. Due to this reimbursement BC is
now among the lowest tax regions in the Western Hemisphere. The American coal
companies have recognized this. They buy US coal via BC subsidiaries and ship
it through BC ports to avoid the higher US taxes.
While the province of BC has
a good environmental reputation Canada as a whole is rated well below the US. At
Kyoto we pledged to reduce our emission by 6% compared to 1990 but in 2008 we
had already increased it by 24% . In Copenhagen we agreed, like the US, to
reduce emissions in 2020 to 17% below 2005 levels. Since that time US levels
have dropped while ours are rising. This is why the US is lecturing us to do
something about it and holds back on pipeline approval. In the US even
bi-partisan bills for carbon pricing are voted down due to their complex
political system. We don’t have that problem. If our Government would table a
revenue neutral carbon tax bill it would most likely pass. Until we establish a
healthy carbon tax and make more technical data available about the proposed
pipelines there will be heavy opposition to all three projects, resulting in
lost revenue of up to $ 30 billion per year.
Most of the above points have
been mentioned in 3 E mails to the Canadian Government which has given
assurance that all points have been carefully considered. It is up to the press
and environmental groups to explain to the public the advantages of the carbon
tax and the progress which has been made in pipeline safety. The article below,
“the economic impact of carbon tax” is based mainly on the material collected for
those 3 e mails to the government with copies to Enbridge. It includes an
analysis of past pipeline problems and
the many improvements made to overcome them. All observations are cross
referenced to over 120 pages of source documents obtained from the internet. It
is felt that many of these points should be discussed in newspapers and
magazines rather than only on the internet. That would make the public better
aware of the problems and solutions
The
economic impact of carbon tax
Introduction
A retired
Canadian mechanical engineer, who believed that carbon tax is an effective tool
to curb climate change saw the attached description and table of contents for a
new book “Rediscovering Sustainability”. The subjects covered convinced him
that we don’t progress fast enough to curb global warming. He lives in British
Columbia, which has a carbon tax and decided to look further into the problems
of carbon pricing which, among many other subjects are covered in that book. He searched the net and
found articles about the Copenhagen agreement and Australia’s efforts to
establish it’s carbon tax. As a result he wrote an E mail to Mr Harper and his
MP to consider following Australia’s example. Later on he found out that unless
we establish a nationwide carbon tax we will likely in 2015 be faced with
countervailing duties by a group of major countries who have a carbon tax. By
that time he had searched the net about pipelines and found nothing but bad
news. He also found out how much revenue is lost by not having additional
pipelines. That resulted in a second E mail. After president Obama announced
that the US would get more serious about carbon pricing he was afraid that we
would fall further behind the US, retrieved information on carbon tax in
various countries and found some amazing data, which led to a third E mail. The
Prime Minister’s Office assured him that his points have been carefully
considered. He hopes that the environmentalists will keep on pressing hard for
a revenue neutral national carbon tax similar to the one in BC. That may be the
only chance to get pipelines approved allowing us to safely keep exporting our
present flow of oil as well as that of the near future. Following agreement
with other countries we than can than start charging a proper tax for our oil
exports. It will curtail our expansion plans but bring in a lot of extra
revenue which should be shared with other countries who don’t have any taxable
carbon but have to live with the rising energy prices and the effects of
climate change. Many environmentalists feel that around $30 per ton of CO2
, which several countries charge internally, is only about one third of
what is required to curb global warming. Let’s first all start agreeing on $ 30
per ton and raise it gradually. The article below covers most of the subjects
in those 3 E mails.(copy attached). It also addresses earthquake considerations
for pipelines and a number of technical, environmental and trade data not
covered in the E mails. The material found on the internet is referred to by
page number (EP) for environmental and pipeline references, which were attached
to the second e-mail and (CT) carbon tax references, which were attached to the
third e-mail. They have been expanded to cover the additional material.
Summary
Since 2008
British Columbians have lived with a carbon tax which gradually rose from $10
per ton of CO2 to $ 30 per ton. When it had reached $25 per ton it
had already resulted in a 15% reduction in consumption of petroleum products
and a survey found that 70% of British Columbians want to keep the tax and saw
no economic losses. A recent study confirms that in July 2012 the reduction had reached !7.4% without
any losses in GDP. If BC would have
taxed the coal, oil and gas which they export there would have been a
tremendous economic gain. Part of this gain could have been shared with
countries which have no carbon tax income but have to live with increased
energy cost and climate changes. In the
US !0 Northeastern States adapted a cap and trade system and after 3 years
found that it had created 16,000 jobs added $1.6 billion to the economy and set
the stage for $1.1 billion in ratepayer savings. Despite these successes
neither the US nor Canada have been able to establish a national carbon pricing
policy. This puts us at a great disadvantage compared to other countries.
Environmentalist rate the US as #43 and Canada at #58 out of 61 counties based
on 5 environmental criteria. This, combined with the fact that existing pipelines
have a very bad operation and maintenance record leads to rejection of
proposals for much safer pipelines to export our oil. As a result the Alberta
oil companies lose at least $ 15 billion per year because the combined US and
Canadian flow shipped by rail is already the equivalent of one large new
pipeline. The Alberta Government
estimates that the total losses amount to $ 20-30 billon per year. Shipping by
rail is dangerous and requires more energy than transport by pipe. Some environmentalists want to decrease our
export of oil and coal claiming that it will reduce the greenhouse gas emission
in other countries. As long as fossil fuel remains cheap those other countries
will keep buying it from us or from others so we may as well supply it until
worldwide carbon taxes have driven the carbon price high enough to make green
energy cheaper than energy from fossil fuel. Quite some oil will always be
needed regardless of it’s price so the oil industry will be kept in business.
Also coal is an essential component in steel production so we won’t lose those
exports.
A main reason
that neither the US nor Canada have a national Carbon tax is that the system is
poorly understood by many citizens and even some organizations. Many people don’t realise that what they pay
in carbon tax is funneled back to them in the form of reduced income tax and
special rebates for those most affected like the poor, those living in Northern
communities and some industries. By leaving out these tax savings the Americans
are told that one of their bills will costs the average family $1500 per year,
while it is only $150 per year. Canadians are told that the average BC family
looses $779 in yearly income as a result of the carbon tax while it is in fact
$0. Many people feel, logically, that the proceeds of carbon tax should be used
to create green jobs, public transportation and many other improvements rather
than returning it to the taxpayers. They don’t realise that those green jobs
and improvements will come automatically as consumption of fossil fuel
decreases. Part of the 17% reduction in fuel consumption in BC has obviously
been replaced by green energy and even the sale of more fuel efficient cars will
have helped the economy.
