Suncor, one of the leading companies in the oil sands, for years had another side to its corporate persona, one that invested in solar and wind power and had a chief sustainability officer among its top executives.
That’s all in the past. Suncor sold its solar and wind assets last year. Rich Kruger, a long-time Exxon executive, became CEO in the spring. He’s scrapping the chief sustainability officer job, and in mid-August Mr. Kruger said Suncor had put a “disproportionate emphasis on the longer-term energy transition.” His focus is fossil-fuel profits.
This sparked a round of outrage – but there shouldn’t be a shock. Oil companies are oil companies. People shouldn’t hope they’ll become renewable energy companies. Forget about that long-ago marketing effort by BP to advertise itself as “beyond petroleum.”
The oil industry has gone through phases in its approach to global warming. Trying to be greener was one. Before that, it sowed skepticism. Exxon worked to cast doubt on climate science, even as it had clear indications it was happening. The journal Science looked back in January at internal calculations Exxon made about the trajectory of climate heating. The study concluded that Exxon’s scientists, going back to 1977, accurately predicted rising temperatures. The existence of these secret forecasts emerged in 2015.
Oil companies no longer outwardly battle the validity of climate science, as the world is lashed by record heat, floods and wildfires, and instead have shifted strategies. This includes a promise of net-zero greenhouse-gas emissions by 2050 – pledged by Exxon, Suncor and the rest of the oil sands companies, and many others – but the same oil producers stoke wariness over the need to rapidly get off fossil fuels.
In May, Exxon said net zero by 2050 was “highly unlikely” because societies would not “accept the degradation in global standard of living required” to reach the goal. Exxon used to undermine climate science. Now it’s a sort of threat, that leaving fossil fuels behind will lead to widespread penury.
Suncor last month made a similar claim in its annual climate report, as it presented several future scenarios. In one, where heating is contained to 1.8 degrees Celsius, Suncor warned of the “enormous cost” of change. It ignored the Paris Agreement goal of limiting heating to 1.5 C and cited a “free markets” scenario where fossil fuels thrive and heating hits 2.4 C. Suncor didn’t mention such a future – heating at double the current level – would be calamitous for everyone.
What all this means is moral suasion and talk of ESG will not be enough to drive down emissions from fossil-fuel production. Government action, whether it be carbon pricing or regulations, is necessary to propel change.
Regulations are already working, in particular to reduce potent methane emissions. As this space showed in May, total oil and gas emissions in Canada peaked eight years ago and have since fallen 7 per cent, as output of fossil fuels rose 16 per cent.
The larger goal is to cut oil and gas emissions by about 40 per cent by 2030. It’s an ambitious target. The federal Liberals have proposed an industry-specific emissions cap but it’s unclear how it would work, and the Liberals have also said they would not force a reduction in oil and gas production absent lower demand for the products.
This space has argued for a stronger use of the carbon tax. Look at Suncor. Even with the rising carbon tax, Suncor estimates its carbon costs at just $1.70 a barrel, from now through the early 2030s. The fiscal pinch has to be stiffer to push companies to speed efforts to further cut emissions.
Meanwhile, the oil sands companies are working on a $16.5-billion carbon capture project to help cut about one-quarter of their emissions by 2030. That’s welcome, but the companies want taxpayers to pay for the majority of the project. Some public funding is reasonable – Ottawa is working on but hasn’t finalized a major tax credit, and Alberta is doing the same. But the size of the ask is aggressive, given that Canadian Natural Resources and Suncor, the two largest firms, together booked profits of $20-billion last year.
Lowering emissions in the oil sands through carbon pricing and smart regulations is essential. But it’s only part of what needs to be changed. As long as people keep buying fossil fuels, climate-heating emissions will continue. The real solution is reducing demand – and that’s where governments may be able to make the biggest difference.