Canadian oil sand giants resist proposed emissions cap

In a combative hearing before the House of Commons committee in Ottawa on Thursday, the chief executives of Suncor Energy, Imperial Oil, Cenovus Energy, Enbridge, and Shell pushed back against the Canadian government’s plan to introduce a cap on oil and gas emissions. The proposed legislation has faced stiff opposition from producers, who argue that the country’s regulatory framework, including a price on carbon, already provides sufficient incentives to curb emissions.

“I do support a price on carbon across the economy because I believe that will drive the innovation, the economic incentives on all of our part to continue to improve our business,” stated Suncor CEO Rich Kruger. “I fundamentally worry that a cap on emissions, the way it’s constructed, will be a cap on production.”

Kruger’s concerns were echoed by his counterparts at Imperial Oil and Cenovus Energy. “Canada has some of the most stringent regulatory requirements of any place in the world, which is why when it comes to something like an emissions cap, I think it’s unnecessary,” said Imperial CEO Brad Corson. “There’s plenty of other vehicles and requirements in place.”

The oil and gas sector accounts for more than a quarter of Canada’s total emissions, making it the highest-polluting industry in the country. In 2022, as oil prices soared amid Russia’s invasion of Ukraine, the sector reaped record profits, prompting calls from climate campaigners for companies to invest more in decarbonization efforts.

Climate advocates argued that the oil sand companies lack comprehensive strategies to reduce their carbon footprint despite repeated promises to do so. “Today’s testimony is a reminder that additional regulation is urgently needed if Canada’s oil and gas sector is going to meaningfully reduce its emissions,” said Marie-Christine Bouchard, oil and gas program director at the Pembina Institute.

The CEOs, however, highlighted their involvement in the Pathways Alliance, a group of oil sands producers proposing to invest C USD 16 billion (USD 11.70 billion) in a carbon capture and storage (CCS) project. However, progress has been slow, and the group is seeking more public funding from federal and provincial governments before making a final investment decision.

“Before we can put shovels in the ground, we need many government permits and approvals and we need regulatory certainty and co-investment commitments,” said Cenovus CEO Jon McKenzie.

The executives voiced their support for maintaining a price on carbon pollution, which would help provide a revenue stream for the Pathways’ sequestered emissions. However, McKenzie emphasised that the carbon price needed to be universally applied and should not target just one industry.

The issue of carbon pricing has become a political hot potato, with federal opposition leader Pierre Poilievre vowing to scrap Canada’s consumer carbon tax if elected, prompting questions over the future of the industrial carbon price.

The session was at times contentious, with some lawmakers criticising the CEOs for the high emissions intensity of their crude. Laurel Collins of the left-leaning New Democratic Party asked Suncor’s Kruger how he slept at night given the threat of climate change, to which Kruger responded, “I appreciate your desire to create headlines, to point fingers that attempt to villainize the industry.”

As the debate over Canada’s energy policy and climate action intensifies, the oil sands companies’ resistance to the proposed emissions cap highlights the challenges the government faces in balancing economic interests with environmental imperatives.