1 Carbon tax principles
Carbon tax as
well as cap and trade are used to drive up the price of fossil fuels. As the
price of oil, coal and gas rises the green energy sources become more
competitive. This means that eventually wind farms, solar fields and other
green energy systems can be built and operated profitable rather than having to
depend on subsidies. At the same time people will use less oil, coal and gas,
which reduces the amount of greenhouse gas (GHG) emission. Most of this GHG is
carbon dioxide (CO2), which causes climate change. Carbon tax is
charged at the source, based on the amount of CO2 which a fossil
fuel will produce when it is completely burned. At the moment the BC carbon tax
is $30 per ton of CO2. Some resulting taxes are 6.67 cent per litre
of gasoline, 7.67 cent per litre of diesel oil, 5.7 cent per cubic metre of
natural gas $62.31 per ton of high grade coal, $74.61 per ton of coke, and $62.40
per ton of tires, since they contain a lot of carbon (CT 13) and in shredded
form, taxed at $71.73 per ton, they are used as fuel. The cap and trade system
is widely used in Europe. It gives allowances to all emitters with a capacity
over 20 MW. Those who can reduce their emission to below the allowance can
trade the difference with others who have to go beyond their allowance.(CT35,36).
The advantage of the cap and trade system is that it achieves a pre-set goal
while with the carbon tax the GHG reduction depends on how the public reacts to
the higher fossil fuel prices. For BC it has already been shown that the carbon
tax is highly successful. In 2011 when the tax was still $25 per ton of CO2,
consumption of petroleum products had already dropped by 15% and 16% compared to
the rest of Canada(EP15)(CT 33). In July 2012 it had dropped by !7.4 %, while
the consumption in the rest of Canada increased by 1.5 % (CT48). It was
re-confirmed that there was no loss in GDP. The main advantages of carbon tax
over cap and trade are comprehensive coverage of emission sources,
administrative simplicity and frugality (it uses existing public and private
tax administration infrastructures), speed of establishment, low transaction
costs, price certainty (critical for investment decisions), and transparency to
consumers (critical for influencing behaviour).(CT31). Another disadvantage of
cap and trade is that emission targets have to be set for each country. This
would be a great disadvantage for China and India, which already have low per capita
emissions.(CT 51). China is however in the planning stage for a carbon
tax,CT32) which would help their
development of green energy Also the developed world will never accept an
emission target as low as China’s present emissions.(CT 51)
2
Distribution of proceeds and economic results
There
are several ways in which governments can distribute all that extra income. Many
feel that a logical choice is to invest it in green technology, public
transportation and other projects which reduce GHG emission. That would mean
that the taxpayers would get no compensation for the extra money they have to
spend on energy. In the US this has been recognized by one proposal to return
75% of the money collected from households to them in the form of dividends
obtained from the auctioned sale of pollution allowances, which would decline as
the cap and trade tightens (CT26). To the average person this is more complex
than the simple rule in BC that all carbon tax collected has to be returned to
individual and business taxpayers. In Europe it has been shown that the carbon
pricing has given a slight boost to the economy. An in-depth European Union
study of the tax shifts undertaken by Denmark, Sweden, Finland, the United
Kingdom, the Netherlands and Germany found that five of the countries
experienced modest economic gains as a consequence of the carbon/energy tax
shift while one country, the United Kingdom, experienced a neutral economic
outcome.(CT32). In the US 10 Northeastern
states adapted a cap and trade system and one study found that by investing carbon funds in energy
efficiency and renewable energy programs, the states achieved $3–4 savings for
every dollar invested. The program also created thousands of jobs (18,000
job years – that is, the equivalent of 18,000 full-time jobs that last one
year), and individuals and businesses who took advantage of the energy
efficiency programs funded by the carbon pricing system actually saw their
energy bills drop. A subsequent study found that the Regional
Greenhouse Gas Initiative(RGGI)s carbon cap pricing system added $1.6 billion
in value to the economies of participating states, set the stage for $1.1
billion in ratepayer savings, and created 16,000 jobs in its first three years
of implementation. RGGI provides us with a real-world example of carbon pricing benefits exceeding the
costs several times over(CT 18)
3 Confusing carbon tax figures
All this good news, along with the
earlier mentioned success of the BC carbon tax, giving 17% reduction in
consumption of petroleum products without any loss in GDP, should make
everybody enthusiastic about implementing carbon tax. Unfortunately there are many people and even some
organizations who don’t understand that by giving back most or all of the
carbon tax proceeds to business and individual taxpayers via income tax reductions
and special grants, nobody suffers. In
the US extra rebates were envisaged for low income families in a now defeated
bill.(CT 17). In BC it is achieved through the refundable low income climate
action tax credit. (CT 4). In addition to their lower income taxes, families in
Northern and rural communities get a special $ 200 homeowners grant.(CT 32,33) On the
business side BC gave a special $ 7.6 million rebate to greenhouse
vegetable and flower growers because
their income tax savings were not sufficient to cover the extra fuel cost.(CT
11). By overlooking these details, completely wrong figures are published. In
the US it is claimed that for one of their 4 bills the average cost per
household would be $1500 per year, while it is in fact only $150 per year.(CT15)
For BC an average of $ 779 per household(CT29) is often quoted while it is in
fact $0
4 Details of the confusing figures in the US
In the US one of their four bills (Waxman-Markey)
was analysed by no less than seven separate organizations. It
would by 2020 have reduced the GHG emissions to 17% below the 2005 level, which
is the Copenhagen agreement (CT36,37) and 83% by 2050. (CT16) The Congressional
Budget Office (CBO) concluded that the bill would reduce the federal deficit by
$9. billion in 2019. The analysis concluded that the bill would cost the
average American household between $84 and $160 per year by 2020, which
corresponds to $0.67 to $1.28 per person per week. The studies also
concluded that the costs would be lower for lower income families. For
example, the CBO analysis of Waxman-Markey concluded that families in the
lowest income quintile would see a net decrease in average annual costs of
about $125 in 2020 due to low-income assistance provisions.(CT17)
Over the entire span of the
Waxman-Markey bill (to 2050), the Environmental Protection Agency (EPA) found
the average annual cost would be $80 to $110 per household in current dollars
(64 to 88 cents per person per week).(CT 17) Contrary to these figures the
Heritage Foundation analysis concluded that for the same Waxman Markey bill it
would cost the average family $1500 per year, 10 times as much as the real
cost. This is because they ignored the distribution of the collected funds.(CT
15).
5 Details of the confusing figures in Canada and international praise
for BC’s tax
The Canadian Centre for Policy Alternatives(CCPA) did an extensive study
to check if the BC carbon tax proceeds were indeed fairly distributed among 5
income groups. In a table,(CT30} they show that in 2008/2009 the poorest group
gained .2% , the 3 intermediate groups
had gains and losses between .1% and .2% while the richest broke even.
