Natural Resources Committee on Oct. 16th, 2023

[The Chair, Liberal, George Chahal]

I call this meeting to order.

Welcome to meeting number 76 of the House of Commons Standing Committee on Natural Resources. Today, we're meeting to discuss the climate crisis and Canada's energy sector, pursuant to the motion adopted on September 18, 2023.

Since today's meeting is taking place in a hybrid format, I would like to make a few comments for the benefit of members and witnesses.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike. Please mute it when you are not speaking. For interpretation for those on Zoom, you have the choice at the bottom of your screen of floor, English or French. For those in the room, you can use the earpiece and select the desired channel.

This is a reminder that all comments should be addressed through the chair. Additionally, screenshots or taking photos of your screen is not permitted.

In accordance with our routine motion, I'm informing the committee that all remote participants have completed the required connection tests in advance of the meeting.

I would now like to welcome the witnesses who are with us for the first panel this morning. From Suncor Energy Inc., we have Rich Kruger, president and chief executive officer, and Arlene Strom, chief sustainability officer.

Welcome to the committee. Thank you for taking the time to appear today. You have five minutes for an opening statement.

Welcome to the committee, Mr. Kruger. The floor is yours.

[Rich Kruger, President and Chief Executive Officer, Suncor Energy Inc.]

Thank you, Mr. Chair.

My objectives today are twofold: to convey how Suncor sees the global energy future, including the role of oil and natural gas in Canada, and to share the actions Suncor is taking today to tackle the dual challenge of meeting the world's energy needs while addressing greenhouse gas emissions and climate change.

Our world is rapidly changing. Global population is increasing. Economies are growing. Energy security is threatened by regional conflict. Climate change is occurring, and energy demand continues to rise. Affordable and reliable energy is at the centre of every human development index: quality of life, life expectancy, education and income. Energy used and human development are inextricably linked. Where there is a lack of energy, there's a lower quality of life. For more than a century, oil and natural gas have played a transformative role in fuelling the world's energy needs, improving living standards and driving economic growth.

Today we see rising greenhouse gas emissions, the warming of our planet and increasingly the concerning effects of climate change, yet all plausible global energy outlooks forecast oil and gas remaining among the world's largest sources of energy for decades to come, valued for its reliability and versatility. Therein lies the dilemma: how to effectively and affordably decarbonize the oil and gas sector, not eliminate it.

With among the world's largest reserves, Canada has a major opportunity to lead and prosper by providing low-carbon oil and gas both at home and abroad. Having worked in some manner in more than 20 countries during my career, I believe that the world benefits from the oil and gas produced in Canada more than from that produced in almost any other country globally. Achieving Canada's energy potential requires a shared vision that includes public policy support, technological advances, competitive investments and effective leadership. In other words, a collective effort is required between government, industry and society.

Suncor has committed to this effort and to being part of the solution by helping to decarbonize Canada's oil and gas sector today and by being part of the energy transition for tomorrow. Today we are taking tangible and financially material actions to decarbonize our existing hydrocarbon businesses by investing in low-carbon fuel switching and cogeneration capacity at all oil sands mining sites, by piloting low-carbon injectant technologies for in situ operations, by installing electric vehicle charging facilities at Petro-Canada stations coast to coast, by advancing sustainable aviation fuels and by operating Canada's largest ethanol plant to produce renewable transportation fuels. In each instance, we are putting our money where our mouth is.

In addition we are working with five other companies in the Pathways Alliance to pursue large-scale carbon capture and sequestration, supporting our objective of net-zero greenhouse gas emissions from our operations by 2050. The alliance involves unprecedented collaboration between industry and multiple levels of government, including federal and provincial.

In terms of the transition to net zero via opportunities outside of oil and gas, we are focused on areas in which we have core competencies such as power generation, renewable fuels, customer delivery systems, large plant operations and manufacturing processes. Conversely, we are not focused on aspects of energy where we do not have core competencies or relevant experience. We are selective and targeted to ensure that we have what it takes to compete and create sustainable opportunities.

We are committed to ensuring a profitable high-performing business today so that we can have a profitable high-performing and sustainable business in the future. At Suncor, it's about both today and tomorrow, not one or the other.

To my Suncor colleagues, I am proud of what you do, developing Canada's natural resources, providing energy that improves millions of people's lives, bolstering the economy nationwide, providing tens of thousands of well-paid jobs, supporting communities across the country, developing meaningful relationships with indigenous peoples and businesses, and working together to create a sustainable future.

