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Canadian oil companies claim their products can help tackle climate change

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Canadian oil companies claim their products can help tackle climate change

Executives of Canadian oil and gas companies Cenovus Energy Inc. and Canadian Natural Resources Ltd. have suggested the companies produce fewer emissions than the global industry average and, therefore, their products should be part of the solution to tackling climate change. But environmental groups and data from Trucost paint a different picture.

Canadian oil companies, including those that garner much of their revenues from oil sands, are running out of new options for getting their product to other markets. Canada is in the midst of export and pipeline bottlenecks even as regulatory hurdles combined with opposition from environmental groups and indigenous communities have diminished the prospects for new projects, such as Trans Mountain Corp.'s oil pipeline expansion, to be completed anytime soon.

Meanwhile, institutional investors are coming under pressure to divest from fossil fuels. The Norwegian government in March dropped oil and gas exploration and production companies from its sovereign wealth fund, although that move was largely due to low oil prices.

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Cenovus CEO, President and Director Alexander Pourbaix in the company's second-quarter earnings call said stopping Canadian oil from reaching more customers "will not address the global climate change challenge. If Canadian oil cannot get to international markets, global demand for oil will continue and be satisfied with higher emissions barrels from other jurisdictions with inferior environmental, social and governance standards."Many large investors are, in turn, pressuring fossil fuel companies to reduce their emissions or otherwise tackle their longer-term climate-change associated risks. "What our investors are telling us is that they do get asked questions about who they're investing in," said Rhona DelFrari, Cenovus' head of sustainability, communications and external engagement. The investors are "telling us that we're not speaking up loud enough" about the company's environmental and social record, DelFrari said in an Aug. 21 interview.

Canadian Natural made a similar argument. "If you view climate change from a global perspective, and climate change is a global issue, not an [national] issue, then it makes sense that having more Canadian oil and gas on the global market will reduce greenhouse gas emissions," said Canadian Natural Executive Vice Chairman Steve Laut in the second-quarter earnings call.

Laut argued that through technology innovations, the company has "taken what was high-intensity oil on a wells combustion basis in 2009 to well below the global average." Canadian Natural has reduced overall corporate emissions by 29% since 2012, he said, and the company's carbon intensity is down 37%. The company's primary heavy oil methane emissions intensity is down 78% since 2012 and the company also sequesters carbon dioxide, he said. Upon request for comment, Canadian Natural emailed a statement that effectively repeated Laut's claims.

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But data from Trucost, a unit of S&P Global Market Intelligence that assesses and prices environmental, social and governance risks; indicates the carbon intensity of overall scope 1 emissions — those created by the company's operations such as oil and gas extraction — for both Canadian Natural and Cenovus are higher than the global average. The carbon intensity levels are calculated by dividing each company's carbon dioxide equivalent emissions by their U.S. dollar equivalent revenues.

The Intergovernmental Panel on Climate Change in 2018 warned that global net human-caused carbon emissions would need to fall by about 45% from 2010 levels by 2030 and reach net-zero levels around 2050 to stave off some of the bigger threats posed by climate change. At the same time, a number of long-term climate scenario projections, including from the International Energy Agency, suggest natural gas and oil will continue to meet a major share of global energy demand through at least 2040.

The Canadian oil and gas companies contend that so long as petroleum products remain in demand globally, an influx of their products to the market could help reduce overall fossil-fuel related emissions.

But Mike Hudema, climate organizer with Greenpeace Canada, argued that "increased fossil fuel production and transportation, regardless of where it's coming from, is not a solution to climate change." Most of the oil these companies are talking about comes from Alberta tar sands, which are among the most carbon-intensive and climate polluting products globally, Hudema said. "There simply is no room for new pipelines and new fossil fuel operations if we want to meet those targets," he said.