Integrated Energy and Materials Management

1. Integrated Energy and Materials Management Major Topics for this Week: • Key management challenges • Energy consumption and use globally and in Canada • Role of conflict and uncertainty in energy sector, prices • Governance and energy security • Case study: Alberta oil sands • Need for an integrated approach, recognizing competing goals

2. Energy Management Dilemmas Energy resource managers face conflicting objectives and uncertain futures Low-cost energy enables economic development External costs (social, health, environmental costs) create challenges for decision-making Oil, coal and natural gas are the main fossil fuel energy sources but also nuclear, hydro power and renewables Direct link between energy choices and climate change impacts well-documented Needed: integrating low-cost energy and environmental protection

3. Global Energy Consumption, 1820 to 2010 http://ourfiniteworld.com/2012/03/12/world-energy-consumption-since-1820-in-charts/

4. Energy Consumption per capita, by Country, 2003 http://en.wikipedia.org/wiki/Energy_development

5. Canadian Energy Choices • Primary energy extracted vs final consumption energy • Example: we can get light from electricity, but where does electricity come from? (coal, oil, gas, hydro, solar, wind, nuclear) • Total primary energy production in Canada = 400 megaton of oil equivalent (Mtoe): • about 200 Mtoe is exported • about 80 Mtoe is imported • about 280 Mtoe is the total primary energy supply for Canada • Transformations and energy flows — illustrate the paths operating within the Canadian energy system

6. Energy Flow Diagram

7. Nuclear and Hydro Consumption

9. Energy Markets, Security Concerns and Uncertainties Securing energy supply is important for economic and social development GDP, CO2 emissions, installed capacity affect demand/supply Vulnerability to accidents, terrorism, and regional conflicts; geopolitical factors disrupting oil supplies cause price instability Canadian energy markets are tightly integrated with those of the USA (e.g. NAFTA) Canada’s energy resources are dispersed regionally—challenge to extract, develop, transform, store, and transport Key uncertainties are: international prices, national/global energy reserves and climate change

10. Oil Price Uncertainty • In 2008, went up to $147 then down to $40 per barrel .. why? • Laws of supply and demand • Political events are important factors in determining market perceptions and pressures on oil prices

11. Oil Price Uncertainty, cont`d

12. Uncertain Reserves This has been changing lately Nature determines global energy resources endowment, but reserves are what can be extracted under current technological and economic conditions Availability based on reserve-to-production (R/P) ratio: ‘number of years for which the current level of production of any energy and mineral can be sustained by its reserves’ mergersandacquisitionreviewcom.blogspot.ca

13. Connecting Energy & Emissions in an Uncertain World • Relationship among four driving factors that produce emissions • KAYA identity, used by IPCC in the development of its scenarios for comparing policy alternatives CO2 Emissions = Population × (GDP/Population) × (Energy/GDP) × (CO2/Energy)

14. Governance Challenges Multi-scale challenges of climate change and energy-supply security require multi-scale governance Policies at one scale can influence policies and actions at another scale Example: Kyoto Protocol to the UNFCCC affects development of national policies, such as a carbon tax or cap-and-trade. National policies can influence provinces to adopt their own, and municipalities to support implementation programs Conflicts can arise at all scales …

15. Multi-scale Governance International: includes agencies such as the International Energy Agency (IEA) based in Paris (http://www.iea.org/) Federal Government has jurisdiction over national trade; has policies to promote Canada as an ‘energy superpower’; encourages non-renewable energy development (including Oil sands); has weak climate change policies and action by comparison Provincial governments are responsible for electricity production, land use, and environmental health and safety; varied laws and policies across the country, varied resource endowments, and socio-economic priorities Others: Municipal governments, First Nations, Non-profits, Businesses, etc…

16. Case Study: Development of Alberta’s Oil Sands • R/P ratio of 347but only 12 years at global rate • Canada’s conventional oil reserves have R/P ratio of 8 • Thus, developing oil sands will undoubtedly improve energy security. • However, the environmental implications are significant. e.g. air, water, GHGs • Global vs. regional perspectives ..

19. What’s in it for us? Alberta’s Royalty Review (2007) • "Albertans do not receive their fair share from energy development and they have not, in fact, been receiving their fair share for some time.“ (Bill Hunter, Chairman of the review) • Royalties are defined by Canada’s Supreme Court as “a property right, specifically a contractually stipulated share of production or the proceeds” • Primary means for governments to collect revenues from natural resource development • Alberta reviewed and then raised its royalties in 2009 but after strong industry opposition, partly reversed the increases … • Did it make a difference? Who was right?

20. Pipeline Politics • Northern Gateway pipeline – Alberta to BC coast • Keystone XL pipeline – Alberta to US Gulf Coast • Variety of social and environmental concerns • What are the options .. rail transport ?? http://www.economist.com

21. Conflict is never far away ..

22. Needed: Integrated Energy Resource Management Energy and climate policies in Canada are fragmented and therefore less effective at creating sustainable energy systems Integration would help To start, Canada could develop a national strategy framework for energy sustainability in line with a climate policy that will reduce emissions National policies should encourage and support local actions