In 2004 and 2006, RBS-NatWest acted as the lead arranger of a US$800 million loan (1) to Canadian oil company Opti Canada for their Long Lake tar sands project south of Fort McMurray in the Athabasca region of Alberta in Canada.
The oil in the ground at Athabasca is not normal crude oil, it is a much heavier form known as oil or tar sands. Made up of extremely heavy crude oil, sand, clay and other contaminents, it takes significantly more energy to process and emits around three times as much as conventional crude oil during processing, approximately 80kg of greenhouse gases per barrel.
It is estimated that there are 174 billion (2) barrels of oil in Alberta. It occupies 140,000 square kilometers, a larger area than England (130,000 square kilometers). The continuation of the tar sands project will lock us into massive emissions in the future.
Greenpeace Canada run the Stop the Tar Sands campaign, you can find out more about it on their website
The area dug up to access the oil is boreal forest and muskeg. Loopholes in Canadian law mean that the land doesn’t have to be restored to its former state, only to an equivalent classification, in this case agricultural land. This means that once the boreal forest is cut down and the muskeg dug up, it is permenantly destroyed. Boreal forest was one of the largest areas of ancient forest in the world but is facing total destruction from logging and oil production. Both muskeg and boreal forest are major carbon storehouses, once they are disturbed and dug up, they release the carbon they have stored for thousands of years, thereby further contributing to climate change.
The current global oil reserves we know about (not including tar sands) are already more than we can safely afford to use. If we add in the oil in the Athabasca tar sands (15% of total global oil) this will push us way beyond any hope of saving the planet from a total climate catastrophe. There are plans to massively step up production of oil in the three Albertan tar sands sites; Peace River, Athabasca and Cold Lake, resulting in a jump of greenhouse gas emissions from 27 million tons per year in 2006 to 144 million tones per year in 2020 almost twice the total annual emissions of New Zealand, and that’s before any of the oil has even been used.
RBS-NatWest are one of the key players driving forward extraction of unconventional fossil fuels, such as the Alberta Tar Sands. By financing development in new and more polluting forms of fossil fuel RBS-NatWest are preventing a transition to renewable energy. Rather than exacerbating the problem of climate change through continued investment in increasingly damaging forms of energy, RBS-NatWest could, and should, be at the forefront of renewable energy finance.
Boreal Forest
Boreal forest is amongst the largest and last remaining areas of ancient forest. Consisting of coniferous trees such as spruce, fir and pine, boreal forest is under threat from two types of industry, clearcut logging and tar sands. The forest is first clearcut to make toilet paper, newsprint and lumber. After this it is used by oil companies to dig for oil sands. Less than 8% of boreal forest is protected from industry and 50% has been allocated to logging companies.
Muskeg
Muskeg is a type of cold weather soil similar to peat. It is largely made up of decomposing vegitation such as sphagnum moss. Muskeg is usually found in boreal areas and acts as a carbon store. When it is disturbed by logging or oil extraction there is a further cost to the environment in the carbon dioxide released which was stored.
References:
1. The Oil & Gas Bank: RBS & the financing of climate change, published by BankTrack, Friends of the Earth Scotland, New Economics Foundation, People & Planet and PLATFORM
2. Alberta’s Oil Sands, published by Alberta Department of Energy