Tar Sands/Oil Sands Firms Drop $1.8B in Environmental Projects in COVID Cost Cuts
Three of Canada’s top tar sands/oil sands companies have dropped C$1.8 billion in environmental projects as part of their cost-cutting during the pandemic, prompting at least one major investment fund to declare itself vindicated for divesting from the companies last year.
The lion’s share of the cuts came from Suncor Energy, which “shelved a $300-million wind power project and a $1.4-billion cogeneration plan, which would replace coke-fired boilers with natural gas units at its base operations, reducing carbon emissions and other pollutants,” Reuters reports.
Cenovus Energy, which committed to an “aspirational” net-zero target for 2050 earlier this year, “cut its technology budget by 78%, or $137.5 million, saying in a filing it was only advancing select initiatives that had both cost and environmental benefits. The budget included work on green initiatives such as solvent-aided extraction and a new design for oil sands facilities.” Canadian Natural Resources Ltd. dropped a $46-million pilot project to reduce emissions in bitumen extraction.
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“This has strengthened our view on the matter, that our decision that we took (to exit the tar sands/oil sands) was correct,” said Jeanett Bergan, head of responsible investments at Kommunal Landspensjonskasse, Norway’s biggest pension fund. In October 2019, KLP announced it had sold off US$58 million in stocks and bonds in Canadian tar sands/oil sands companies and declared it wouldn’t back companies that draw more than 5% of their revenue from bitumen production.
Suncor Vice President of Sustainability Jon Mitchell said the “deferral and delay in some of those projects does not diminish their importance,” but explained that the company’s green investments depend on the health of its core business of crude oil extraction, Reuters says. A Cenovus spokesperson said the company’s commitment to its longer-term target was unchanged.
But those promises don’t show up in the industry’s actual performance. Citing data released last month by Rystad Energy, Reuters says Canadian fossils have “the highest upstream emissions intensity among major world oil and gas producers, at 39 kilograms per barrel of oil equivalent, more than triple that of the United States.” Moreover, “the picture in Canada contrasts with Europe, where the biggest oil and gas companies have diverted a larger share of their cash to green energy, even through the outbreak,” the news agency adds.
“Canada’s oil firms have invested in recent years to reduce their emissions intensity,” a measure of greenhouse gases released per barrel of oil produced. “But Western Canada’s overall emissions increased 14% from 2005 to 2018, as oil output doubled.”