The citizens of Alberta ownthe oil sands, oil and gasresources in the province.The government of Alberta,through the Department ofEnergy, manages theseresources on behalf ofAlbertans. In their role asmanagers, the governmentallows companies to undertake oil sands, oil and gasdevelopments. In doing so,companies incur costs andalso receive revenue fromthe sale of the resources.The government is thenresponsible for obtaining aportion of that revenue forthe people of Alberta-theowners of the resource. Inthis capacity, the govern-ment has a responsibility tomaximize the value toAlbertans for the develop-

D E L I V E R I N G O N A L B E R T A N S ’ E X P E C T A T I O N S

B L U E P R I N T

Albertans and Canadians are increasingly concerned when they look at the way Alberta’s oil sands are being developed. Amidst growingurgency about the need to fight global warming,the oil sands have emerged as Canada’s fastestgrowing source of greenhouse gas pollution.Other impacts – from drawing down theAthabasca River, to the creation of toxic tailingsdumps, to hundreds of square kilometers of strip-mining and drilling in the boreal forest – are growing just as rapidly. All across theprovince, and especially around Fort McMurray,Albertans are facing new hardships like a shortageof affordable housing and waiting lists for doctors. Inflation is driving up the cost of criticalinfrastructure to the point where constructionprojects such as roads and schools are beingdeferred or cancelled altogether. And compound-ing the concerns arising from the overheatedeconomy is a troubling sense that Albertans, the owners of the oil sands resource, aren’t even receiving their fair share of the profits from oil sands royalties.

ALBERTA CAN DO BETTERLast fall, hundreds of Albertans came out to share their vision for oil sands development in a series of public consultations. Their message to the government was clear: Today’s approach – developing fast, rather than developing responsibly – isn’t good enough.

A CHANCE TO GET IT RIGHT

SANDSFeverOil

s Hundreds of square kilometres of boreal forest are already being strip-mined. PHOTO: DAVID DODGE, THE PEMBINA INSTITUTE

BLUEPRINT for Responsible Oil Sands Development

z Honours the rights of First Nations and Métis z Provides a high quality of lifez Ensures a healthy environmentz Maximizes value-added in Albertaz Builds healthy communitiesz Sees Alberta benefit from the oil economy and lead in the

post-oil economyz Sees Alberta as a world leader in education, technology and

a skilled workforcez Provides high quality infrastructure and services for all Albertansz Demonstrates leadership through world class governance 1,2

SOURCE: OIL SANDS CONSULTATION – MULTISTAKEHOLDER COMMITTEE INTERIM REPORT. NOVEMBER 30, 2006

Albertans’ vision for oil sands developmentleads to a future for Alberta that:

1 Multistakeholder Committee, Government of Alberta. “Oil Sands Consultation – Multistakeholder Committee Interim Report” November 30, 2006. 5. http://www.oilsandsconsultations.gov.ab.ca/index.html

2 Government of Alberta. “Interim oil sands consultation report outlines vision for development,” news release, January 25, 2007.http://www.gov.ab.ca/acn/200701/209765A5C8A71-0356-3289-B126EF25661C511F.html

For the Pembina Institute, a decade andmore of independent work on the oilsands has led to a similar conclusion:Many of the environmental, social andeconomic impacts being felt acrossAlberta can be traced back to a singledecision – to develop the oil sands asfast as possible, rather than at a man-ageable pace.

As a result, while the scope and scale ofoil sands projects have expanded rapid-ly, government policies and planninghave fallen far behind, leaving a seriousenvironmental, social and infrastructuredeficit. The costs of catching up, cou-pled with rising inflation and projec-tions of declining oil sands royalties,3

mean that Alberta could soon face aneconomic deficit.

And even then, catching up won’t beenough. Alberta needs to get ahead ofthe curve and ensure that the mistakesof past years are never repeated. Thatmeans approving new developmentonly when environmental, social andeconomic impacts can be adequatelyaddressed, and only when the net contribution to Albertans’ quality of life is clearly positive.