The latest figures are for 2010/11 and show that the poor loose $47 per year
per household which is .2% of their income. The 3 intermediate groups lose between .1% and .2% while the rich gain
$311 per year per household, which is .2% of their income.(CT 30). The Canadian
Union of Public Employees (CUPE) submitted a table, (CT29) showing how much
each income group pays in carbon tax, suggesting that the proceeds should be
used to help low and middle income families and in particular those in rural
communities . That is exactly what the income tax reduction and special rebates
do. But after having paid all money back to households and businesses there is nothing left for their
other wishes , just transition and green jobs,
investment programs to help workers and communities affected by these changes
adapt and develop good quality jobs, greener industries and more sustainable
communities. They also like to see investments in physical and social
infrastructure to help communities prepare for and adapt to the more extreme
weather and climate changes caused by global warming.(CT 29). These will come
automatically as the price of carbon rises. The CUPE table is referred to by
the Frazer Institute claiming that a 2008 analysis of a $30.00/tonne carbon tax
conducted by CUPE suggested that the poorest quintile in Canada would lose 1.7%
of household income, while the top quintile would lose only 0.86%.(CT 31). The
actual figures as shown above are .2% loss and .2%gain.With such misleading
figures it is no wonder that the public is not that enthusiastic about carbon
tax. Fortunately 70% of the people in BC
who have experienced the tax since 2008, when it was $10 per ton, did not mind
the $5 per year increase and still liked it when it rose to $25 per ton and
probably don’t mind that it is now $30 per ton. Hopefully BC will influence the
rest of Canada and the government to adapt the carbon tax
In June 2011 the Pembina institute found out that British
Columbians support carbon taxes and are confident that taking action to reduce
greenhouse gas pollution will help grow, or have little or no impact on, the
provincial economy. The poll came on the eve of the July 1 scheduled increase
in the carbon tax that will see it rise to $25 per tonne of greenhouse gas pollution.
According to the poll, the majority of British Columbians (69%) are worried
about climate change and most (70%) want the province to continue showing
leadership on the issue without waiting for other jurisdictions to take similar
steps. The poll also shows that most British Columbians feel the carbon tax has
either been positive (33%) or neutral (41%) for the province.(CT 35), A
subsequent study led by professor Stewart Elgie of the University of Ottawa
concludes that by July 2012 BC’s per capita fuel consumption had dropped by
17.4 %, while it rose by !.5% in the rest of the country. The study also found
that during the period that the carbon tax was in effect the gross domestic
product kept pace with the rest of the country. (CT48).
Despite all this good news there are, even in BC, some people who
don’t believe that the carbon tax is revenue neutral because the reduced income
tax does not show as such on our tax forms. This perpetuates the myth that
carbon tax is harmful to individuals and businesses. Fortunately other
countries see the benefits. Due to the revenue neutral regulation we now have
some the lowest individual and business income taxes in the western hemisphere.
(CT38). In the US our revenue neutral carbon tax is pointed out as a prime
example on how the US should proceed as seen in the following statement: ”
Handley argued that taxing CO2 pollution instead of productive activity such as
work and investment is a climate policy offering
enormous climate benefits at
little or no cost. Successful carbon taxes in
British Columbia and
Sweden are proof that voters can be persuaded to
embrace carbon taxes that reduce taxes on individual and business income,
retail sales and payrolls. These taxes, along with
Australia’s new carbon tax, demonstrate that
well-designed carbon taxes can effectively reduce emissions quickly, at minimal
cost, without stunting
economic growth.
Handley further noted that the effectiveness of BTI’s
proposal hinges on the ability (and willingness) of Congress and federal
agencies to identify and fund nascent low-carbon energy technologies capable of
breaking fossil fuels’ economic dominance. Yet a steadily-rising economy-wide
carbon price can perform this task
far more broadly and effectively, Handley argued, by
encouraging every energy supplier and every energy user to look for ways to
reduce emissions, spurring innovation across the entire spectrum of energy
supply and use. He noted that diverting carbon tax revenues to R&D would
preclude using carbon tax revenue to reduce other taxes, thus undercutting
political support.”(CT45). Closer at home we are praised in Seattle by the
following: “British Columbia's carbon tax offers a "tremendously useful
role model" for U.S. states developing their own climate policies, said
the policy director of a Seattle-based think tank.
The most specific argument to use carbon tax rather than
cap and trade comes from the Australian debate as follows: “Here are the six reasons the
Carbon Tax Center believes carbon taxes are superior to cap-and-trade systems:
Carbon
taxes will lend predictability to energy prices, whereas cap-and-trade systems
will aggravate the price volatility that historically has discouraged
investments in less carbon-intensive electricity generation, carbon-reducing energy efficiency and carbon-replacing renewable
energy.
Carbon
taxes can be implemented much sooner than complex cap-and-trade systems.
Because of the urgency of the climate crisis, we do not have the luxury of
waiting while the myriad details of a cap-and-trade system are resolved through
lengthy negotiations.
Carbon
taxes are transparent and easily understandable, making them more likely to
elicit the necessary public support than an opaque and difficult to understand
cap-and-trade system.
Carbon
taxes can be implemented with far less opportunity for manipulation by special
interests, while a cap-and-trade system’s complexity opens it to exploitation
by special interests and perverse incentives that can undermine public
confidence and undercut its effectiveness.
Carbon
taxes address emissions of carbon from every sector, whereas cap-and-trade
systems discussed to date have only targeted the electricity industry, which
accounts for less than 40%[in the US] of
emissions.
Carbon tax revenues can be returned to the public through
progressive tax-shifting, while the costs of cap-and-trade systems are likely
to become a hidden tax as dollars flow to market participants, lawyers and
consultants.
A recent (4 August 2013 ) article in the Economists gives
more details about Professor Elgie’s findings about the 17% drop in fuel
consumption and also states “
CANADA could do more to limit carbon emissions, which have risen
in recent years even as they have fallen south of the border. As if to rub it
in, Barack Obama recently warned that unless it does, he will
not approve the Keystone XL pipeline to bring oil from Alberta's tar sands to
Texas. Yet America itself can learn a thing or two about climate policy from
British Columbia (BC).”(CT 54, 55) Note that in Copenhagen both counties agreed to reduce
emissions in 2020 to 17% below 2005 levels (CT 36, 37).
6 Industries’ reaction to carbon tax
Until many countries agree to charge the same carbon tax there
will be strong opposition from many
industries. Obviously they don’t want to see a cost disadvantage compared to
competitors’ in other countries. This can best be seen in the struggles
Australia had to establish the tax and which South Africa has in trying to
impose it. On the other hand there are 100 multinational companies who complain bitterly that the
negotiations to obtain a global tax are proceeding far too slowly and hamper
their forward planning.