Mr. Chair, I'm ready for your questions.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Kruger, for your opening statement.

We'll now go to our first round of questioning, starting with the Conservative Party of Canada.

Mrs. Shannon Stubbs, go ahead for six minutes.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thank you, Chair.

Thank you, witnesses, for being here today.

It is of course an unignorable fact that we're gathering here one business day after the Supreme Court of Canada ruled that the cornerstone piece of legislation governing the regulation of resource projects and its sweeping and wide net catching many other projects and intervening in jurisdictions.... We know that is the case today. It's inescapable that we have you here to answer questions in that context, which demonstrates just how much uncertainty has been created in the last eight years of this government.

Mr. Kruger, you mentioned that you have worked in 20 countries in your long career as an expert in this field. I wonder if you would expand on your perspective and your comments on the role of Canadian oil and gas in the world, Canada's opportunity both domestically and internationally and the importance of clarity and certainty for private sector proponents to meet those aims.

[Rich Kruger]

I have worked in more than 20 oil- and gas-producing countries around the globe—southeast Asia, the Middle East, the former Soviet Union, west Africa and North America—over the course of my nearly 40-year career. The last seven years of my career were here in Canada. When I look at what I see about not only what we do but how we do it, whether it's human rights, personnel safety, environmental protection or the responsibility this industry applies to developing its natural resources in Canada, I can without hesitation say that I believe the world is a better place if the incremental barrel of oil comes from Canada than most anywhere else I've ever worked.

I retired three and a half years ago from the industry, and I chose to come back earlier this year because I believe in the industry. I believe in Canada. I believe in Canadians, and I believe we can punch above our weight by lowering the emissions and carbon content of what we produce here and not only providing it at home but also providing it abroad.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thank you.

To your point, the comments you made about Suncor's commitments to reducing emissions and all of the innovation and investment that Suncor has made, both in terms of being a catalyst 20 years ago for wind and solar operations that are now owned by another proponent, but also including, as you just mentioned, continuing to contribute with the largest ethanol plant serving the entire country. I wonder if you want to expand on and clarify more about the comments and your actual perspective on Suncor's position in terms of its core businesses and also all its contributions to improved environmental stewardship and to innovation in the future.

[Rich Kruger]

Thank you.

Our view of the future and our commitments haven't changed: our commitments to decarbonizing our existing base hydrocarbon business and our commitments to being a part of the longer-term transition over time. I appreciate the question, because I think part of the basis upon which I was called here today dealt with comments I made in August on an investor call.

The analogy I would use for what my comments said is that, when I was coming out of retirement and going to come back to work, I went to my family doctor and I said, “You know, I'm going to give up some years of my life to work again. I want to live a long and healthy life. What's the best advice you can have?” He said, “To live a long and healthy life, take care of yourself today.”

My comments on our earnings call looked at our company and said that, for us to be a part of the solution for the long term, we have to do today's business very well. If you look back at the track record over the last several years of Suncor, that can't be said. We have opportunities to improve the safety, the operational integrity of our business, so that we can continue our decarbonization effort and be part of the transition for the longer term.

When I made the comment and I think, explicitly, I said that we have a bit of a disproportionate emphasis on the future, it was to ensure we're strong today so we can be strong tomorrow. Our commitments on decarbonization and being part of the transition have not changed at all since I took over in this position six months ago.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thank you for that clarification.

Do you have any additional comments particularly on juxtaposing the Canadian policy and fiscal and regulatory framework around energy and resource development against, for example, Canada's biggest competitor and customer, the United States, as well others of the top ten major energy-producing regimes around the world, say, the majority of which, of course, are state-directed regimes?

Do you have any comments about the importance or the damage, for example, of eight years of the combination of policy uncertainty and also what has become a layering of taxes, bans, standards and hammers with almost no incentives, and what that does to Canada's competitiveness and the role we can play to secure energy self-sufficiency and security for our own citizens, as well as to play that crucial and I think moral obligation Canada has internationally to provide both our technology and our best-produced products to other countries around the world?

[Rich Kruger]

Yes, there's a lot to that question, so let me step back.

I think one of the things that capital markets look for is a reasonable return for a reasonable risk. When you think of what's important to capital markets in major investments, you see that we look for levels of predictability, stability and certainty. If the hurdle is set at a certain height, that's fine. We just want to know that it's not a moving target.

