Climate change, despite other ongoing challenges such as the oil downturn, political changes in the US and Canada, pipeline approvals , is a concern that remains at the forefront for the Canadian oil sands. With increasing reports linking greenhouse gas (especially carbon dioxide) emissions to climate change , companies like Suncor Energy, the largest bitumen producer in the world , have no option but to be thoughtful in their positioning on climate change.
The new normal
Suncor Energy has taken the stand of stating that as Canada’s largest energy company, it has a significant role to play in the energy discussion and strategies. The company has embraced carbon taxing and committed to reducing its green house gas (GHG) emissions by 30% by 2030 in accordance with the Paris agreement reached in 2016. Suncor is lowering cost and carbon intensity across its supply chain by improving energy efficiency in existing systems, transitioning to co-generation facilities for less wastage, piloting and testing new technologies to improve oil sands processing and extraction, investing in renewable projects, founding and collaborating at the industry level to share technologies through Canada’s Oil Sands Innovation Alliance (COSIA), investing CAD $200 million in research and technology, and encouraging entrepreneurs to help bring to light converting emissions to useful products .
In the long term, the company is monitoring global demand and supply mix, political and economic indicators, climate data and policy trends, and consumer trends in transportation to identify critical shifts and is positioning itself to be able to respond in different scenarios by ensuring the right supply chain/infrastructure is in place.
Furthering the strategy
Suncor energy has responded to the external changing environment by confirming. The steps that the company’s management should also consider taking include:
Suncor has been investing on autonomous haul trucks and has already tested a small number in its open-pit mine. Introduction of digitization helps improve productivity, cycle time and throughput while lowering costs and wastage. Since oil sands projects function as manufacturing facilities as production does not rapidly peak or decline for a number of years, Suncor should continue its efforts and aim for a fully automated operational facility.
Educating the masses
The industry and company lack an ability to communicate the progress it has made in embracing reduction in carbon emissions in its supply chain to the society. Often taunted as tar sands, most people don’t know that oil sands only make up 9.3 percent of Canada’s emissions, 0.1 percent of global emissions  and yet are under scrutiny more than coal industry for example. Coal industry in the US alone produces 26 times more GHG emissions than Canadian oil sands.
The company needs to do a better job at communicating the successes and work in progress as supply chains do not function in isolation. Perception and reality are often influencers on a company’s operations. This could also help bring attention to other industries that need to catch up and help towards the ultimate goal of being sustainable as a world.
It also needs to start leveraging traditional and social media to reach the masses and share technologies such as ESEIEH which uses radio frequency energy and solvent in wells configured in horizontal pairs much like a Steam assisted gravity drainage (SAGD) operation.
One of the challenges of SAGD is that the reservoir is typically heated to get the bitumen to flow, consuming a significant amount of natural gas, and necessitating large amounts of water treatment for steam production. ESEIEH reduces energy requirements by 75% and hence, GHG emissions .
Suncor has energy expertise and capital to invest in the future of energy, and bringing in the right people to move it in the right direction is a mandatory investment that needs to be added to the goals to drive innovation in its supply chain.
The question remains whether it is a good strategy from a business perspective?
President Donald Trump announced earlier this year that US will be pulling out of the Paris Climate change agreement as it would undermine the US economy and put US businesses at a disadvantage. US is the only country to reject the climate accord. Of the major fossil fuels, coal is by far the biggest climate change culprit. In 2014, coal accounted for 46 percent of the globe’s carbon dioxide emissions, but was only 29 percent of its energy supply, according to the International Energy Agency . Trump has promised to revive coal by rolling back environmental regulations and moved to repeal Obama-era curbs on carbon emissions from power plants.
Could confirming or non-confirming be hurtful as the world moves towards carbon efficient energy sources?
Do you think that Trump’s contrarian or the Oil sands conformist approach will prevail for businesses and environment?
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Cover image: Miningcom. 2017. Available at: http://www.mining.com/wp-content/uploads/2016/09/canada-oks-three-new-oil-sands-projects.jpg. Accessed November 15, 2017.