ConocoPhillips – Environmental Impacts of Oil Sands

WHEREAS

ConocoPhillips has extensive interests in oil sands operations in the Canadian boreal forest. ConocoPhillips holds a 9% interest in Syncrude; is the operating partner of the Surmont oil sands; and is a partner in the FCCL Oil Sands Partnership. Total production capacity for these projects is estimated at 950 MBD within the next few years.

The boreal provides critical climate regulation for the earth as a whole, storing more than 186 billion tons of carbon — equivalent to 913 years’ worth of Canada’s greenhouse gas emissions.  More than 30% of North America’s bird population rely on the boreal for breeding.

Industrial logging and oil sands have reduced the boreal to less than 40% of its original size; the remaining forest is fragmented, with harmful impacts on many species.  According to the Canadian Parks and Wildness Association, it will take over 300 years before reclaimed areas become functioning forest again. The UN Environmental Program has identified the boreal as one of the world’s top 100 “hot spots” of environmental change.

Processing oil sands is highly resource intensive and requires the draining of wetlands, diversion of rivers and the removal of trees and vegetation. Tailing ponds cover almost 20 square miles. Their pollutants are acutely toxic to aquatic life and threaten to leak into the groundwater system and surrounding soil and surface water.

Extracting one barrel of bitumen requires 2-5 barrels of fresh water. Less than 10% of the water withdrawn from the Athabasca River is returned, threatening the survival of numerous fish and bird species.  Current withdrawals from the river for oil sands are twice the amount used annually by the population of Calgary. The Pembina Institute predicts that withdrawals may increase by 50% within 6 years.  Future demand for groundwater is expected to increase exponentially.

An average barrel’s extraction requires enough natural gas to heat a Canadian home for 1.5-5.5 days, and the removal of four tons of earth.  While processed sand must be replaced and the site reclaimed, in 40+ years of oil sands operations, not a single acre has received a reclamation certificate from the Canadian government.

Oil sands have made Alberta the largest emitter of industrial pollutants in Canada. They are the fastest growing source of Canada’s greenhouse gas emissions, generating 3x more during production than conventional oil. These emissions will be responsible for 50% of the growth in Canada’s emissions between 2000 and 2012.

RESOLVED

Shareholders request that an independent committee of the Board prepare a report (at reasonable cost and omitting proprietary information) on the environmental damage that would result from the company’s expanding oil sands operations in the Canadian boreal forest. The report should consider the implications of a policy of discontinuing these expansions and should be available to investors by May 2010.

SUPPORTING STATEMENT

The requested report should discuss the intense environmental and social impacts of oils sands operations that occur despite best efforts at mitigation, including: greenhouse gas emissions, water resources, biodiversity, and social impacts upon Albertans, including indigenous populations.

Fighting Poverty, Protecting Biodiversity in Honduras

I spent my summer vacation being educated and inspired on an eye-opening trip through the Honduran rainforest as a new board member of the EcoLogic Development Fund.* EcoLogic is a U.S.-based nonprofit dedicated to community-led sustainable development that strengthens the conservation of rural Latin American’s unique and threatened biological diversity. (Some readers may recognize the EcoLogic name from the microcredit loan fund they originated, which has since gone independent and is now known as Root Capital.)

EcoLogic’s mission is to protect Latin American biodiversity while alleviating rural poverty: lofty goals that aren’t always seen as congruent, even within the conservation community. For 14 years, EcoLogic has pushed the envelope towards these goals through its work with local partners to provide direct assistance to more than 5,000 rural poor communities who steward more than six million acres of ecologically significant habitat in Mexico and Central America.

EcoLogic founder and executive director Shaun Paul explains the link between poverty and conservation: “We live in a world of growing inequity. The poor are growing poorer. And in parallel, we are finding the areas of great natural heritage on the planet are continuing to be eroded. If we’re going to protect some of these places important for their natural resources and biodiversity, we need to find solutions that respond to the needs of local people.” To see these solutions at work, our group headed to Honduras, a country facing myriad problems: widespread and often extreme poverty, a thriving illegal timber trade that has led to large-scale deforestation and watershed degradation, and an ineffective government failing its people in providing basic services like clean water.

The EcoLogic projects we visited are giving rural communities the opportunity to participate in determining the use of their natural resources and the direction of economic development. We met community leaders winning battles to build clean water systems that also protect the local watershed, visited villages proudly promoting cleaner-burning adobe stoves and saw new techniques for “agroforestry” – a land-use method that integrates trees into agriculturally productive landscapes, in this case growing small-scale crops for harvest – as an alternative to slash-and-burn agriculture.

Bosques Pico Bonito, EcoLogic’s new and most ambitious initiative, was the highlight of the trip. The project aims to reforest over 6,200 acres of denuded Honduran rainforest by planting 1.2 million trees, which will store 1.4 million tons of carbon and provide sustainable livelihoods in over 20 local villages representing more than 1,000 people. The Kyoto Protocol’s Clean Development Mechanism approved Bosques Pico Bonito’s methodology for the accurate measurement of carbon sequestered by tree-planting, making it the fourth forestry-based project worldwide whose methodology was approved.

Bosques Pico Bonito and similar projects may come at a fortuitous time, as the markets are placing new and explicit monetary value on “ecosystem services” like carbon sequestration and clean water. With Bosques Pico Bonito, EcoLogic has tapped into the emerging carbon offset markets, taking advantage of new financial incentives for rural communities to benefit from conservation initiatives. EcoLogic has also applied the ecosystem services concept to water, initiating a project in Mexico whereby resorts in Acapulco will pay indigenous people living upstream for watershed protection – a win-win for the environment and local communities.

I left Honduras with a new awareness of the intense challenges for the Honduran people and their rich but endangered natural resources. I also brought home new hope from seeing EcoLogic projects on the ground, and how innovative solutions for battling poverty while protecting natural resources really can work.

*Adam Seitchik of Trillium Asset Management Corporation also visited Latin America this summer. You can read about his adventures in Peru in his Strategic View column entitled “What Fair Trade Means for Alejandro and Elida Maldonado.”