This shift – from exploiting the oilsands as fast as possible, to responsible

development in the interests ofAlbertans – will require six essentialchanges in Alberta’s development framework, outlined below. As the manager of Albertans’ resources, theGovernment of Alberta is responsiblefor making these changes and owes it to Albertans to place a moratorium on new oil sands project approvalsand lease sales until the necessary policies and safeguards are in place.

Fundamentally, a moratorium willfocus the energies of governmentand other stakeholders, includingindustry, Aboriginal groups, environmental organizations and the public, on finding andimplementing the requirements

for responsible development. In fact,there is no other choice: approvalsunder the current system disregard the interests of Albertans, and there isno time to lose. Once sound policiesare in place, regulatory reviews andlease decisions will be able to proceedwith the assurance of respectingAlbertans’ interests and of achievingtheir vision for the oil sands.

SANDSFeverOil

S E R I E S

s The Alberta government must address the environmental, social and economicimpacts of already approved projects. PHOTO: DAVID DODGE, THE PEMBINA INSTITUTE

A Moratorium On New Oil Sands Approvals What is a moratorium?

A moratorium means a temporary pause – in this case in the government’sapproval of new oil sands projects and in the granting of new oil sands leases – until the right policies are in place toguide future development so that it’s environmentally, socially and economical-ly responsible, and always in the bestinterest of Albertans.

Objectives of the Moratorium

z Catch up to current oil sands develop-ment by addressing the environ-mental, social and economicimpacts of already approved projects.

z Get ahead of future oil sands develop-ment by implementing a plan to proactively manage environmental,social and economic impacts.3 Patrick Brethour “Alberta’s royalties to

slide despite boom,” Globe and Mail,March 24, 2006.

1 Limit EnvironmentalImpacts: Apply science-basedprecautionary limits that tell uswhen ecosystems are threatened,so that we can make informeddecisions about whether and how oil sands projects proceed.

2 Address CumulativeImpacts: Improve the systemsand approaches for monitoringand addressing the impacts of oil sands development on the climate, air, fresh water, borealforest and wildlife.

3 Focus on Quality of Life:Manage the rate of oil sandsgrowth so as to maximize the benefits to Albertans’ qualityof life, and ensure that social services and infrastructure can keep pace.

4 Think Like an Owner: Reform the oil sands royaltyregime so that Albertans obtain maximum value from the development of theresources they own.

5 Make Better Decisions forAlbertans: Reform the Energyand Utilities Board’s decision-making process so that the public interest comes first andonly responsible oil sands projects proceed.

6 Plan for the Future: Take advantage of Alberta’s prosperity so as to build a morediversified, green and competitivefuture that includes low-impactrenewable energies and responsible energy use.

It’s Time for a Plan: Six Steps forResponsible Oil Sands Development

s Alberta has a chance to get it right – and develop the oil sands responsibly. PHOTO: DAVID DODGE, THE PEMBINA INSTITUTE

1Limit Environmental Impacts

In 1999, the Government of Albertainitiated the Regional SustainableDevelopment Strategy for the AthabascaOil Sands Region. A key component ofthis strategy was to collect scientific datato identify environmental thresholdsthat would limit impacts to protect theregion’s air quality, fresh water, borealforests and wildlife. These thresholdswould guide decisions about how muchoil sands development the environmentcould withstand before irreversible damage would occur. Eight years later,the government has been unable orunwilling to establish all of these thresholds – but has nonetheless

approved numerous new oil sandsmega-projects that will create signifi-cant environmental impacts.

