Taxpayers could end up paying to clean oilsands pollution: report

EDMONTON — An environmental think-tank says Alberta taxpayers could potentially have to pay billions of dollars in oilsands cleanup costs because of inadequate government regulation.

EDMONTON — An environmental think-tank says Alberta taxpayers could potentially have to pay billions of dollars in oilsands cleanup costs because of inadequate government regulation.

A Pembina Institute report suggests current financial guarantees that energy companies must make to pay for cleaning up the oilsands could amount to as little as one-twentieth of the real cost. In the worst-case scenario, that could leave a liability of up to $6,300 per taxpayer.

“The true cost of cleanup is being under-reported and hidden from Albertans,” Simon Dyer, one of the report’s co-authors, said Tuesday.

Operators are required to post security deposits to ensure there’s money for reclamation of oilsands sites in case the companies are either unwilling or unable to pay. They estimate the required amount themselves.

“There’s no publicly available information as to how the Alberta government validates that,” said Dyer. “There’s no third-party assessment of that.”

The Pembina report found that industry has a total of about $820 million in letters of credit and other guarantees for remediation. That’s supposed to cover about 69,000 hectares of disturbed land, averaging about $12,000 a hectare.

But based on costs already incurred by some remediation projects, the report found true cleanup costs are much higher. The institute estimates it could cost at least $220,000 a hectare and perhaps as high as $320,000 a hectare.

As well, the government doesn’t require companies to include the cost of dismantling and reclaiming oilsands facilities. Also not included is the long-term cost of managing and monitoring the so-called “end-pit lakes” — the remains of toxic tailings ponds that are capped with fresh water.

Dyer acknowledges that many oilsands operators are among the largest and wealthiest companies on earth and are unlikely to go under any time soon.

Once they’re finished with an area, operators are required to obtain a certificate of reclamation from the government before they are absolved of their environmental liability. Some operators are already sinking hundreds of millions into land and tailings ponds reclamation.

But Dyer points out that some operators are not publicly traded and others are limited liability partnerships or national subsidiaries of multinational corporations.

“It’s not clear that companies wouldn’t be able to dispose of those assets if they needed to,” Dyer said. “The track record of the mining industry in Canada shows that problems with unfunded mining reclamation are severe.”

Concerns over unfunded environmental liabilities aren’t new.

The Pembina report points out that Alberta’s auditor general has warned the government about oilsands reclamation costs in four different reports, most recently last October. Although the province has been looking at the issue since 2004, no changes have been made and talks are being held in secret between government and industry, the think-tank suggests.

Dyer said the unfunded liability should also be a concern to investors.

“This is another example of how significant economic costs aren’t being accounted for on the balance sheet.”