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OTTAWA (Reuters) - Canada will not be able to fully benefit from huge resources of oil and natural gas unless the energy industry improves its environmental record, a Senate report concluded on Thursday.
The report, from the Energy Committee of the Senate, said Canada should do more to persuade the world it was developing its resources responsibly.
"Canada must demonstrate its commitment to mitigating greenhouse gas emissions on a national scale," it said, adding that firms working in the oil sands industry had to improve their environmental performance.
Canada has the world's third largest proven reserves of crude and the Conservative government wants to turn the nation into an energy superpower.
But greenhouse gas emissions keep rising and look set to spike even higher as development picks up in the oil rich tar sands. Activists assail the Conservative government for not doing more to protect the environment and Canada regularly wins "Fossil of the day" awards from environmental groups.
"We're in this incredibly enviable position in Canada ... but this is at great risk and to stay in this position a lot of things are going to have to change," said David Angus, head of the Senate's energy committee.
Ottawa is particularly keen to speed up development of the tar sands, which contain 170 billion barrels of crude and are the world's third-largest oil resource.
Angus, complaining about the fossil of the day awards, grumbled that "Canada has been portrayed as the bad guy" when it came to energy and the environment.
"It's kind of depressing... What we want to do is have the Canadian brand celebrated and so we've got to clean up our act, of course we do," he told a news conference.
The report will now be presented to the government for its reaction. The Conservative administration will find it hard to completely dismiss the document, since Angus and the majority of senators are Conservatives.
Canada abandoned the Kyoto protocol on climate change last year and committed instead to more modest cuts in emissions of the greenhouse gases blamed for global warming. Booming development in the oil sands means Canada may not meet even these lower emissions targets.
Canada's reputation suffered another blow last week when U.S. regulators savaged Enbridge Inc for the way it handled a spill from an ageing pipeline in Michigan in 2010. There have already been several spills in Canada this year.
"This is old infrastructure and it needs to be upgraded," Angus said. "We built the pipelines originally and we were way ahead of the curve. Now we've fallen behind and we have got to get caught up and it is a serious problem for the country."
Environmental activists and aboriginal groups oppose an Enbridge plan to build a 1,177-km (731-mile) pipeline from the tar sands to the Pacific, from where it could be shipped to China and other Asian markets.
Opponents say the proposed Northern Gateway pipeline is too risky.
The office of federal Natural Resources Minister Joe Oliver was not immediately available for comment on the Senate report.
Reporting by David Ljunggren; Editing by Janet Guttsman and Bob Burgdorfer