Similar ambition must be applied toaddressing the global warming impli-cations of oil sands development.Unfortunately, the Alberta govern-ment’s climate change regulation willnot reduce greenhouse gas pollution. In fact, if recent economic growth ratescontinue, total Alberta emissions willrise to 72% above 1990 levels by 2020,a far cry from the deep reductionsessential to combat climate change.Alberta has the opportunity to be a glob-al leader in reducing pollution and the oilsands industry has the capacity to do itsfair share. If the government mandatedreal reductions in greenhouse gas

pollution, our analysis has concluded that the oil sands industry could invest intechnologies and approaches that wouldenable carbon neutral (zero net green-house gas pollution) oil sands develop-

ment by 2020 for only afew dollars per barrel.5

Albertans should expect the government to lift itsmoratorium only once the government has implemented precaution-ary environmental thresh-olds and regulated realgreenhouse gas pollution reductions. These will compel oil sands com-panies to minimize andmitigate impacts throughinnovative technologies and approaches, andenable the government tomake informed decisions.

Using Thresholds to Protect the Environment

“The existence of regulatory standardsand thresholds is an important elementin determining whether a project is inthe public interest from a cumulativeimpacts perspective and whether theimpacts need further mitigation if theproject is to proceed.” 4

EUB/CEAA JOINT REVIEW PANEL REPORT: IMPERIALOIL LTD. KEARL OIL SANDS PROJECT

BLUEPRINT: Six Steps for Responsible Oil Sands DevelopmentREQUIREMENTS FOR CONDUCTING RESPONSIBLE OIL SANDS DEVELOPMENT

s Oil sands water use must be addressed to ensure the Athabasca River and its fisheries are protected.PHOTO: DAN WOYNILLOWICZ, THE PEMBINA INSTITUTE

4 EUB/CEAA Joint Review Panel Report. EUB Decision 2007-013. “Imperial Oil Resources Ventures Ltd. Application for an Oil Sands Mine and Bitumen Processing Facility (Kearl Oil Sands Project) in the Fort McMurray Area.” February 27, 2007 (Alberta Energy and Utilities Board and the Government of Canada, 2007), p.92. Available online at http://www.eub.gov.ab.ca/

5 See http://www.oilsandswatch.org/doc.php?id=1316 to download Carbon Neutral by 2020: A Leadership Opportunity in Canada’s Oil Sands.

2 Address Cumulative Impacts

The Alberta government has publiclyacknowledged that the RegionalSustainable Development Strategy forthe Athabasca Oil Sands Region needsto be updated.7 In addition, this type ofstrategy needs to be developed for boththe Cold Lake and Peace River regions.A key element of these strategies mustbe the implementation of comprehen-sive monitoring systems for air quality,fresh water quality and quantity, andthe health and diversity of the borealforest and its wildlife. These monitoringsystems will provide critical informationto better understand the environment,but will also ensure that unanticipatedimpacts from development can bedetected and addressed.

In order to address these impacts, and inparticular the cumulative environmentalimpacts from multiple oil sands projects,the government must also implementenvironmental management systems. In the Athabasca oil sands this task has been delegated to the multistake-holder Cumulative EnvironmentalManagement Association (CEMA).Over the past seven years, CEMA hasbeen overwhelmed by the number ofenvironmental issues it has been assignedto address and has proven unable tomeet deadlines. For government, ensuring that this organization fulfills

its objectives has been a lower prioritythan issuing new approvals. Nonetheless,CEMA remains a unique and importantforum for government, industry,Aboriginal and environmental groups to collaboratively address cumulativeimpacts. Clearly, if the government is to continue relying upon it, CEMA’srole and responsibilities must bereformed to make it both more efficient and effective.

There is significant uncertainty aboutwhether and how areas of boreal forestdirectly impacted by oil sands activitycan be restored or reclaimed. Some ofthis uncertainty can be reduced throughmore aggressive research by industry, butensuring the long-term sustainability ofthe region’s ecosystems requires settingaside “no development” areas and com-pensating for habitat loss. The govern-ment must legally establish an ecological-ly representative interconnected networkof protected areas and corridors. Notonly will these areas ensure the continu-

ity and sustainability of the region’s bio-diversity, but they will also provide repre-sentative benchmark areas that will fur-ther enhance knowledge that can beapplied to restoring disturbed areas.