In Australia the government first yielded to pressure from the
coal companies and did not impose a tax.(EP 53) When it became clear that
Australia could not meet it’s GHG reduction target without taxing big emitters
(CT43 ) there was enough public support to impose a $23 per ton of CO
2 along with a mining tax of 30% of earnings(CT
40 ). There was quite some uproar and the impression was created that it was an
export tax following this statement from BHP Billiton: “
This, if you
boil it down to its barest essentials, is a tax on coal exports from
Australia.”.Their Climate Change Minister
had this to say: “
Claims of massive job losses
are completely absurd. The coal industry has at least $70 billion worth of
investment coming into it that's committed, 19 new mines opening up that are
committed.
You know, the average carbon price cost per ton of
coal mined once the carbon price legislation comes into place is only $1.90 per
ton of coal in the first year - $1.90, as against a coke and coal export price
currently in excess of $300 a ton.
It's a modest impost on the industry and it will
create an incentive to reduce their methane emissions - and that's a positive
thing.
- Greg Combet, Climate Change Minister(CT 49)
South Africa was at
the same time (2011) trying to establish a carbon tax and got this reaction
from Anglo American: “Ms Carroll said yesterday the process the South
African government was adopting in formulating a carbon tax policy was
far preferable to that in Australia, where Anglo is carefully weighing up
the financial merits of a pipeline of projects worth $10bn-$15bn after the
government passed a carbon tax policy that will affect the mining sector
heavily.
She warned about the implications of the current proposals for South Africa’s
economy. Anglo wanted a clear and stable policy environment on climate change
as it had long-life assets around which it had to plan, said Godfrey Gomwe,
executive director of Anglo American SA. In Australia, a tax of $25 per ton of
carbon emitted was adopted to become effective from July next year, provoking a
furious response from not only the mining sector, but other industries such as
airlines and steel makers.”(CT40)
The companies who feel that the carbon pricing does not
proceed fast enough made their stand clear: “
And,
in a clear signal that global business is becoming frustrated by the lack of
political action in the UN climate talks, support for a global carbon
price came on Monday from 100 multinationals including Shell, Unilever, Cathay
Pacific, EDF Energy, Braskem, Statoil, Swiss Re, Ricoh and Skanska.
The companies have called on
governments to introduce a the price to "drive the investment" needed
to deliver substantial reductions in greenhouse gas emissions. "A price on
CO2 can open the door to increased ambition. Putting a clear, transparent and
unambiguous price on carbon must be a core policy objective," said the
companies who signed up to a declaration by the Carbon Price Communiqué, an initiative co-ordinated by the Prince of Wales's corporate
leaders group on climate change.”(EP17)
7
Economic impact of not having a carbon tax
Environmentalists from around the world want to stop our pipeline
projects based on our poor environmental records and past disasters with
pipelines and oil tankers A carbon tax would help to show them that we care
about the environment. A far more open discussions about the past pipeline and
tanker problems and how they can be prevented could gain more public support
for all 3 projects . The sad fact is that the delay of the Keystone XL pipeline
already causes at least $15 billion per year in lost revenue for the Alberta oil
companies.(EP 1) According to the Alberta Government it is $ 20- 30 billion per
year.(EP1) The Governments and the environmentalists should release a more
detailed analysis of these losses and how they affect our standard of living,
our social services and financial support for specific municipal projects. A
main reason for the lost revenue, $37 per barrel of oil in January 2013(EP 1),
is that, due to lack of pipeline capacity the oil has to be shipped by rail,
which is costly, dangerous and consumes a lot of fossil fuel. In 2012 rail
shipments in the US were 340 000 barrels per day. With added Canadian shipments
it is expected to reach over 400 000 barrels per day, which is equal to the
amount shipped in a new large pipeline.(EP 13)
8 Our environmental records
Our records are indeed
poor. We have always stated that we would continue to align our measures with
the US but even well before president Obama announced his policy change we were
according to the environmentalist already well behind. They rated us as # 58 out
of 61 countries while the US was rated #43.(EP2) This makes it more difficult
to negotiate with the US. Our Kyoto aim was to reduce GHG emissions in 2012 to
6% below 1990 levels. Instead in 2008 we had already increased it by 24% instead
of lowering it (CT 36). In Copenhagen we agreed to reduce our emissions in 2020
to 17% below 2005 levels (CT 36, 37). Environmentalists and US government
officials( CT 1) believe this is impossible to achieve considering that
extraction of oil in Alberta requires a lot of energy while further extraction
is encouraged by special fiscal privileges, which are seen as subsidies.(EP 1)
Furthermore when we tore up our Kyoto agreement there was no agreed way to
punish us. This led to the virtual collapse of the pricing system for tradable
permits, which deprives many countries of a valuable tool (CT 37}. .Alberta
apparently tried to influence the decision on the Keystone XL pipeline by
offering to try to negotiate an increase in the Alberta carbon tax from $ 15 to
$40 per ton. That sounds a lot but far less than what BC charges, $ 30 per ton
on any fossil fuel. The Alberta tax only applies to large emitters (more than
100 000 tons per year),(CT 3). It only applies
to the amount they emit over target.(CT 3) . As a result they only
collected $312 million (CT 3). This is very little compared to the $ 15 billion
a year, which oil companies loose in revenue partly because other countries
don’t like our carbon policies (EP 1). All these matters lead to aggressive demonstrations
against our government and our pipeline proposals. In London Mr Harper was met
by 30 protests organisations from both sides of the Atlantic while 6 MPs tabled
a motion to keep our oil out of Europe.(CT 37) By now 20% of the
greenhouse gas emissions and 30% of the World’s GDP are covered by a carbon
price. Korea, South Africa and China are still in the planning stage. (CT 32)(CT
46). When so much progress is made we might as well join the crowd rather than
facing countervailing duties. These are likely to arise in 2015 when a group of
countries become upset with the slow global process, form a block and charge us
based on our implied emissions(EP 1). To an average Canadian it appears that
this important carbon tax issue has for far too long been used as a political
football between parties and that it is high time to get together and pass a
bill for a carbon tax similar to the one in BC. That may be the only way to
keep exporting our oil as planned.
9
Development of green energy
While wind power appears to be the most economical green
energy it has a big drawback that energy storage is expensive. This means that
it requires a lot of regular power to cover all those periods when there is no
wind. The Vehicle to grid system(V2G), which is being developed sounds
promising.(EP4 and EP19) It would allow utility companies to use the batteries
of parked electric vehicles to store surplus electricity and retrieve it when
needed.
