Canadian Oil Sand Extraction: The Nexus between Economic Development and Environmental Sustainability

Abstract

This paper investigates the relationship between environmental degradation, income and regulation for the Alberta province of Canada. This issue assumes a value added since Alberta is the third-largest oil reserve in the world after Saudi-Arabia and Venezuela. The province is interested by large extractions of unconventional oil from bituminous sands, which produces high greenhouse gas emissions (CO2, CH4, N2O and HFC). Our attention is focused on the environmental overexploitation, specifically air quality depletion, related to the oil sands extraction processes first and then on the level of GHG of the province. The paper has the following results: i) We provide a first assessment of the levels and the growth rates for GHG specifically generated by Alberta oil sands extraction, while distinguishing between in situ and mining extraction method. ii) We find a positive and strong relationship between economic growth and air degradation for the Alberta region during the last decade, discussing the issue in light of EKC literature. In this context we are not aware of other contribution addressing this question. iii) Our analysis highlights that the average energy intensity indicator of Alberta is higher by 11% then overall Canada, which is among countries with highest energy intensity. iv) The paper, next, propose an original indicator where we frame the relationship between GDP and GHG in a global view. We construct the Sustainable Income Index for Alberta and some selected countries relevant for our investigation. v) Eventually the paper discusses results in light of the possible regulation issues in the framework of International Panel for Climate Change (IPCC) guidelines and Kyoto Protocol.