Albertans should expect the government to lift its moratorium only once the govern-ment has implemented systems to monitorand manage cumulative environmentalimpacts and created protected areas tosustain the oil sands regions’ biodiversity.

You Can Only Manage What You Measure

“…an old Alberta trick: If you don’t havedata, you can’t say there’s a problem.” 6

DR. DAVID SCHINDLER, KILLAM MEMORIAL CHAIR AND PROFESSOR OF ECOLOGY, UNIVERSITY OF ALBERTA

REQUIREMENTS FOR CONDUCTING RESPONSIBLE OIL SANDS DEVELOPMENT

Alberta Needs to Regain Control ofCumulative Impacts

“Historically, we have looked at projects on a very prescriptive, one-off basis... We have been prescriptive to the point ofnot considering cumulative impacts, to thepoint where we no longer have control ofcumulative impacts.” 8

ALBERTA’S MINISTER OF THE ENVIRONMENT, ROB RENNER

s The cumulative environmental impacts of multiple oil sands mining and drillingprojects need to be addressed. PHOTO: DAVID DODGE, THE PEMBINA INSTITUTE

6 Murray Whyte. “At what price progress?,” Toronto Star, September 23, 2006, F17 EUB/CEAA Joint Review Panel Report. EUB Decision 2007-013. “Imperial Oil Resources Ventures Ltd. Application for an Oil Sands Mine and Bitumen Processing Facility

(Kearl Oil Sands Project) in the Fort McMurray Area.” February 27, 2007 (Alberta Energy and Utilities Board and the Government of Canada, 2007), p.92. Available online at http://www.eub.gov.ab.ca/

8 Renata D’aliesio, “Bitter urban-rural split amid land rush chaos,” Calgary Herald, March 4, 2007.

3 Focus on Quality of Life

The social ramifications of the pace ofoil sands development are being feltthroughout the province, but nowheremore than in the Regional Municipalityof Wood Buffalo (RMWB). While“healthy” population growth rates aredescribed as between 1% and 3% peryear, the RMWB has averaged 9.3%per year since 1999. With oil sands

development fast outpacing the govern-ment’s provision of sufficient socialservices and physical infrastructure, the quality of life of the municipality’sresidents has been deteriorating. Whilethe Alberta government’s recent spend-ing commitment to address housingand infrastructure needs in the regionwill begin to address the current deficit,it has failed to implement a plan toensure this situation doesn’t repeat itself in the future.

Failing to plan for economic growth has meant a deterioration of the qualityof life for many of Alberta’s citizens.According to the RMWB, the munici-pality is deficient in 70 out of 72 of the

Federation of Canadian Municipality’squality of life indicators.9 The simplefact is that using a measure like theGross Domestic Product (GDP) as anindicator of overall well-being is inade-quate. Tools like the Genuine ProgressIndicator (GPI) – a measurementframework comprised of 51 environ-mental, social and economic indicators– provide a more holistic picture of ourquality of life. While Alberta’s GDP

rose 483% between 1961 and 2003, the province’s GPI declined by 19%from a rating of 76 in 1961 to a ratingof 61 in 2003.10

Adopting the GPI in Alberta as a meas-ure of quality of life would prove a usefultool for assessing the benefits and impactsof economic growth, and could serve asthe basis for a commitment to continu-ously improving the lives of all Albertans.

Quality of life is critical. Albertansshould expect the government to lift itsmoratorium only once the governmenthas implemented a plan to provide sufficient social services and infrastruc-ture, and committed to measuring andimproving Albertans’ quality of life.

Cures Not Band-Aids Are Required

“The rapid development of the oil-sands is impacting timely access toquality health care, thereby puttingour patients at risk... These challengeshave now been exacerbated by theoilsands tsunami with escalating over-head costs, a shortage of office staffand inflating housing prices.” 11

DR. E. SANDRA CORBETT, PRESIDENT, NORTHERN LIGHTS HEALTH REGION MEDICALSTAFF ASSOCIATION, OCTOBER 5, 2006

REQUIREMENTS FOR CONDUCTING RESPONSIBLE OIL SANDS DEVELOPMENT

s Delivery of social services and infrastructure must keep pace with development.PHOTO: DAVID DODGE, THE PEMBINA INSTITUTE

s Protecting areas of the boreal forestwill ensure its long-term sustainability.

