A new report released Friday from the Pembina Institute is casting doubt on the pledges of Canada’s major oilsands companies to reduce their greenhouse gas emissions.
The latest analysis examines the emissions reduction pledges of the Pathways Alliance – an industry group formed over a year ago that represents 95 per cent of Canadas oilsands production.
In mid 2021, Pathways announced plans to get to net-zero greenhouse gas emissions by 2050, including a milestones emissions reduction target by 2030.
Jan Gorski, director of the Pembina Institute’s oil and gas program, says that despite raking in historic profits in 2022, companies have spent much of their revenue on repurchases and dividend payments instead of climate action.
“Our research shows oilsands companies have all the funds and technology at their disposal to get started now,” said Gorski. “We haven’t yet seen the detailed plans for how they’re going to achieve their 22 megatonnes annually of reductions.
“Those that make rapid and deep cuts to their emissions will be best-placed to compete in a near future where governments and consumers will have increasingly high expectations about the emissions present in every supply chain.”
The institute examined all of the decarbonization promises made by each company in the Pathways Alliance and compared them against actions the companies are currently taking to reduce their carbon footprint.
The five companies in the alliance are:
Canadian Natural Resources Ltd.
Cenovus Energy Inc.
Imperial Oil Ltd.
MEG Energy Corp.
Suncor Energy Inc.
The report goes on to identify that oilsands profits from these five companies are up 349 per cent collectively from the first quarter of 2021 to the second quarter of 2022.
At the same time, profits reinvested into new production or decarbonization measures are down from 100 per cent of capital expenditure as percentage of cash flow in 2020 to 39 per cent in 2022.
The Pathways Alliance however argued in a report that the Pembina Institute omitted the year 2020 on their chart when profits of the participating companies were in negative territory.
“While the pledges and promises of the Pathways Alliance may give the impression that action on this front is imminent or already underway, our analysis her demonstrates that oilsands companies have yet to make the necessary investment decisions – or even release sufficiently detail project plans, with information about allocation of capital expenditure, timelines and individual company GHG targets – to provide proper reassurance about the like pace of decarbonization in the sector.”
“SIGNIFICANT WORK IS WELL UNDERWAY”: PATHWAYS ALLIANCE
Kendall Dilling, Pathways Alliance president, said “significant work is well underway” toward final investment decisions on a wide range of emissions reduction projects.
Dilling added that expectations by the Pembina Institute that Pathways Alliance companies ‘make final investment decisions on these multi-billion-dollar projects before governments have finalized regulatory frameworks to support them are unrealistic.’
In a statement to CTV News, Dilling wrote:
“Pathways Alliance acknowledges and supports the desire to see significant emissions reductions from all Canadian industries and recognizes it has a major role to play in helping Canada meet its climate goals,” said Dilling.
“We have set ambitious targets for the oil sands sector to achieve a 22 million tonne annual reduction by 2030, with a goal of reaching net zero by 2050.
“We are progressing with our ambitious emissions reduction plans as quickly as we can while we pursue the economic and regulatory certainty from governments that will enable us to deploy billions of dollars in capital between now and 2030 and beyond to achieve our 2050 net zero goal.
“These projects and technologies to reduce emissions will be developed and financed over a period of 30 years, during which we will be subject to fluctuating commodity price cycles, such as these.
“We also can’t ignore that decarbonization projects in Canada are competing for capital with similar projects in the United States, which now has a significantly more favourable investment climate thanks to the Inflation Reduction Act.
“We remain confident that continued collaboration with governments will enable a fiscal and policy framework that is required for our industry to proceed to final investment decisions.”
Dilling also mentioned several steps currently underway to work towards climate goals including:
“We have submitted a comprehensive application to the Government of Alberta for underground storage (pore) space for our proposal to construct one of the world’s largest carbon capture and storage (CCS) projects.
“Results of the competition are expected in October.
“Engineering studies on our foundational CCS project – including specific capture facilities – are under way.
“We continue to work with governments and provide regular input towards a realistic and achievable plan to significantly reduce emissions from our operations and protect jobs and investment.
“We have pooled 200 of the brightest scientific and professional minds of our six member companies to work on the Pathways Alliance plan.
“Our experts are studying and working on more than 80 technologies that could be deployed to help reduce emissions in further phases of our plan.
“We have integrated Canada’s Oil Sands Innovation Alliance (COSIA) and the Oil Sands Community Alliance (OSCA) into our organization to strengthen our efforts to reduce our environmental footprint, while ensuring we continue to contribute to communities and produce the world’s preferred barrel of oil.
“We have begun early engagement with more than 20 Indigenous and Metis communities along our proposed CO2 transportation and storage network and will continue meaningful engagement throughout the full cycle of our operations.”
Pathways’ plan to achieve net zero is primarily based on carbon capture, utilization and storage facilities (CCUS), which force carbon dioxide emissions in the ground and keep them out of the atmosphere.
Officials with the collective note that plans currently in the works include a 400-kilometre pipeline that will carry CO2 from Fort McMurray to Cold Lake.
However, the report from Pembina Institute found that no current Pathways member has announced any new CCUS projects at any facility or outlined how much it plans to invest in carbon capture.
The report’s only instance of investment in absolute greenhouse gas reductions comes from Suncor, which has currently allocated 10 per cent of its 2021 to 2025 capital budget to expanding its low carbon businesses.
Suncor is targeting an absolute emissions reduction goal of 10 megatonnes of CO2 by 2030 with much of that investment going toward the replacement of three petroleum coke-fired boilers with two natural gas cogeneration units.
More funds are also being allocated to developing renewable electricity from a wind farm.
Gorski adds that reductions from these projects still fall outside of direct emissions from Suncor’s oilsands facilities.
“A good chunk of the projects moving forward, while they do reduce emissions, don’t actually reduce those direct emissions and that’s one of the challenging things we’re seeing,” said Gorski .
“The world is heading in a different direction and so investing in these decarbonisation projects is really an opportunity to create new jobs within the sector and that’s another reason why this is so critical.”