Companies including Suncor Energy Inc., the largest oil sands producer, have already released plans to reach net-zero emissions over the long run. The announcement “is not that new in aggregate (on the way there independently), but is new as we think about the collaborative effort and the leverage that the information sharing will bring to the group,” National Bank Financial analyst Travis Wood said in a note.
The oil sands sector is particularly carbon-intensive because of the energy required to extract bitumen from vast open-pit mines or by injecting steam into the ground to force hydrocarbons to the surface. In recent years, international funds including Norway’s sovereign wealth fund and the New York state pension fund have sold oil-sands holdings or indicated they will do so.
International oil companies including Royal Dutch Shell Plc and ConocoPhillips have also divested their Canadian oil-sands assets, often to focus on less carbon-intensive areas such as natural gas.
The new initiative — backed by Canadian Natural Resources Ltd., Cenovus Energy Inc., Imperial Oil Ltd., MEG Energy Corp. and Suncor — envisages several measures, including the development of a pipeline connecting the oil sands centers of Fort McMurray and Cold Lake in Alberta with a hub for capturing and storing carbon emissions.
Capturing and storing carbon offers a way to potentially continue operating while helping Canada meet its commitments under the Paris climate accord. But it will need significant public money.
“The Pathways initiative is ambitious and will require significant investment on the part of both industry and government to advance the research and development of new and emerging technologies,” the companies said in a statement.
“We see this announcement as a win for the energy sector and expect that the already ESG-friendly Canadian energy industry will be the largest contributor to Canada reaching its net-zero targets over time,” Wood wrote.
Prime Minister Justin Trudeau has pledged that Canada will reduce its emissions by 40% to 45% below 2005 levels by 2030, an acceleration of his climate policy meant to improve the country’s poor-performer status among leading economies and match new targets set by the U.S. and other allies.