PHOTOS: DAVID DODGE, THE PEMBINA INSTITUTE

9 Regional Municipality of Wood Buffalo. 2006. Submission of Intervention of Regional Municipality of Wood Buffalo, Joint Panel Hearing of Applications No. 1408771 and1414891 Kearl Oil Sands Project, Imperial Oil Resources Ventures Limited.

10 See http://www.pembina.org/pubs/pub.php?id=193 for the Pembina Institute report The Alberta GPI Summary Report11 “Northern Alta. health region says oilsands development creating pressure,” Canadian Press. October 5, 2006.

4 Think Like an Owner

Albertans have serious doubts as towhether they’re receiving fair value fromthe development of the oil sands,12 andfor good reason. An outdated royaltyregime allows oil companies to rack uprecord profits while Albertans – the own-ers of the resource – receive decliningreturns. Between 1996 and 2005, oilprices rose by 214%, but royalties paidto Albertans decreased by a third, from$3.39 to $2.29 for every barrel of oil.And because oil sands producers payroyalties based on profits, their cost over-runs – due to inflation and driven byan unmanageable pace of growth – areexacerbating Albertans’ short shrift.

It’s clear that royalty reform is essentialand that it must be conducted decisive-ly, through a legitimate process thatputs the interests of resource owners –Albertans – first. Yet the government’scurrent review is dominated by anexpert panel and limits public delibera-tion to hearings in a few cities. Giventhe complexity of the royalties as anissue, effective reform should involve aCitizens’ Assembly in which ordinaryAlbertans learn about the issues and are empowered to present informedopinions as citizen-experts.13

Indeed, Albertans should expect theirgovernment to lift its moratorium only once real royalty reform has beenconducted by Albertans, for Albertans.

And they should be assured that royal-ties will be invested based on a plan thatsecures Albertans’ future, and the futureof their children and grandchildren.

5 Make Better Decisions for Albertans

The Alberta Energy and Utilities Board(EUB) has a mandate to ensure “...thatthe discovery, development and deliveryof Alberta's energy resources and utilityservices take place in a manner that isfair, responsible and in the public inter-est.” This should mean that if a projectis against the public interest, or irre-sponsibly designed, it will be denied.

In practice, however, the EUB sees itsrole as deciding how, not whether, oilsands projects go ahead. The board con-tinues to rubber stamp approval afterapproval, despite opposition from FirstNations and Métis groups, environmen-talists and even the Regional Municip-ality of Wood Buffalo, and despitemounting evidence that new oil sandsprojects are exceeding Alberta’s capacityto manage impacts.

Simply put, the oil sands deci-sion-making system is broken;Albertans should expect their government to lift its moratoriumonly once the system is fixed.Reforms need to ensure that thepublic can participate meaning-fully and that, in the end, onlyresponsible oil sands projects areallowed to proceed.

It’s Time For Albertans to Get Their Fair Share

““It [the Government of Alberta] brought ina favourable royalty regime of one per centto accelerate development of the oil sandswhen oil cost less than $20 a barrel – andpersisted with it even as prices rose astro-nomically. This failure to build an escalatingroyalty rate so that government incomewould increase as prices rose, cost theAlberta treasury more in lost revenue thanthe reviled National Energy Programmenegotiated a generation ago between PeterLougheed and Pierre-Elliott Trudeau.” 14

SATYA DAS & KEN CHAPMAN, CAMBRIDGESTRATEGIES, NOVEMBER 26, 2006

Current Decisions Are Failing to Protect Albertans’Best Interests

“Our role is to ensure that orderly andresponsible development occurs, not ifdevelopment should occur – very big distinction there.” 15

ALBERTA ENERGY AND UTILITIES BOARDSPOKESPERSON, NOVEMBER 2006

REQUIREMENTS FOR CONDUCTING RESPONSIBLE OIL SANDS DEVELOPMENT

s Alberta has the opportunity to be a globalleader in low impact renewable energy.

