Report on Sustainability 2019

Policy engagement

We participate in public policy discussions on energy and the environment, and regularly communicate with governments in jurisdictions where we operate.

We ensure our participation is in compliance with all lobbying regulations and we report government interactions consistent with the law and company policies.

Increasingly in Canada, public policy is developed through open and transparent processes, incorporating the expertise and perspective of a broad range of Indigenous Peoples and stakeholders. Suncor participates in these forums, bringing our industry perspective and a solutions-based mindset to advance responsible development.

We support governments taking a reasoned and outcomes-based approach to policy development. We believe policy should be built on evidence-based information and informed perspectives.

Constructive dialogue and transparent sharing of information are critical in guiding our interaction with governments and stakeholders toward the development of practical policy solutions. These activities promote responsible development of existing and new energy sources. We seek opportunities to mitigate polarization through engaging broadly with diverse interests.

Our policy position with governments includes:

  • supporting Canada’s long-term prosperity
  • developing vibrant, sustainable communities
  • ensuring that Canada remains competitive and able to attract needed investment
  • encouraging Indigenous economic collaboration and capacity building
  • encouraging a healthy dialogue about energy solutions
  • considering energy development and distribution costs and benefits
  • understanding the role of and supporting advancements in research, technology and innovation
  • ensuring effective policy outcomes and effective and efficient regulation that will enable timely and responsible development
  • supporting carbon mitigation policies that address both consumption and production, including a price on carbon
  • advocating for policy and regulatory regimes to support deployment of innovations that reduce environmental footprints such as GHG emissions and water management
  • supporting Alberta as the first oil and gas producing jurisdiction to limit the greenhouse gas (GHG) emissions from the oil sector, all while allowing for continued growth, investments in technology, and expanding market access

Economic policy

Royalties and taxes

Royalties and taxes should deliver a fair return to government, while providing industry with a competitive, stable and predictable fiscal framework on which to base long-term investment decisions.

Policies should recognize market factors, such as challenges faced by corporations competing in a global economy.

Levies added over and above current royalties and taxes need to be holistically considered and understood in terms of costs, outcomes and competitiveness against other jurisdictions in which Canada’s natural resources compete.

Transparency

We support policy and regulations that promote transparency and advocate for rules that are consistently applied and respect agreements with Indigenous Peoples.

Cumulative impact of policy changes

We continually assess risks associated with existing and proposed policy and regulation changes. The findings are from the assessments to inform our approach with governments and others involved in policy and decision-making. The assessments provide context for policy-makers and regulators so we can fully consider all aspects of potential policy and regulation. This enhances our focus on how to achieve constructive outcomes.

Market access

Our oil sands industry makes a strong contribution to meeting global energy demands, while creating jobs, contributing to the economy and generating revenues for government to fund social programs across Canada. We continue to support the development of new pipelines to ensure we have options during unplanned events, to get full value for all our products and to enable future growth.

Suncor is supportive of all the major pipelines that are currently proposed and/or approved:

  • Keystone XL
  • Line 3
  • Trans Mountain expansion

Pipeline projects take several years to approve, develop and make operational, so it also makes sense for us to tap into existing networks to transport our products to market.

Pipelines continue to be the safest, most efficient means of transportation for crude oil and other petroleum products. We are working with stakeholders to address many of these concerns from a producer’s perspective and are engaged with governments to the same extent.

Canadians are not receiving the full value for our energy resources and an uncertain regulatory environment hinders investment and growth. Pipeline infrastructure is critical to all Canadians because when we receive full value for our energy resources, we’re better able to fund health care and education, and provide employment.

In addition to the existing comprehensive and robust regulatory framework that governs development and operation of pipelines and other large infrastructure projects, the Government of Canada has introduced Bill C-48, Oil Tanker Moratorium Act that received Royal Assent on June 21, 2019. This Act will restrict vessels that transport crude oil or persistent oil to or from ports of marine installations located along British Columbia’s north coast.

We believe efficient, effective and transparent regulatory oversight is the responsible thing to do and will be valuable to accurately inform Canadians, decision-makers and other stakeholders.

