Canada’s oil companies are falling short on climate

In the nine years since late 2015, when Justin Trudeau became prime minister and countries around the world agreed to a landmark climate treaty in Paris, Canada’s production of oil and natural gas has continually climbed higher to new records.
Oil production this year is set to average more than five-million barrels a day for the first time, according to federal data. Natural gas output this year is also higher than it’s ever been. Together, Canada’s production of fossil fuels is up 26 per cent since 2015.
As output rose, the industry over several years has doled out tens of billions in profits to investors. But it is not delivering on its pledges to cut its voluminous greenhouse gas emissions. Among the large oil sands producers, an analysis this month from the Pembina Institute, a climate policy think tank, said there was no indication of emissions spending that’s moved past the early stages of project development.
The oil and gas sector accounts for almost a third of Canada’s emissions and, according to the latest estimates, the sector’s emissions rose – not fell – last year. Canada has pledged to cut emissions by 40 per cent by 2030 from 2005 as part of the Paris Agreement. The country is not living up to its treaty obligations. As of 2023, at the halfway mark between the Paris Agreement’s ratification and the initial 2030 target, emissions are down 8 per cent.
For Canada to make significantly more progress, the oil industry must deliver on its promises. Instead, it appears to be moving slowly, and awaiting a possible change in government. The federal Liberals are poised to institute a cap on oil and gas industry emissions, but such a policy will likely be scrapped by a Conservative government, if opinion polling holds through to an election in the coming year.
Canada has made progress on emissions. Excluding the oil industry, the country’s emissions are down 15 per cent since 2005. But in the oil and gas business, they’re up 12 per cent.
There’s no shortage of pledges from industry. In 2021, the major oil sands companies announced a goal to reach net zero emission by 2050, and sketched out a plan of how it would happen. In 2022, the group said it was central to their business strategy, declaring that they “understand that we don’t have a long-term future in this business if we don’t address our greenhouse-gas emissions,” and “we have made that fundamental mindset shift that our future is a carbon-free production of our product.” They planned $24-billion in climate spending to 2030, with two-thirds going to emerging technology of carbon capture.
Meanwhile, Canadian Natural Resources and Suncor, the top two producers, have returned $19.6-billion to their investors in dividends and share buybacks, since just the start of last year.
There is also a massive amount of public subsidies on offer: Ottawa and Alberta have put tax credits for carbon capture on the table worth roughly $15-billion for all industries but targeted at fossil fuels, the country’s leading export.
Yet the oil sands group’s climate spending remains provisional. In March, they filed regulatory documents in Alberta for their carbon-capture project but haven’t disclosed spending this year. And following new rules on greenwashing in the Competition Act, the oil sands group and companies such as Canadian Natural and Suncor have hidden the bulk of their previous climate publications.
Industry needs to be pushed, this space has argued repeatedly, and early policy work has been successful. Federal and provincial rules to rein in methane emissions helped reduce total oil and gas emissions by 6 per cent as of 2022 from a peak in 2014. But record production last year outpaced such declines and industry emissions rose 1 per cent in 2023.
Change is possible. Canadian Natural Resources in late 2022, citing support from the federal and Alberta governments, set a target to cut emissions by 40 per cent by 2035. That’s a big number and would go a long way to helping Canada deliver on its climate promises.
But the oil industry does not have an inspiring history on the environment, from Exxon’s decades of climate denial to the many old oil and gas wells on the Prairies that have not been cleaned up. Last week, Alberta Premier Danielle Smith talked of using public money to address the industry’s messy legacy.
This has to change. The oil industry must heed its own declarations about a carbon-free future.