Rod Nickel

WINNIPEG (Reuters) – Canada’s oil companies are under new pressure by Justin Trudeau, Prime Minister of Canada, to cut emissions within three years. This is a drastic acceleration that at least one company believes looks impossible.

Suncor Energy (NYSE):, the 2nd-largest Canadian crude oil producer, stated that it will continue to reduce emissions until 2030 rather than 2025, which is what the Canadian government requires.

Suncor’s chief sustainability officer Martha Hall Findlay told Reuters that “Honestly, 2025 was going to be hard.” That’s not the number that we used. It’s the number used by federal agencies.”

Trudeau’s advanced timetable for cuts to the oil sector’s total emissions by 2025, announced last month https://www.reuters.com/world/americas/trudeau-pledges-cut-canadas-oil-emissions-even-country-keeps-pumping-more-2021-09-13, comes as the oil sector has focused on longer-term targets, and on reducing emissions on a per-barrel basis.

That is very light for an oil sands firm. That’s tomorrow,” said Kevin Birn, chief analyst of Canadian oil markets at consultancy IHS Markit, of Trudeau’s demand. “They’re a very hard ship to turn because they have so much emissions.”

Ottawa previously had an objective to reduce national emissions by 40% by 2030. However, it didn’t include the oil industry. Canada’s crude oil industry produces some of the most high-emission barrels in the world.

Suncor, the largest producer, has a May plan to reduce total emissions. It relies heavily on energy efficiency, carbon capture and greener power sources.

Trudeau’s demand for 2025 was a shock.

Hall Findlay explained that he had been in contact with the feds for a long time before last spring’s budget, which was long before this election campaign. “2025 has not been mentioned in any of these discussions. Suncor is laser-focused upon 2030.

Cenovus Energy (NYSE 🙂 and Canadian Natural Resources Ltd (NYSE 🙂 have been working for months on their plans to announce their emission targets for the year.

Cenovus plans to reduce emissions per barrel and absolute, according to Reg Curren (spokesman), but it is not clear if the cuts will occur before 2025.

Canadian Natural, a spokesperson for the company Julie Woo stated that they are working together to achieve “mid-term goals” related to Pathways carbon capture project. They will not address Trudeau’s 2025 requirements, she said.

RBC Economics stated that Canada would require businesses and governments to invest C$60 billion per year to reduce its emissions by 75% over the next 30 years.

Canadian producers can expect to announce big quarterly profits as a result of the soaring oil prices. Although the priority of these companies has been to repay debt and return cash to investors; Trudeau would prefer that producers spend some profit on reducing greenhouse gas emissions.

Just ahead of the United Nations Climate Change Conference, which takes place in Glasgow (Scotland), on Tuesday, he plans to reveal his new cabinet.

Joanna Sivasankaran spoke on behalf of the Canadian environment department. She stated that Ottawa is committed to achieving ambitious reductions in oil and gas emissions, which will make a significant contribution to Canada’s climate goals.

Trudeau’s ambitious 2025 goal seems “ambitious” but it is more achievable to see the sector cut its emissions significantly by a decade later. Steve MacDonald (CEO of Emissions Reduction Alberta), an independent corporation funded by Alberta government, stated that the province has given the company an arm-length grant.

It’s ‘Easier Than Anyone Thinks’

Some conventional oil producers have already shown that deep emission cuts can be achieved. However, they are using techniques Canadian Natural and Cenovus may not widely use. Both the companies make crude oil from conventional or oil sands methods.

Yangarra Resources is a producer of 10,000 barrels oil equivalent daily and claims that it will reduce its total emissions by 47% (or 50,000 tonnes) by 2022. The company plans to power 80 pumpsjacks using electricity from Alberta’s grid. It also intends to replace older instruments which emit large amounts of methane.

Yangarra CEO Jim Evaskevich stated that “cutting carbon in the oil field is going to prove much easier than anybody thinks.” All of the economic benefits that we’re implementing are incredible.

Evaskevich stated that Yangarra is likely to earn substantial credits in the next year, which Yangarra could sell to larger emitters. However, Yangarra has yet to determine its monetary value.

Cenovus generates 18% from traditional operations and has reduced its methane emissions nearly by half since 2015, according to a spokesperson. Woo stated that Canadian Natural has reduced methane emissions 28% in 2016

MacDonald stated that “they’re large, big operations and can’t pivot quite so quickly.” They are still moving in the right areas, however.

Oil sands production requires more energy than traditional methane emission reductions.

Producers of oil sands are counting on increased carbon capture and storage facilities to reduce emissions. But the economics require government funding https://www.reuters.com/world/americas/exclusive-oil-companies-ask-canada-pay-75-carbon-capture-facilities-2021-10-07, said Greg McNab, a partner at the Baker McKenzie law firm. He said that renewable energy may be the fastest way to reduce emissions.