Social policy

Local community capacity

Suncor is committed to being a good neighbour and playing a lead role in the strength and resiliency of the communities where we operate.

Building capacity and supporting key community initiatives is an important component of our work in all of our operating regions. For example, in the Regional Municipality of Wood Buffalo we have been working in co-operation with industry partners and local business associations to better forecast future population growth and infrastructure needs.

Environment policy

Federal Environmental legislation reviews

Environmental assessments inform government decision-making and support sustainable development by identifying opportunities to avoid, eliminate or reduce a project’s potential adverse impact on the environment and ensure mitigation measures are in place when a project is constructed, operated and decommissioned.

In May of 2016, the Government of Canada initiated a review of Canada’s environmental assessment processes with the introduction of Bill C-69, Impact Assessment Act. Bill C-69 aims to enhance predictability and timeliness of environmental assessments for major project reviews to protect Canada’s environment and grow the economy.

The legislation expands the types of impacts to understand how a proposed project could affect not just the environment, but also health, social and economic impacts as well as impacts on Indigenous Peoples over the long term.

Since 2016, Suncor was actively engaged in the federal government consultation process to ensure that our concerns were considered in the proposed legislation. In June 2019, Bill C-69 received Royal Assent.

While we support the intent of Bill C-69 with its early planning phase that includes clear timelines, permitting and Indigenous consultation requirements, we are concerned that the Bill will not restore investor confidence in our industry and our country. The environmental assessment processes for major projects need to appropriately balance the economy, the environment and social impact while at the same time incent innovation and future investment.

Lower Athabasca Regional Plan

In 2012, the Government of Alberta approved the Lower Athabasca Regional Plan (LARP). The LARP addresses land-use management in the Lower Athabasca region of Alberta, which includes the area of the province in which Suncor’s Oil Sands business is located. The LARP, which was developed pursuant to the Alberta Land Stewardship Act, is part of Alberta’s approach to managing economic, environmental and social goals, including cumulative environmental effects management on a regional scale.

The LARP includes management frameworks for:

  • air quality (sulphur dioxide and nitrogen dioxide)
  • surface water quality
  • surface water quantity
  • tailings management for mineable Athabasca oil sands
  • regional groundwater management

Each of these frameworks includes interim triggers to allow early indications of change. On an ongoing basis, we also participate in discussions that lay a foundation for future policy and regulation on aspects of tailings management, water return, biodiversity, caribou and wetlands.

Greenhouse gas (GHG) emissions

Climate change regulation

Suncor operates in many jurisdictions that regulate, or have proposed to regulate, industrial greenhouse gas (GHG) emissions. We are committed to fully complying with existing regulations and we are engaged with all levels of government to establish or evolve a credible carbon policy regulatory framework for the oil and gas sector in Canada. Our position is that Canada's oil and gas sector are world-class, responsibly developed resources that are needed to meet growing global energy demand. Canada will continue to advance technologies to improve environmental performance and contribute to tackling the climate change challenge.

We are a strong voice in the call for effective policy to address the Canadian oil and gas industry’s GHG emissions. In our view, this includes a carbon price signal that incents carbon reduction and a practical regulatory architecture.

Regardless of the strategy chosen to reduce carbon, implementation really matters. We also think it’s important for investors and other stakeholders that policy is predictable and certain.

Since 2008, we have advocated publicly in support of a broad-based, economy-wide carbon price. In 2016, we joined the Carbon Pricing Leadership Coalition (CPLC) – and contributed to the CPLC’s Canadian industry report in 2017 – to support Canada’s Ecofiscal Commission, ultimately broadening the discussion of carbon pricing into the realm of practical policy application.

Our continued collaboration with Canada’s Ecofiscal Commission has generated numerous reports focused on two themes:

  • the importance of implementing carbon pricing
  • considerations needed for policy design

We support regulatory design that:

  • is focused on emissions rather than targeting specific sectors and protects against carbon leakage
  • drives best achievable performance from existing facilities
  • provides clear support for innovation and technology development that enables game-changing solutions
  • positions Canada as a leader in energy innovation and ensures competitiveness
  • sets challenging but achievable reduction goals with a process that allows for an increase in ambition as technology develops
  • is flexible and provides for multi-jurisdictional compliance pathways
  • avoids duplication

In Canada, there exists a “patchwork quilt” of carbon pricing policies across the provinces, as well as differences in complementary policies across provinces. Over time, this will mean higher costs than necessary. We advocate for both levels of government to ensure policies work together.

