Canada, US at odds on GHG emission plans

Surveys show Canadian oil producers outpace US counterparts in corporate plans to lower GHG emissions, including methane levels

Gary Park

for Petroleum News

Too little, too late is likely the best anyone can say about two studies of Canadian petroleum producers that shows they are more committed than their U.S. counterparts to reducing greenhouse gas emissions.

If that message had been delivered a few years ago it might have helped spruce up the image of the oil sands sector, but it’s unlikely to put even the slightest dent in the decision by U.S. President Joe Biden to sink the Keystone XL pipeline in the name of demonstrating his resolve to tackle climate change.

The findings flow from separate surveys by Raymond James and the Federal Reserve Bank of Dallas that show sharply contrasting industry plans on either side of the Canada-U.S. border to reduce GHGs.

The financial services firm derived its findings from interviews with 56 executives of public and private Canadian petroleum producers, matching the research by the Dallas bank.

Only 21% of American producers said their companies have plans to lower emissions, compared to 84% in Canada.

In the U.S. less than 40% of producers said they were targeting reductions in emissions of methane, rated as one of the most toxic greenhouse gases, compared with 77% in Canada.

Expectations by 2025

Two-thirds of the American producers who responded to the survey were either not aware of their corporate plans or admitted they did not have a plan to lower their emissions intensity.

“I couldn’t believe it,” he said. “It’s like, ‘Where have you guys been for the last few years?’”

McCrea said investors deserved to know about the clear divergence between the U.S. and Canadian entities, adding the gap reflected the lack of an imperative during the Trump administration for firms to lower emissions, while Canadian companies were faced with an increasingly tougher set of rules and regulations, along with a schedule for raising carbon taxes.

Under that pressure, leading oil sands producers such as Cenovus Energy, Canadian Natural Resources and MEG Energy have all effectively signed on to the 2050 target, suggesting they could even beat that deadline.

Ben Brunnen, a vice president of the Canadian Association of Petroleum Producers, said the Raymond James numbers demonstrate a sharp discrepancy between the two countries, while Chris Severson-Baker, Alberta director of the non-partisan Pembina Institute, said the different mindset of Canadian companies is a direct result of the Canadian government having a climate plan.

Better story for investors

McCrea agreed that Canadian producers realize they must “decarbonize” to rate consideration from investors who are increasingly focused on environmental, social and governance (ESG) performance.

In 2018, the oil and gas industry accounted for 26% of all Canadian emissions, up from 22% in 2005, the result of rapid growth in oil sands output.

But a study last year by the consulting firm IHS Markit showed emissions per barrel from the oil sands were lowered by 2% in 2018, posting an improvement of 20% in the previous decade.

McCrea said the survey shows Canadian management teams “have the right mind frame now. They can’t change things overnight, but they want to change.”