Since there are so many coal fired power plants around
the world it is unlikely that they could be rapidly replaced even when green
power becomes more economical. This would explain the great emphasis on coal
fired plants with carbon capture and storage(CCS). It reduces the Global
Warming Potential(GWP) from 4.44 to 1.8. but requires roughly 20% more coal per
KWH. The GWP can be further reduced if the power required to drive the carbon
underground is derived from other sources than coal(CT24)
The table on EP 18 shows that by 2017 the US can for new
facilities produce wind power far cheaper than advanced coal with carbon
capture and storage($96.8 vs $140.7 per MWh). A later table (CT62) shows that
by 2018 it will be $86.6 vs $135.5 per MWh. These figures don’t include
targeted tax credits and it is assumed that a plant without CCS would have to
pay an emission fee of $15 per ton of CO2(CT61).
It is likely that after 2015 coal will be more expensive due to a $25- $30 per
ton of CO2 carbon tax. That would make the alternative energy even more
attractive. As shown on the 2018 table(CT62).
the next cheap green energy apart from hydro is geothermal. It can also be seen
that without a carbon tax the green energy can’t compete with natural gas. The
US figures may not apply world wide. In 1975 the US pioneered windpower (CT33)
and had in 2012, after China’s 75,324 MW, the largest windpower capacity in the
world at 60,007 MW(CT34). They have many windy deserts which may explain their success.
Since China
depends on coal for 70% of it’s primary energy and emits more GHG than any
other country, the carbon capture and storage(CCS) receives a lot of attention
in China(CT58), while other countries help them to achieve lower emissions. In
2005 the per capita emission in China was 1/5th of our emissions(CT56)
but due to China’s increasing prosperity that figure will increase unless they
become a lot greener. Canada, which has many coal fired plants, spends a good
part of it’s research money ($3 billion) on CCS, which could lead to 5 or six
large demonstration plants.(CT22). The European CCS team also helps China with
evaluation of potential storage sites. Also the Australian coal companies
commit money for CCS research(CT63). China now has the largest number of CCS
pilot projects in the world. Six of them are large scale fully integrated
projects(LSIP), driven by state owned power companies with help from major
international partners(CT59,60)
Another source of CCS which appears to be overlooked is
the carbon content of rubber tires. It is futile to burn those as fuel when the
carbon can be stored underground. Shredded tires, known as Tire Derived
Aggregate (TDA), have many civil engineering applications. TDA can be used as a
backfill for retaining walls, fill for
landfill gas trench
collection wells, backfill for roadway landslide repair projects as well as a
vibration damping material for railway lines. There are many more applications
which store the carbon (CT57). While it costs a lot of money to store the
captured carbon from power plants, road builders in BC do it for free after
having paid a carbon tax of $ 71.73 for each ton of shredded tires they bury
(CT13). The use of tires in the steel industry(CT57) does make sense because
the carbon is an essential reduction agent to convert iron ore to pig iron in
the blast furnace or to obtain sponge iron(CT58) and pre-reduced pellets via
different processes.
10
Carbon tax on exported coal and oil
Many countries will never improve their emissions if they
can count on importing cheap untaxed
coal, oil and gas. Negotiations to
obtain a world wide agreement for a uniform system keep breaking down because the
developing countries don’t want to be tied to a cap and trade agreement and the
developed world cannot accept a reduction to anywhere near the per capita
emissions in the developing countries.(CT51). They would not even accept a 40%
reduction( CT52 ). A global carbon tax treaty is the way forward. Each country
has a wide scope about how their tax is set and spent, no adverse global
economic impact as long as overall tax levels remain the same(CT51). It is
hoped that this will be achieved in 2015. If not, a partial treaty by many
countries is likely, these would than impose import duties on non participating
countries(EP1). Based on 2010 figures(CT42)about 40% of the coal export comes
from Australia, which has a carbon tax and from the US and South Africa who
have pending bills to obtain it. Since that time the US has increased it’s
export from 83.2 to 126 million tons(CT63) while Australia projects increases
in the order of 10% per year(CT63) so by now likely well over half the coal
export is covered by countries who have or acquire a carbon tax and could reach
an agreement to charge the tax on exported coal. If the environmentalists keep on pressing for
such a uniform tax in coal , the oil may follow. As long as all counties charge about the same
tax there would be no unfair competition between companies, This is exactly
what those 100 multinationals expressed: “And, in a
clear signal that global business is becoming frustrated by the lack of
political action in the UN climate talks......”(see 6 above), The
environmentalists could discuss the problems with these companies and propose a
joint solution. A main problem to solve is how much of the tax proceeds have to
be passed to less fortunate countries, who will determine and administer that
distribution.
11 The coal situation in BC
In 2010 Canada supplied 2.9% of the world’s coal,
Australia 26.5% and Indonesia24%.(CT42). If we would curtail our export, those
two countries could easily add a little more to their production so the amount
of GHG produced in the world would remain the same. Only a universal carbon tax
will eventually reduce the demand for coal. The rapid expansion of US coal
export from 83.2 million short tons in
2010 to 126 million short tons in 2012(CT63) can in part be explained by 2
price advantages they have. The first one is that of the coal targeted for export, most of
it will come from leases on publicly owned lands in the Powder River Basin. A
lease is obtained by a “competitive” bid. Rarely is there more than one bidder.
Awarded the lease by the Bureau of Land Management at “fair market value”, a
high value might equal US$1.10 a tonne(CT38). Once mined from the leased land,
the coal is sold. The sale takes place at the mine. In the State of Wyoming,
where most of the export coal will be mined, the only tax liability is on the
value of the coal at the mine, which works out at US$9 or US$10 a tonne(CT39).
The second advantage is that, due to the carbon tax, BC has
one of the lowest income tax rates in the western hemisphere. The US companies
make use of it: “As to income tax, when
the coal mined from taxpayer property is profitably sold for US$80-120 a
tonne on the international market, there is no obligation to pay those taxes in
the United States. A prudent international business will use an international
subsidiary to buy the coal at the mine mouth. It could be a subsidiary based in
British Columbia, or any country where income tax rates are lower than in the
United States.”(CT39)
BC environmentalists can do something to stop that US flow.
They can seek out all politicians and industry groups in the US who are against
the very low mining leases and let them know that it not only hurts US
taxpayers but also has nasty effects in BC. The main problem is still that
there is no international agreement on carbon tax, let alone on taxing coal
exports. That can be achieved by environmentalists actively searching through
all those hyperlinks in the CT documents and get together with the 100 multinationals
mentioned under 6) above and with Australians who understand the problems. If
they can agree on a plan of action to be presented at the next climate
conference we may see better progress. Furthermore the environmentalists should
check if there are any carbon tax centres in South Africa and Russio in order
to get support from those coal exporting countries. Here is an Australian comment proving that we
are not alone in trying to tax coal exports:
“Export
Coal Tax
Australia
supplies almost 40% of the world's coal and so can have a huge impact on the
price of this damaging product. Our coal exports account for more than half of
Australia's total emissions. (See "Out with the coal" by John Perkins.)
