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Chasing green: Canada’s leading oil producers playing catchup
Gary Park for Petroleum News
Husky Energy, controlled by Hong Kong multi-billionaire Li Ka-shing, is the latest of Canada’s major oil producers to climb on the green bandwagon.
The company is now linking its output of greenhouse gas emissions to compensation as part of its strategy to reduce carbon by 25% over the next five years.
The move comes at a time when fossil-fuel producers around the globe are competing for increasingly tight capital dollars as investors cave in to pressures from environmental, social and government organizations.
It coincides with the release in Canada of a multi-industry report calling for an “integrated climate and natural resources strategy that reconciles climate objectives and the export of low-emissions resource commodities,” while matching the evolving objectives of Prime Minister Justin Trudeau’s administration to adopt a national target of net-zero emissions by 2050.
Likely more than any other sector of the oil industry, the oil sands have been targeted as the biggest enemy of climate change, despite major successes in lowering GHG intensity (per barrel output) - progress that is brushed off by pension funds, insurers and investment firms.
“It’s important that the entire Canadian industry shows leadership because we’re out in a world where we are fighting for capital and we need to show that we know how to manage these risks - not just as Husky but as an industry,” Janet Annesley, a Husky senior vice president, told the Calgary Herald.
Calgary-based Canadian Natural Resources took an early step to link compensation to carbon performance in 2013, while Royal Dutch Shell and Spain’s Repsol both base about 10% of executive compensation on their carbon emissions results.
Coalition report In late August, a report by a coalition of 35 business, labor and Indigenous groups suggested that policy changes in Canada’s resource industries (forestry, energy, mining and manufacturing) could create up to 2.6 million jobs over five to 20 years and expand the economy by 17%.
The report said that “few other realistic growth opportunities exist” that could come close to the projected employment gains, adding: “Canada has an unmatched array of natural resources ... that can drive national prosperity, while simultaneously making Canada a world leader in emissions reduction technology and action on climate change.”
The coalition has submitted its findings to the Canadian government.
“I don’t see green recovery as inconsistent in any way with our report,” said coalition organizer Stewart Muir. “We really have to go in this direction.”
In case there was any question about the Canadian government’s resolve, newly appointed Finance Minister Chrystia Freeland said: “All Canadians understand that the restart of our economy needs to be green. It also needs to be inclusive. And we need to focus very much on jobs and growth.”
Call for new business strategies Scott Crockatt, a spokesman for the Business Council of Alberta, is among those who see no reason why Freeland’s stand is at odds with the future of resource development.
“Some of the biggest opportunities for reducing emissions come from the resource sector,” he said.
However, Alberta’s Energy Minister Sonya Savage said in a statement that Canada cannot turns its back on the oil and gas sector, “our largest and most valuable export industry” which contributed C$236 billion to the national Gross Domestic Product in the latest fiscal year, or 11.3% of the national economy.
Olaf Weber, a professor at the School of Environment, Enterprise and Development at the University of Waterloo in Ontario, argued that oil and gas companies need to set their sights well beyond just improving their environmental performance.
He said that rather than just tying compensation to lower carbon emissions, petroleum companies should be focused on new business strategies, such as investing in renewable.
- GARY PARK
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