Canada’s energy industry has a responsibility to navigate between the aspirational and the realistic, which for the oil sector specifically means keeping the Canadian economy moving, through continued investment in existing energy supply and maintaining critical infrastructure. Policies should provide the certainty required to make necessary investment decisions and not lead to leakage of investment capital.

There remains much work to be done to define a unified Canadian energy vision for 2050. The need exists for collaborative policy solutions that can advance our nation’s economic ambitions while advancing measurable environmental outcomes.

Canadian federal government

The federal government’s Pan-Canadian Carbon Price Framework requires each province to implement a carbon pricing policy with an overall stringency equivalent to a minimum price of $20 per tonne, rising to $50 per tonne over the next four years. Provinces and territories that do not comply are subject to a federal carbon pricing backstop.

Provinces and territories that volunteered to accept the federal plan may use the revenue as necessary for the unique circumstances of their region, including protecting carbon-intense, trade-exposed industries. Involuntary provinces with policies that were viewed to be inadequate are subject to the federal backstop. In these jurisdictions, carbon revenues are generally collected from two streams:

  • A consumer-facing carbon tax on all fossil fuels where the majority of the carbon revenues collected are returned to their citizens in the form of a rebate rather than to their provincial governments.
  • An output-based pricing system (OBPS) for industrial facilities that emit above 50 kt CO2e or more per year, with the ability to opt-in for smaller facilities –protecting the competitiveness of the industrial sector.

The federal government is consulting with industry on how best to use the carbon revenues to help industry reduce their emissions. Under the proposed OBPS structure, the federal government’s current direction is to implement a fuel-differentiated output-based standard for emissions from electricity. We believe this approach prolongs coal fired power generation and favours converting coal power plants to natural gas over lower carbon and more efficient forms of power generation that exist in today’s energy system, including renewables and cogeneration. This could lead to a higher intensity electricity grid over a longer period of time and therefore increased GHG emissions. Suncor continues to highlight this issue.

Canadian provincial governments

Alberta

In April 2019, Alberta elected a new provincial government and for the remainder of 2019, Alberta’s industries will continue to be regulated under the current Carbon Competitiveness Incentive Regulation (CCIR) at the economy-wide price of $30 per tonne.

Starting in 2020, Alberta industries will be regulated under a yet-to-be-developed Technology Innovation and Emission Reduction Fund program (TIER). The proposed construct of the TIER is similar to the previous Specified Gas Emitters Regulation (SGER) that was put in place between 2007 and 2017.

To protect the competitiveness of Alberta trade-exposed industries, the proposed TIER model, similar to SGER, will apply to facilities that emit greater than 100,000 tonnes of carbon dioxide (or equivalent) applying historical facility intensity baseline architecture with a requirement to reduce the carbon intensity of an industrial operation beginning at 10%. A portion of the carbon revenues collected from the TIER program will be used to support emission reduction technologies, a distinct component of Alberta’s climate policies since 2007. Electricity generators will be required to meet a “good as best gas” output-based standard similar to the current CCIR.

Quebec

Suncor’s Montreal refinery in Quebec is regulated under a cap-and-trade program linked to the Western Climate Initiative (WCI). Industries regulated under the program receive an allowance allocation that aligns with a benchmark performance specific to their sector and takes into account competitiveness in a trade-exposed context.

Fuel suppliers are required to purchase allowances to cover the tailpipe emissions of all fuel sold, the cost of which is expected to be largely passed to the consumer, thus acting as a carbon price on fuel consumption.

Ontario

In June 2018, Ontario withdrew its participation in the WCI cap-and-trade program in favour of introducing its own Emission Performance System intended to meet the overall stringency of the Federal backstop.