Through a combination of coal taxes and export quotas we could drive up the
price of coal until other energy sources become more attractive.”(CT51)
12
Oil transport records
The pipelines have a history of regulatory violations, poor
maintenance, inadequate instrumentation, numerous large spills, including a
rather recent catastrophic one. Little publicity is given to the fact that
these problems have led to stricter regulations, safer designs and improved operating
procedures for the proposed pipelines. A
recent Bloomberg article reveals that the customary leak detection systems,
which rely on internal sensors, can’t detect leaks smaller than 1 ½ % of the
flow, which for the proposed Keystone XL pipeline amounts to undetected leakage
of 500 000 gallons per day.(EP11} Furthermore in complex networks the signals
these internal sensors provide, are hard to interpret leading to so many
false alarms that the real ones may be misinterpreted. For the disastrous Enbridge
Kalamazoo spill this caused a delay of 18 hours before the flow was stopped.
The same article also notes that external sensors which can detect leaks as
small as 10 gallons per day are available but seldom used because they are too
costly.(EP 12) Enbridge will use
external sensors for their Kitimat pipeline but this is hardly mentioned. It
was discussed in Kitimat but not reported(EP27) They will also provide thicker
than normal wall thickness for their pipes, install 50% more isolation
valves.(EP 8, 9), use extra personnel in the control room and around the clock
manning of their pump stations.(EP 43). It also appears that the public is not
aware that Enbridge pays a lot of attention to the seismic activity along the
route and will design the pipeline to accommodate the maximum ground
acceleration.(EP51). Note that an Alaska pipeline was designed with a
flexibility which withstood a magnitude 7.9 earthquake. (EP 37). Also there are
acoustic leak detection systems available which detect vandalism, tremors and
landslides, which could shut the line down in time. (EP20-23,28) Enbridge has so far not yet committed to any
particular leak detection system.(EP45) It would appear that their design and
improved manning will result in one of the safest pipelines on the continent. It
will however require a lot more open discussion to convince the public that all
previous problems will be resolved. The draft report of the joint review panel
for the Northern Gateway pipeline shows a number of conditions how
consultations have to be conducted, how to achieve independent reviews and what
monitoring involves. It does not immediately refer to resolution of specific published
problems or several concerns which have been raised during the enquiry (EP40). It
appears that it was more like a court hearing. Enbridge was faced with a cross-examination
by legal council (EP27) and had to be careful what to say. Also all efforts
were made not discuss the US National Transportation Safety Board’s report about
the Kalamazoo spill. (EP38) Obviously the public wants to have simple answers
to a number of questions listed under point 14) below. It would be nice if the
governments and the environmentalists publish their views on those matters. It
all refers to Enbridge but Trans Canada also has some poor records. A CBC discussion on 6 August suggests that a careful
review of that company is also in order.
A lot can be accomplished by having more personnel available to
oversee the design, construction and operation of our oil transport systems. In
the past too many cuts have been made with disastrous results. Surely more
inspections and oversight will increase the price for our oil but if all
companies are forced to follow the rules, there will be a level playing field
and the price increase for the oil will be insignificant compared to the $37
per barrel which we lose at the moment due to limited transport capacity.
For the pipelines some
examples of cost cuts are that Enbridge incurred over 500 regulatory violations
in one year during the 2008 pipeline installation
in Wisconsin (EP6) and paid $ 1.1
million to settle a lawsuit for 100 violations on that project.(EP59) Enbridge
was also well behind with required repair of 15,000 cracks in their disastrous
Kalamazoo line.(EP3) Trans Canada continued construction of their Bison
pipeline while they were made aware of shoddy welding and poorly trained
inspectors who were not identifying all the welding problems(EP54). Railroad transport also has to become much safer. The
Quebec disaster revealed that in order to cut costs, a struggling railroad
company was allowed to operate a 72 car, 5 locomotive fully loaded oil train with
only one engineer without help of a conductor. In addition he was allowed to
leave it parked unattended on a hill for several hours. For the tanker transport, reservations were
expressed about the proposed number of tugs and pilots(EP7). The public will
want to know how that has been resolved.
13 Rules and regulations
for pipelines
Thanks to the internet it is easy to find some of the
criteria and technical aspects which give some idea how many rules and
regulations there are and how insufficient checking and supervision can lead to
major problems. Here are some facts which are important to evaluate proposals:
a)
Wall
thickness. It is very simple to
calculate the required wall thickness when the pressure is known but the
configuration of the line and it’s pump stations is complex as summarized by
the Canadian Energy Pipeline Association(EP 31). The complexity of the
calculations is discussed in a paper submitted at the 2007 Pipeline Technology
Conference in Munchen, Germany. There are four
equations which describe (1) the continuity of mass, the conservation of (2)
momentum and (3) energy, and finally (4) the equation of state. All four
equations have to be solved simultaneously to include all the hydraulic and
thermodynamic phenomena being relevant for flow through pipelines. (EP
46-47). Obviously such calculations have
to be checked, double checked and preserved for future reference. Also during
operation the pressures in all sections of the line have to be recorded to
ensure that at no time the operating pressure exceeds the design pressure. It
should be noted that Enbridge increased the wall for the diluted bitumen
(dilbit) line by 19% over the requirement and by 14% for the condensate line.
At major river crossings the thickness was further increased by 10-20%(EP 43)
b)
Steel
quality. There are 4 different grades of steel plate from which pipes can
be made.(EP57). The quality of each individual piece of pipe has to be backed
up by a Mill Test Report(MTR) from the steel mill who supplied the plate. This
ensures that the particular batch of steel has been tested at the mill for
strength and chemical composition of the steel grade on which the design is
based. It proves to all governing bodies and inspection agencies that the
project meets government safety requirements. (EP45,46)
c)
Pipe manufacturing.
The Pipe Fabrication Institute (PFI) creates standards and technical
bulletins for the production of piping, which is made out of steel plate.(EP45).
Inspection and cleaning of the longitudinal weld is an important part of the
fabrication. The welding is to be done following specific standards for
submerged arc welding. (EP57). Manufacturing is not perfect. Between 1979 and
1985 Enbridge did, following 5 failures due to manufacturers defects, replace
all Canadian Phoenix pipe in a 1200 km line with IPSCO pipe (EP 34)
d)
Field
welding and inspection. The work involved, and required qualifications of
personnel are described by 2 companies
who do this work for pipeline companies.(EP49) Obviously their work has to be
overseen by the client and by the authorities, who all need trained personnel
to look after this all important aspect of the construction. If the client does
the work himself there still must be an independent inspection agency to review
the work. The inspection records have to be carefully prepared and preserved
for future reference. In the case of Trans Canada’s welding and inspection problems
mentioned under 12) above, these were identified in internal correspondence and
ultimately reported to the National Energy Board (NEB) by a metallurgical engineer.
