CEOs from Canada’s largest oil sands companies have expressed support for a carbon tax but said that they strongly oppose the proposed federal cap on oil and gas emissions during a testimony to lawmakers in Ottawa on Thursday.
Representatives from Suncor Energy, Imperial Oil, Cenovus Energy, Enbridge, and Shell attended a video conference with Canada’s House of Commons committee to discuss their strategies for reducing emissions.
The Canadian Government unveiled the Regulatory Framework for an Oil and Gas Sector Greenhouse Gas Emissions Cap on December 7, 2023. This framework aims to introduce a cap-and-trade system under the Canadian Environmental Protection Act, which would set a controlled limit on emissions from the oil and gas sector.
The government states that these regulations are designed to ensure a gradual reduction in greenhouse gas (GHG) emissions from the upstream and liquefied natural gas (LNG) subsectors, with a goal of achieving net-zero emissions by 2050. As it is, greenhouse gas emissions are on a rise in Canada.
Rich Kruger, CEO of Suncor, emphasized that his company, along with others, is investing significant funds into projects aimed at transitioning to alternative fuels and generating low-carbon power. These efforts include investments in energy efficiency, the construction and operation of renewable fuels facilities, testing emission-reducing technologies for in situ extraction, and a collaborative carbon capture and sequestration initiative known as the oil sands Pathways Alliance.
“I support a price on carbon across the economy because I believe it will drive innovation and economic incentives, helping to improve our business,” Kruger stated. “My main concern is that a cap on emissions, as currently proposed, could effectively limit production,” he added.
Canada, the fourth-largest oil producer in the world, largely sources its five million barrels per day of production from the tar sands in northern Alberta. Suncor, Imperial, and Cenovus, all members of the Pathways Alliance, plan to invest $16.5 billion in a carbon capture and storage project.
Despite these plans, progress has been slow, and the consortium is seeking additional public funding from both federal and provincial governments before finalizing their investment decision.
Canadian oil sands contain a mixture of sand, water, clay, and bitumen, a heavy and viscous form of crude oil. Located primarily in Alberta, they are one of the world’s largest reserves of crude oil. Extraction and processing of bitumen from oil sands are energy-intensive, resulting in significant greenhouse gas emissions.
Research conducted by the Canadian think tank Pembina Institute indicates that oil sands bitumen is among the most carbon-intensive materials in the world to produce and refine. “It is now time for oil sands companies to accept the significant level of support on offer,” the institute stated.
The ongoing debate highlights the challenges of balancing economic growth with environmental sustainability, as both the industry and the government work towards finding a viable solution.