Strategy and scenario planning
Climate change is a complex challenge and we are committed to doing our part to limit global temperature rise to less than 2°C. We know that to stay within these global limits, the world needs to reach net-zero emissions by 2050 or sooner.
As an energy company for the future, our strategy charts a path to contribute to a net-zero world by transforming the emissions footprint of our core business while also expanding our low-emissions businesses and working with our customers, governments and partners to realize our shared climate objectives. We are building on a strong foundation. Through our investments in low-carbon power, renewable fuels and electric charging stations, we have already helped our customers reduce their emissions by 3.5 Mt in 2020 and our new target commits us to going even further.
We understand that achieving our goals is only possible through sound decision-making processes. Over the last year, we’ve built on our track record of success to develop our new strategic objectives. Our strategy firmly embeds climate action into our business.
Scenario planning and integration
We use three energy future scenarios to 2050 and a 2°C scenario to 2100 to test and assess the resilience of our business strategy against inherent uncertainty. All scenarios are developed using distinct, challenging, relevant and plausible world trajectories. The three energy future scenarios to 2050 use variables adjusted in a consistent manner. Some of the aspects we consider in our scenario development include demographics, economics, environment, geopolitics, legal, social and cultural, and technology. Our scenarios are used annually by the CEO, the executive leadership team and the Board of Directors to assess business and growth strategy and identify alternative strategic directions. The scenarios are also used by internal teams to evaluate projects and opportunities. This process continues to be a useful tool for stress-testing our business on several key dimensions, including climate risk.
Suncor’s 2°C scenario, developed in 2019 with IHS Markit* is informing our long-term business planning and corporate strategy and allows us to understand what a pathway could entail to keep global temperatures from rising 2°C or less, by 2100 compared with pre-industrial levels.
- Peak emissions are reached following a combination of cost and generational pressures, technological innovation, and political unity to change the trajectory of GHG emissions.
- Aggressive emission reductions in all sectors, and solutions to remove GHGs from the atmosphere are required to reduce the total concentration of CO2 by 2100.
- An international alliance with a shared 2°C ambition, along with transparent collaboration in technology, trade and environmental approaches is established.
- A broad-based price on carbon throughout the economy is required to reduce consumption and incent the adoption and improvement of low-GHG technology.
- In conjunction with carbon pricing, governments implement market-based solutions including open carbon markets to buy, sell and trade offsets across a vast economy.
Revolutionary change in social and political attitudes towards energy, climate and the environment.
- COVID-19 has a fundamental impact on the world that alters institutional and lifestyle choices, accelerating the energy transition.
- Strong behavioral and attitudinal changes drive fundamental shifts in energy policy, use and investment.
- The combination of policy and commercial initiatives and advances in clean technologies leads to revolutionary changes in energy and emissions levels.
- Carbon-intensive industries face high regulatory costs and requirements.
In Rivalry, population growth, urbanization and growing middle class drive energy demand – diverse supply is required to satisfy demand, with intense competition for market share between energy sources.
- Post-COVID-19, most governments revert to a more stable and sustainable level of interdependent political, economic, and trade relationships.
- Expansion of emerging-market economies, especially in Asia, drives growing geopolitical competition between rising and established powers.
- Shared self-interest in economic growth and global stability are moderating forces in global affairs, which help underpin weaker but ongoing international development.
- Carbon-intensive industries face higher regulatory costs and stricter standards, affordable due to a higher price environment and stronger economic growth that can be passed on to consumers.
Discord is a world with economic and political fragmentation and market uncertainty and weakness.
- Environmental progress and climate change mitigation take a back seat to economic concerns.
- Chronic economic crises make governments short-term focused, insular, and confrontational in international affairs.
- The global supply chain breaks down, raising the cost of living for the emerging middle class.
- Governments are unstable due to the volatile political environment, resulting in uncertainty for climate change action policy.
- Income inequality grows in many jurisdictions.
- Lack of consistent, stable government policy and support to meet society’s climate ambitions.
*These scenarios are substantially based on the IHS Markit Autonomy, Rivalry and Discord 2020 scenarios. The scenario descriptions have been modified by Suncor for applicability to its business. IHS Markit acted as external market consultant for this data and analysis, in 2019. The use of this content was authorized in advance by IHS. Any further use or redistribution of this content is strictly prohibited without written permission by IHS Markit. All rights reserved.