Canadian oil sands carbon emissions stalled in 2022 even as output grew


Updated Wed, August 9, 2023
By Nia Williams

(Reuters) -Greenhouse gas emissions from Canadian oil sands production were flat in 2022 even as output grew, an analysis by S&P Global showed on Wednesday, suggesting absolute emissions from the carbon-intensive sector could peak sooner than previously expected.

It was the first time since S&P Global began tracking emissions in 2009 that absolute oil sands emissions did not rise, apart from periods in which major market disruption caused a decline in production, such as the COVID-19 pandemic.

Even so, the oil sands sector in northern Alberta will still need to make significant emissions cuts to meet Canada's climate targets, said Kevin Birn, chief analyst of Canadian oil markets at S&P Global Commodity Insights.

"We expected absolute emissions to rise as they always do when there's no market disruption. The fact it stalled suggests industry may be able to achieve more than they anticipated," Birn said.

"But for industry to make large-scale absolute emissions reductions we see the need for carbon capture and storage (CCS)," he added.

A number of Canada's largest oil sands producers, including Suncor Energy and Cenovus Energy, have asked the Canadian and Alberta governments for public funding to develop costly CCS technology.

Canada is the world's fourth-largest crude producer, of which around two-thirds comes from the oil sands in the western province of Alberta.

Liberal Prime Minister Justin Trudeau's government is targeting a 40%-45% cut in emissions from 2005 levels by 2030, but is unlikely to get there without significant reductions from the oil and gas industry, the country's highest-emitting sector.

Oil sands emissions held steady at 81 million metric tons of carbon dioxide in 2022, while total production topped 3.1 million barrels per day (bpd), a gain of more than 50,000 bpd, the S&P Global report showed.

It attributed the flattening of absolute emissions to industry-wide greenhouse gas (GHG) intensity improvements such as using less steam in thermal oil sands projects and better operating efficiency.

A modest decline in carbon-intensive synthetic crude production, due to major maintenance turnarounds in 2022, and increased output from more efficient thermal oil sands projects also helped.

"The potential stalling of emissions growth in 2022 is a clear signal that oil sands absolute emissions will indeed peak and begin to decline, perhaps sooner than previously expected," Birn said, adding that S&P Global forecast it would happen around 2025.

(Additonal reporting by Arunima Kumar in Bengaluru; Editing by Krishna Chandra Eluri and Paul Simao)