In the interim, Ontario has become an involuntary province subject to the federal backstop. Suncor’s Sarnia refinery and St. Clair ethanol plant are both regulated facilities under the federal OBPS where it receives an emissions allowance to protect the competitiveness of our sector. Suncor will work with the provincial government to explore solutions that achieve the required outcomes while minimizing impacts to people and business.

Newfoundland and Labrador

The Government of Newfoundland and Labrador’s carbon pricing plan took effect on Jan. 1, 2019 with a carbon price of $20 per tonne of CO2e. The plan is a hybrid system comprised of performance standards for large industrial facilities, including large scale electricity generation, plus a consumer carbon tax on transportation, building fuels, electricity generation and other fuels combusted in the province.

Performance standards for large industrial facilities are legislated under the Management of Greenhouse Gas Act (MGGA) and associated regulations, which apply to all facilities that emit 15,000 tonnes of CO2e or more per year.

Similar to Alberta’s SGER and CCIR, the MGGA will establish a fund for clean technology through carbon compliance payments made by industrial emitters. This is expected to support technology and innovation as well as provide flexible compliance options and protect the competitiveness of energy-intensive trade-exposed sectors such as the province’s offshore petroleum sector.

Low-carbon fuel standards

We continue to monitor and consult on numerous policy initiatives such as the federal government’s proposed Clean Fuel Standards (CFS) to reduce Canada’s GHG emissions through the increased use of lower-carbon fuels.

At Suncor, we’ve long acknowledged that broad-based carbon policy tools can create an efficient, market-based approach that addresses both consumption and production challenges. It’s important to remember that about 80% of overall carbon emissions occur at the point of consumption, while only about 20% are generated in production. Therefore, some tools will need to focus on that 80% to make a real difference.

The challenge is to design a system that economically efficient without adding duplicative layers of cost and administrative burden, while truly complementing GHG policies that can support a carbon price and drive greater emissions reductions at a lower economic cost.

Where complementary policies are added to carbon pricing, the objectives of the complementary policy should be clear and the interaction with other policies, and the environmental outcomes as a result of carbon pricing in particular, should be well understood.

Renewable energy

Renewable and low-carbon power policy

Under the proposed OBPS structure, the federal government’s current direction is to implement a fuel-differentiated output-based standard for emissions from electricity. We believe this approach prolongs coal fired power generation and favours converting coal power-plants to natural gas over lower-carbon and more efficient forms of power generation that exist in today’s energy system, including renewables and cogeneration. This could lead to a higher intensity electricity grid over a longer period of time and therefore increased GHG emissions. Suncor continues to highlight this issue.

In Alberta, policies remain in place that accelerate the transition from coal to renewable electricity and natural gas generation by 2030. Suncor is a proponent of increased cogeneration as a key part of the power mix in Alberta, particularly as the province transitions away from coal. Cogeneration provides reliable, base-load power to intermittent renewable power at the lowest GHG intensity of any hydrocarbon fuel.

Greening the electricity grid through our existing renewable wind assets and highly efficient cogeneration units in addition to our continued commitment to invest in low carbon power is one important pathway for Suncor to be able to make a measurable positive impact in support of our shared environment.

We are the 5th largest electricity generator in Alberta and are keenly focused on reducing our carbon footprint. We have cogeneration units at Oil Sands Base plant, Firebag, MacKay River and Fort Hills facilities, and we export low-carbon excess electricity generated from these units to the provincial grid. Suncor works with policy-makers, industry partners and other stakeholders to increase investment in low and zero carbon power generation. Collaboration between government, industry and other stakeholders is the only way to ensure that measurable environmental outcomes are achieved under electricity market.

Biofuel policy advocacy

Canada’s renewable biofuels industry is quickly maturing, and Suncor is working to improve its long-term viability as current government support programs directed at first-generation biofuels decline.

As opportunities arise, we invest in advanced renewable energy technologies to complement the existing biofuel industry. This involves funding outside companies whose technology ideas align with the strategic needs of our operations or businesses.

Suncor supports a flexible performance standard for transportation fuel intensity over more narrowly constructed mandates.

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Recommended readings
Stakeholder and Indigenous relations
Market access
GHG performance
Renewables