He was later on fired for undisclosed reasons. His whistle blowing did result
in a NEB investigation which
eventually “warned TransCanada it would not tolerate further infractions of
regulations related to welding inspections, the training of pipeline inspectors
and internal engineering standards. It also announced a further audit of the
company’s inspection and engineering procedures”.(EP54)
e)
Hydrostatic
testing. This is a very important test to prove that the newly constructed
line is safe (EP 55). The pipe is filled with water and the pressure is raised
to a specified pressure, well above the operating design pressure and it is
carefully checked if the pressure holds when no further water is admitted. If
it does not hold , it can be determined where the pipe leaks. Obviously such
tests have to be witnessed by knowledgeable independent observers and recorded
for future reference Until the pipelines are equipped with external sensors
which can detect small leaks it is the most reliable test for the safety of existing
pipe lines. This does however require expensive shutdowns of the operation. If
it can’t be done with oil it requires lots of water. Obtaining and disposal of
all that water must meet local codes and practices such as those which are
shown for Alberta.(EP54)
f)
Corrosion
protection and backfilling. The
pipeline is cleaned, primed and coated with a hot, tar-like material to prevent
corrosion and wrapped in an outer layer of heavy paper, mineral wool or
plastic. If the pipe is to be buried, the bottom of the trench is prepared with
a sand or gravel bed. The pipe may be weighed down by short, concrete sleeves
to prevent its lifting out of the trench from groundwater pressure. After the
underground pipeline is placed in the trench, the trench is backfilled and the
surface of the ground returned to normal appearance. (EP 55)The material for
the bedding and backfilling will have to be specified for quality and size graduation.
Corrosion is further prevented by
Cathodic Protection (CP),which is a technique used to
control the corrosion of a metal surface by making it the cathode of an electrochemical cell. A
simple method of protection connects protected metal to a more easily corroded
"sacrificial metal" to act as the anode. The sacrificial metal then corrodes instead of the protected
metal. For structures such as long pipelines, where passive galvanic cathodic protection is not adequate, an
external DC electrical power source is used to provide sufficient
current.(EP56)
g)
Oil
properties including corrosion aspects. Some confusion has occurred by statements that
the Alberta oil is more corrosive and has to be transported hotter than regular
oil. This is true for gathering piping in the oil fields but not for the transmission
pipes(EP 55,56). The diluted bitumen behaves the same as other oils and before
it reaches the transmission pipe it must for Canada meet the National Energy
Board regulations and for the US the Federal Energy Regulatory Commission’s
standards. Samples of each batch are analysed before they enter the pipeline
h)
Limitations
of internal leak detection instruments.
Pipeline operators use a variety of methods to look for leaks, but the
remote leak detection system—a combination of sensors, gauges, computer
software and control room technicians called controllers—is the only one that
offers real-time, continuous monitoring along the length of the line. The
system is not very sensitive and signals can be misinterpreted because there
are many false alarms. 10 years of federal data shows that leak detection
systems do not provide as much protection as the public has been led to
believe. US figures show that between 2002 and July 2012, remote sensors
detected only 5 percent of the nation's pipeline spills, according to data from
the
Pipeline and Hazardous
Materials Safety Administration(PHMSA). The general public reported
22 percent of the spills during that period. Pipeline company employees at the
scenes of accidents reported 62 percent. (EP9) These internal instruments are
not very accurate, one to two percent is "the most anyone's going to
guarantee, because there are some hydraulic behaviors that thwart perfect leak
detection. For Keystone XL a spill involving 1.5 percent of the initial
capacity would be 10,500 barrels, or 441,000 gallons a day. When calculated for
the expanded capacity, that 1.5 percent comes out to 12,450 barrels, or
522,900 gallons a day. (EP11) Another
option is to install external sensors that can detect leaks smaller than 10
gallons per day. But these sensors are expensive and are rarely used.(EP12)
i)
External
sensors for leak detection Wikipedia
confirms that local dedicated sensors (LDS) are very expensive (EP 27). It
describes 5 other systems including the acoustic system(EP28). That system is
used by Westminster. Apart from leaks, it detects vandalism, landslides and
earthquakes. It is described as follows: “The Westminster Acoustic Fibre Optic
Pipeline Security System (AFOPSS) is designed to protect gas, oil and other
utility pipeline distribution networks and their remote facilities by providing
an early warning of leaks, illegal taps, excavations and intruders which could
pose a potential threat. AFOPSS will monitor vibration and acoustics at every
metre of a pipeline with a single standard communication optical fibre sensor
linked to one or more interrogator units. AFOPSS unique sensing solution will
provide security and monitoring, detecting third party interference (TPI)
tampering and illegal tapping attempts to within 1 metre along the pipeline. AFOPSS
un-rivalled sensitivity means the sensor can detect analyse and locate leaks or
potential threats instantly, regardless of distance”(EP20-22). No data are given
on the minimum leakage flow it can detect. Enbridge does a lot of research on
leakage systems (EP 29) but there are so many vendors that they have not yet
committed to a particular system(EP45).
j)
Isolation
valves. These valves, also referred to as stop valves are used to isolate a
portion of the line when a leak is detected. “
An economical and technically feasible method is available
for determining effective pipeline block valve automation for
remote operations. Most pipeline codes do not stipulate requirements for block
valve spacing or remote pipeline valve operations along transmission pipelines
carrying low-vapor-pressure petroleum products. This requirement is generally
industry driven to control hazards and reduce environmental effects of pipeline
ruptures or failures causing hydrocarbon spills. This article summarizes
pipeline codes for valve spacing and spill limitations in high consequence
areas (HCAs). It also provides a criterion for an acceptable oil spill volume
caused by pipeline leak or full rupture”.EP56)
k)
Cracks,
causes, monitoring and regulations For
most people it will be a surprise to learn that cracks often occur in pipelines
and that there are regulations which allow operation at reduced pressure until
the cracks are fixed. Pipelines are subject to cyclic pressure fluctuations and
cracks can be formed by corrosion fatigue as occurred in a longitudinal weld on
Enbridge’s line 3 line (EP34} In this case neither the material nor the manufacturing was at fault
(EP33). Cracks are measured by intelligent pigs which are cylindrical vehicles
which are inserted in the pipe and travel with the flow. A German paper
describes how between 1991 and 1994 an ultrasonic detection tool was developed,
which measures inside and outside cracks.(EP 49) Quite likely there are
different tools available. One of the conclusions of the Kalamazoo spill was
that “the tools used to measure cracks were inadequate for the type of cracks
in pipeline 6B.”(EP20). That 2010 disaster was caused by 15000 cracks which had
been reported in 2005. Enbridge tried to manage these defects by prioritizing
them by immediacy. These small corrosion fatigue cracks grew in size and linked
together creating a rupture when the pressure was increased. (EP20). Since that
time stricter regulations have been issued for US pipelines. They deal with
various types of cracks, crack growth, when a pipe with suspected cracks has to
be excavated, time limits for various activities and safety factors based on accuracy
of crack sizing.(EP32)
14
Pipeline and Tanker transport details yet to be clarified
The general public opposes the Northern Gateway project
because few details of the project can be found in newspapers magazines and
official bulletins. Below are a number of points which have to be answered
before the public can gain more confidence that this project will be much safer
than any previous undertakings:
a)
Leak detection
using internal sensors
Ten days before the Kalamazoo spill Enbridge had told the federal
regulators that they could shut down the line in 8 minutes but yet it took 17
hours.(EP10). Has Enbridge since that time done regular tests by creating
artificial spills as discussed at the Kitimat hearing?(EP26,27). Has it been
confirmed that the instruments can’t detect a leak smaller than 1.5% of the
flow? What is the average response time for more severe leaks? For the Kitimat
line how often and at how many locations will such tests been done?
