Oil and gas executives argue emissions cap unnecessary in testimony before Commons committee

This article was written by Emma Graney and Marieke Walsh, and was published in the Globe & Mail on June 7, 2024.

The chief executives of Canada’s largest oil companies argued against a federal emissions cap Thursday when they appeared before a fiery parliamentary committee to explain what the sector is doing to reduce its environmental footprint.

The CEOs of Cenovus Energy Inc., Imperial Oil Ltd. and Suncor Energy Inc., the president and country chair of Shell Canada, and Enbridge Inc.’s president of gas distribution all appeared via videoconference. Their testimony followed a request from the House of Commons environment and sustainable development committee, spearheaded by its NDP member Laurel Collins, to face questions about plans to reduce emissions, and why Canadians are paying so much for gas at the pump despite record industry profits.

Suncor CEO Rich Kruger called the proposed federal emissions cap “unnecessary regulation,” but said he supports a price on carbon across Canada’s economy.

“I believe that will drive the innovation, the economic incentives on all of our part to continue to improve our businesses,” he said.

Cenovus CEO Jon McKenzie and Brad Corson, CEO of Imperial, agreed that a cap isn’t needed for the oil and gas sector, because significant regulatory incentives are already in place.

“I think you just need to judge us by our actions and you’ll see continued reductions in our emissions,” Mr. Corson said.

The oil and gas sector accounts for around 30 per cent of Canada’s total emissions and the latest federal figures, from 2022, show that pollution from the oil sands continues to climb. Emissions increased to 87 megatonnes that year, up from 86 Mt in 2021.

This was consistent with a steady march upward every year from six Mt of emissions in 2006, according to the National Inventory report released last month.

Marie-Christine Bouchard, the oil and gas program director at the Pembina Institute, an environmental think tank, said Thursday afternoon in an e-mail that oil and gas companies have a range of options available to them to reduce emissions, but they urgently need to take action.

“Today’s hearing is another reminder that additional regulation is needed to make sure those promised investments and projects finally start to move forward,” Ms. Bouchard said. “This is not only about our climate targets. It’s about futureproofing the sector to compete in a low-carbon world.”

Ms. Collins told The Globe and Mail that other sectors of Canada’s economy are working hard to reduce emissions, and so should oil and gas. She added that taxpayers should not be on the hook to make that happen when companies are making record profits.

To that, Mr. Kruger, Mr. McKenzie and Mr. Corson spoke to the cyclical nature of oil and gas economics. Mr. Corson, for example, acknowledged that while 2022 was his company’s most profitable, 2020 was its least profitable when it reported a net loss of more than $1.8billion.

Canada’s major oil sands companies, through a group called the Pathways Alliance, have pledged to bring emissions from production to net-zero by 2050, partly by building a massive carbon-capture project. Engineering work is under way, but no final investment decisions have been made.

“Decarbonization helps everybody and that’s what we’re focused on,” Mr. Corson said.

The project will help Imperial reach its long-term goal of net zero by 2050, he said, while continuing to produce oil, thereby boosting Canada’s economy.

“When the oil industry is successful, is profitable, then everybody wins,” he said.

While individual companies are pursuing other emissions-reducing technologies at their operations, such as using solvents instead of steam and using new in-pit extraction processes, a 2022 analysis by the Pembina Institute found that Canadian oil sands companies have done little to follow through on their public pledges to reduce their greenhouse gas emissions.

And a study from Britain-based climate think tank InfluenceMap, released Wednesday, said the Pathways Alliance is actually blocking climate action.

It found that Pathways has given oil and gas companies a vehicle to brand themselves as climate-conscious entities as a cover to undermine climate policy by not supporting a federal emissions cap, asking for exemptions under Ottawa’s proposed clean electricity regulations and attempting to weaken oil and gas sector methane regulations.

While individual companies are pursuing other emissions-reducing technologies at their operations, such as using solvents instead of steam and using new in-pit extraction processes, a 2022 analysis by the Pembina Institute found that Canadian oil sands companies have done little to follow through on their public pledges to reduce their greenhouse gas emissions.