A hard night’s sleep wrestling oil and climate

This editorial was written and published by the Globe & Mail on June 15, 2024.

‘How do you sleep at night?” It was a rhetorical question, framed as a real one, from a politician to one of Canada’s top oil executives at a House of Commons committee earlier this month. NDP MP Laurel Collins said she was simply asking what people want to know, in the face of delayed climate action from Canada’s oil sector.

Suncor chief executive Rich Kruger said the question was designed “to create headlines, point fingers” and “villainize the industry.”

The question might have been rhetorical, and designed to create social-media content, but it did serve a useful purpose. The question illustrates a long-standing tension in this country, that some Canadians believe oil executives are a special type of bad actor.

It’s a deeply inconsistent position. Would an MP ask about the slumber of CEOs in sectors that are the voracious consumers of fossil fuel, or extracted critical minerals? Those who lead Canada’s aircraft or vehicle manufacturing companies, those who produce their wares using power from coal plants overseas, or artificial intelligence executives, whose companies’ computers could suck up more electrical power a few years from now than a rich developed country consumes?

Probably not.

But oil executives should get a higher level of scrutiny because of the global industry history of not acknowledging, or hiding, the truth of climate change. And Canadian oil sands producers have not fully explained how they’re going to live up to their net zero by 2050 promises, and have not yet invested the required billions of dollars.

Here’s where the frustration of progressive MPs becomes concrete. Everyone needs to be more fully committed if there’s going to be sustainable progress in Canada on climate.

Canada is one of the world’s largest oil producers, and a transition in a world hungry for energy is not going to happen overnight. The world devours copious amounts of crude every day. Canada’s oil industry, riding high commodity prices, is also a bright spot in a national economy where per person GDP is flailing.

The oil and natural gas sector remains Canada’s largest source of greenhouse gas emissions, making up 31 per cent of the total in 2022, the latest official numbers. That’s because of the sheer scale of the export-focused industry. From 1990 to 2022, Canadian crude production nearly tripled.

The oil sands in Northern Alberta also use far more energy and produce more emissions than other types of oil, hitting a record level of emissions in 2022. Oil output is at record highs and set to rise significantly. It makes it more challenging to further reduce emissions, even as industry has cut the volume of emissions per barrel. That’s a good trend but it’s not enough.

The debate is happening as a key climate policy is on the ropes. The consumer carbon tax – which could be a solid, serious thing – has been under constant attack by the Conservatives and debased by the Liberals’ political manoeuvring in Atlantic Canada.

The proposed emissions cap on oil and gas, which no other country has instituted, will be forever fought by any provincial government in Alberta.

One bright spot is industrial carbon pricing. It’s effective, generally uncontroversial, and should survive into the years ahead – no matter which political party forms government. But it needs to be strengthened and bolstered, alongside potential federal contracts for difference that aim to encourage industry investments. The combination would help all heavy emitters reduce or capture emissions, no matter what sector or region of the country they are in.

There will be the carrot of taxpayer subsidies alongside the stick of emissions rules, as well. Finance Minister Chrystia Freeland said this week a carbon capture tax credit, worth more than $10-billion, will soon be law and she wants to see “shovels in the ground.” The oil sands companies had previously said they want taxpayers to fund the majority of their carbon capture project and wouldn’t forge ahead until public money is locked in.

How does a Canada oil executive sleep at night? Probably at least as well as leaders in other industries that consume the world’s resources. But the alarm clock is ringing – for everyone.