b)
Leak detection using external instruments
Enbridge improved the leak detection system of their Michigan line
by installing external sensors.(EP26). What type of sensors are these and how
small are the leaks they can detect? Enbridge does a lot of research work in
leak detection (EP29), yet they don’t release any information of how sensitive
some of the options, like the Westminster acoustic system (EP 20,21) (EP28)
are. They mention that there are many vendors from which they will make a
selection.(EP45).Surely those venders have some test data for their products
and an overview could be given about the capabilities This lack of details has frustrated the BC
Environment Minister (EP 27) and is certainly something which makes the public
wonder if there will be hidden surprises.
c)
Previous leaks and new pipeline regulations
It seems logical to have a
summary explanation of all recent major spills. These are 2012 Wisconsin
(190,000 litres) 2012 Red Deer (230,000 litres), 2011 Stingray (gas),2010
Kalamazoo( 3 megalitres) (EP6). Were the design criteria for these lines
different than those of the Canadian Energy Pipeline Association (EP 31). How old were those lines,
how often were they inspected and most importantly how would the spills have
been prevented had the present regulations and proposed technology been in
place. Are the Canadian regulations as strict as the new US regulations. A
summary of the present regulations in particular the maintenance requirements
seems useful to satisfy the public that things have changed as a result of all
those spills.
d)
Explanation of regulatory
violations
In 2008 Enbridge incurred over 500 regulatory violations in one
year during pipeline installation in Wisconsin.(EP6). What type of violations
were those? Was Enbridge not aware of these regulations or was there
insufficient oversight, How are regulations for a new project researched,
recorded and included in bid documents for contractors who do work on the
project? It is noted that on the same project Enbridge had to pay $1.1 million
to settle a lawsuit related to over 100 environmental violations. They violated
numerous permits resulting in impacts on wetlands and navigable waterways.
(EP59) Is Enbridge aware of all the BC regulations and will they be listed to
allow all workers to know about them. Are they included in their design and proposed
construction methods?
e)
Cracks detection
tools
The NTSB report about the Kalamazoo spill shows that the tools
used to measure cracks were inadequate for the type of cracks in pipeline 6B.(EP20)
Why were these tools inadequate, what are the presently available tools, how
accurate are they? SGS uses a pig to measure all types of weld defects
(EP49-50), NDT uses pigs and crawlers(EP 49). What equipment will Enbridge use
for the Kitimat project. Are those tools used by many other companies and what
is their experience? How often will the lines be checked for cracks?
f)
Isolation valves
With reference to 13 j) above the public will want to know what is
the maximum spill which could occur in each section of the line. Many people
may not realize that when a section between two isolation valves has several up
and down segments only one segment will be emptied when the leak is at the
lowest point of that segment. The worst spill can occur when the leak is at the
bottom of a hill just ahead of the isolation valve or anywhere in a perfectly
horizontal segment.
g) Earthquake considerations
Like buildings, pipelines can be designed to withstand
earthquakes. An Alaska line was designed to withstand up to 20 feet lateral and
up to 10 feet vertical movements at known fault lines. In 2002 it withstood a
magnitude 7.9 earthquake.(EP37). Also note that the Westminster leak detection
system monitors vibrations and acoustic at every metre of the pipeline(EP20)
and can detect landslides and earthquakes(EP23). Enbridge describes their
earthquake and tsunami strategies in a 29 October 2012 blog (EP50-51) and a
summary should be published to ensure that the public is aware that Enbridge
has already done quite some pre- engineering work this important aspect.
h)
Tanker selection
and sea conditions
At the hearings Captain Walsh gave several reasons why 20 year old
tankers, which are double hulled vessels at the end of their service life,
should not be used (EP6). Transport Canada approved the use of 20 year old
vessels (EP8). Will Enbridge avoid using such old ships considering that tanker
design has changed since that time (CT27,28) Captain Walsh also felt that more
pilots and tugs were required and that details were missing about the treatment
of ballast.(EP7). How has that been resolved?
Mr Sweeny, a retired naval commander reported sea conditions which
rolled his ship 60 degrees to port and another 20,000 ton ship nearly stood on
her nose.(EP3). This must have been very unusual conditions which can with
present weather forecasting be avoided. Even without good forecasting Alcan’s
bulk carriers must have made thousands of trips through these waters. For well
over 50 years they shipped alumina powder, the raw material for their smelter,
from the West Indies to Kitimat. Their logbooks could give an insight of the
sea conditions. There are documentaries of huge tankers being towed and
nudged through Alaska waters by powerful
tugs. How comparable is that operation to the present proposal? Have there been any spills? A US Coast Guard
report shows that between 1991 and 2004 roughly36% of spills came from ships
and barges, 28% from facilities, 9% from pipelines, 20% from non tank vessels,
7% from mystery spills and only 5% from
oil tankers.(CT 28). Are there any later figures available?
At the very end
of the article “ the economic impact of carbon tax” is a list of unanswered
question about tanker traffic related to the Northern Gateway Pipeline project.
It is noted that according to a US Coast Guard report, covering 1991 to 2004, only
5% of the oil spills were caused by tankers and that later figures should be
obtained, A significant later figure is
supplied by the British Columbians for International Prosperity http://www.bc4ip.ca/info/?l=1. Among
many other interesting shipping data they note that there has not been a single
spill from the tankers which, since 1956 shipped the oil from Kinder Morgan’s
site in Burnaby. The website provides links to Transport Canada and videos
about the Northern Gateway project. It is emphasized that tanker design has
improved since the first double hull ships were built. Despite all this there
is no clear answer how the concerns which Captain Walsh expressed at the inquiry
have been resolved. Regarding the use of 20 year old double hulled vessels
which he described to be at the end of their service life it is good to know
how thoroughly ships are inspected as described in http://www.classnk.or.jp/hp/en/about/aboutNK/index.html
It shows how much well trained and experienced
personnel is required for each of the many tasks. 
