We have voluntarily reported on our progress annually since 1995. And progress has been made. We have invested in technology, improved energy efficiency and reduced GHG emissions intensity at our oil sands plant by 45 percent compared to 1990 levels. But we know much more can—and must—be done as our absolute emissions continue to grow.
Suncor believes that our first lever to reduce GHG emissions is to improve reliability and energy efficiency across our operations. Our operational excellence focus launched in 2008 is aimed at revitalizing Suncor's vision to do just that.
Suncor continues to invest in renewable energy sources and to collaboratively advance new emissions-reducing technologies, including carbon capture and storage. As a responsible energy developer, we also continue to work with governments and other stakeholders on emerging public policy solutions aimed at finding the most effective ways to reduce global GHG emissions.
In 2009, we are reviewing our GHG strategy in light of stakeholder concerns and emerging government policies. The revised strategy will help Suncor identify and implement future levers and actions to address the future stakeholder concerns and policy requirements.
For the first time, we are making our annual Climate Change Report part of our broader Report on Sustainability. In this section, we provide an overview of our performance in 2008 as well as our major challenges and priorities going forward. We also include details on the performance of each of Suncor's business units.
Our Performance
Both absolute GHG emissions and emissions intensity decreased in 2008 as compared to previous years. These decreases, however, did not contribute to improved performance. They are the result of extended outages of one of our oil sands hydrotreating units, which resulted in a larger amount of sour crude oil product being produced and thus fewer GHGs emitted. As the result of unexpected shutdowns in 2008, average production rates were also well below Suncor's existing capacity. The closer our plant runs to capacity, the more efficient it becomes as economies of scale take effect. Even at lower production rates, much of the plant infrastructure must keep running, drawing energy without producing as much finished product—so per-barrel GHG emission rates go up.
By the first quarter of 2009, Suncor's renewed focus on operational excellence had resulted in improved reliability and productivity. We plan to sustain this momentum, which should allow us to resume making emission intensity improvements. Suncor's decision in January 2009 to delay our major growth projects until economic conditions improve means our absolute GHG emissions will not grow as quickly as previously expected.
Looking Ahead
We remain committed to our seven-point climate change action plan. This plan calls on Suncor to manage our own emissions, develop renewable sources of energy, invest in environmental and economic research, use domestic and international offsets, collaborate on policy development, educate employees and the public, and measure and report our progress. We are proceeding on all those fronts.
At the same time, the global economic crisis that emerged in the fall of 2008, concurrent with a significant drop in commodity prices, forced Suncor to review and reassess its spending priorities.
Some difficult decisions had to be made. For example, we decided to delay construction of a proposed $120 million expansion of our ethanol production plant near Sarnia, Ontario. We also opted not to proceed at this time with a proposed joint venture with Lignol Innovations to construct an $80 million USD cellulosic ethanol plant in Colorado.
All the same, Suncor remains committed to pursuing a “parallel path” for energy development—building today's oil sands industry while also helping to bring along new sources of energy for tomorrow at a pace and scale that reflects our financial capacity.
Similarly, Suncor is moving on several fronts to advance new technologies to reduce GHG emissions. We continue to work with the Integrated CO2 Network (ICO2N) on industry efforts to improve the commercial viability of carbon capture and storage (CCS) technology. We are also a long-term partner in the Carbon Capture Project, which sees some of the world's leading energy companies and various governments collaborate on research to help make CCS a reality.
Suncor continues to invest in other technologies aimed at conserving energy and reducing GHG emissions. These include proposals to use gasification technology to turn petroleum coke into synthetic gas and investigate the potential for harnessing deep geothermal energy.
Suncor welcomes emerging efforts in Canada and the United States to develop more comprehensive energy and climate change policies. When it comes to climate change regulations, we continue to press for clarity and certainty (i.e. our investors want to know what the rules are up front), fairness and competitiveness (i.e. no one industry or region should be unfairly targeted or punished), and harmonization across jurisdictions to avoid overlap and inefficiencies.
Suncor sees emissions trading and other carbon pricing mechanisms as useful tools for achieving low cost GHG emission reductions. But we also believe that for climate change policy to be effective, it must accelerate the pace of development and deployment of new technologies that will transform how we produce and use energy. Cap and trade policies will not accomplish this. We need complementary policies and measures that will attract additional capital over the near to long term.
And when looking at the full life-cycle perspective, about 75 to 80 percent of the GHG emissions from any given barrel of oil occur when gasoline or diesel is combusted in vehicles. So we all have a role to play in reducing the GHG emissions.
Suncor is closely monitoring proposed initiatives by California and others to establish low carbon fuel standards. We are encouraged by crude oil life cycle assessment studies suggesting that on a “wells-to-wheels” basis, the carbon intensity of oil sands crude may not be significantly different from conventional crudes including offshore imports. Displacing emissions to other jurisdictions will not create a net benefit for the atmosphere and could compound energy security and social concerns associated with reliance on foreign imports.