PHOTO: DAVID DODGE, THE PEMBINA INSTITUTE

12 63% of Albertans do not believe that they are receiving maximum revenues from oil sands development. Probe Research Inc. Poll of Albertans’ Perspectives on Oil SandsDevelopment, April 2006. Available at http://www.oilsandswatch.org

13 See http://www.oilsandswatch.org/doc.php?id=1367 for the Pembina Institute’s Blueprint for Conducting Sound Royalty Reform in Alberta.14 Satya Das and Ken Chapman. “Un nouveau leadership: Les Albertains souhaitent exercer plus d’influence au pays grace à leur pouvoir économique croissant,” La Presse.

November 26, 2006.15 Lisa Schmidt. “Suncor oilsands growth approved: EUB places seven conditions on project,” The Calgary Herald, November 15, 2006, D1.

S u s t a i n a b l e E n e r g y S o l u t i o n s

6 Plan for the Future

Alberta is in an enviable position: nopublic debt, a culture of entrepreneur-ship and innovation, and world-classrenewable energy potential. That repre-sents an almost unparalleled opportunityto think big and to diversify our econo-my beyond fossil fuels. The alternative –a growing dependency on the oil sands –carries big economic risks: booms andbusts as oil prices fluctuate, and a lossin competitiveness as our trading part-ners demand cleaner energy than the oil sands can deliver. Fossil fuels are not going to disappear tomorrow, butAlberta can begin laying the foundationsfor a sustainable energy future today by investing fair royalty returns in low-impact renewable energies and dramati-cally improving efficiency. The missingpiece of Alberta’s development plan is acredible and comprehensive strategy toprioritize investments and guide oilsands development towards a morediversified, competitive and green future.Albertans should expect their govern-ment to lift its moratorium only oncesuch a strategy is in place. And theyshould expect to participate as equals in building this vision: Alberta’s energyfuture is for Albertans to choose.

A Unique Opportunity to Get It Right A moratorium on new approvals is not a moratorium on economic growth. The construction and operation of new oil sands projects that have already been approved – which will double the current operating capacity – means that Alberta’s economy will continue to expand, creating new jobs and generating new revenue. That makes it the right time to takestock, to shift the oil sands lease andproject approval process temporarily into neutral, until the right systems are in place to protect Alberta’s future.

In fact, with responsible policies inplace, the oil industry will never turntheir backs on a resource as significantas the oil sands. It only takes a glance at the nations joining Canada in the listof the world’s top ten oil reserves – likeVenezuela, Iran, Iraq and Nigeria – torealize that the oil sands are uniquelypositioned in a stable democracy, nextto the world’s largest market for oil.

Alberta can show its leadership, entrepre-neurship and stewardship, not because ofthe brute quantity of energy it produces,but on the basis of responsible develop-ment in the interest of all Albertans.Alberta has the chance to get it right.

“92% of Albertans believe that a portion of oil sands revenue should be used to fund the development of renewable energy sources.” 16

s Alberta has the opportunity to be a global leader in low-impact renewable energy.

REQUIREMENTS FOR CONDUCTING RESPONSIBLE OIL SANDS DEVELOPMENT

16 Probe Research Inc. Poll of Albertans’ Perspectives on Oil Sands Development, April 2006. Available athttp://www.oilsandswatch.org.

Want more information?For more information about oil sands, their impacts and the royalty regimeplease visit our website at www.oilsandswatch.org. There you willfind reports, fact sheets, photos, videos, and other information on oil sands.

This Blueprint was prepared by Dan Woynillowicz author of Oil SandsFever. Please consider supporting our work. For more information or to make a donation to the Pembina Institute please visit www.pembina.org.