I think one of the challenges we face here, and have faced here for some time now, is a bit of the unpredictability and uncertainty, which then, quite frankly, scares away capital. With the resources and the opportunities that I think the country has, and with what I believe is a leadership position that we can take both home and abroad, I applaud any efforts to get a greater level of predictability and certainty so that those of us who participate in the capital markets can do what we do best: bring technology and bring investment dollars to develop the resources of this great country.

[The Chair, Liberal, George Chahal]

Mr. Kruger, thank you.

That's over the time allotment, so we'll move to the next round of questions.

We have Mr. Aldag from the Liberal Party.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

Thank you, Mr. Chair.

Mr. Kruger and Ms. Strom, thank you for being here today.

I was really interested when I saw the comments you mentioned, which appeared in the media in August from some interviews you had done. As somebody who has followed western Canada's energy sector for a number of years, I think that Suncor was always seen as a leader in the sustainable energy area. I was really surprised, and I think a lot of Canadians were surprised, to see what I would consider to be a fairly aggressive movement away from some of those businesses—wind and solar—that had been developed over the years.

I'd like to try to understand what you see as the future for energy in Canada. You mentioned in your opening comments that oil and gas have a long horizon, yet I've seen comments that we're going to see oil and gas peak within the next decade and then start to decline. It seems like you're kind of doubling down right now, trying to get every last dollar out of that oil and gas sector.

Where do you see us going as far as traditional oil and gas goes compared to renewables? That's kind of the first part of the question.

The second part is this: Where does Suncor fit into that in this new vision that you seem to be putting out for the company?

[Rich Kruger]

Let me start with the oil and gas. There are a lot of various outlooks—whether or when it's going to peak, etc.—but I think the important thing to realize is that oil and gas are depletable resources. If we do nothing, if the world does nothing, depending on...for gas it may be a 5%-per-year decline, and for oil it may be a 7%-per-year natural decline. Just to continue at today's demand levels requires ongoing investment.

The question for me is this: Where will that investment be made? If the demand is there, I believe that, whether we, as a country, choose to produce one less barrel, the world won't necessarily consume fewer barrels. I think it's an opportunity to look at where Canada competes in the oil and gas sector. My belief is that, with the efforts that we're undertaking—I mentioned Pathways Alliance, blending renewable fuels, etc.—we can continue to compete in that sector.

I think the oil and gas sector has a long life ahead of it. It's how we do it that will make it more socially acceptable and more socially acceptable within Canada.

Now, with regard to renewables, I think that renewables have a huge role and a growing role in the energy equation. Global energy demand continues to increase. I don't think that there's any one energy source that will meet that. I don't think it's an either-or. It's an “and” equation, whether that's renewables, continued oil and gas or hydrocarbon investments, etc.

Suncor plans to be around a long time. We've been around a long time. We're a big company, a prominent company in the country, and we plan to continue that. We plan not only to continue to extract value from our existing businesses but to grow new businesses.

What are we good at? You mentioned solar. If you look at it over time, we were a pioneer. We got into wind and solar about 20 years ago. At almost exactly the same time, we built a $250-million renewable-fuels ethanol plant, which is Canada's largest ethanol plant today. It provides renewable fuels for our coast-to-coast network of Petro-Canada sites.

A year ago, before I arrived, the decision was made to sell the wind and solar business to parties that we, the company, thought could operate it better than we were. However, at the same time, we're investing in our renewable facility sites because we think those are what we're good at.

It's a question of picking those things that you're best at as you participate in the transition.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

I'm a member of Parliament from British Columbia where we have fires and floods. Climate change is very much real and upon us.

When you talked about “socially acceptable”, one of the discussions I hear are about these massive profits the oil sector is generating right now. One of the articles talked about Suncor. In the second quarter it had $1.88 billion of earnings and $4 billion in the same period last year. Canadians are asking—and my constituents for sure are asking—where are those profits going in helping us to deal with climate change and the effects of climate change? The sector that you're in has had very real impacts on the planet, and it continues to.

What is the next round of investments that is going to be made to help reduce those impacts and get us to the net-zero economy that we need by 2050?

I guess that's the other question. Is Suncor still committed to that transition by 2050, and where will the next round of investments go? What we're doing right now is simply not enough to get us there.

[Rich Kruger]

Your question is a good one. In terms of our industry, the nature of.... We're a big company. It's big dollars. I'll give you a few numbers to tie in.

Over the last three full years, we made, in total, $9 billion in profits. We've paid $10 billion in income taxes and royalties to the federal and provincial governments to build bridges, hospitals and schools. We've invested, over those same three years, $13 billion more than we've made. Some of it is to maintain the health and well-being of our existing businesses, the safety and operational integrity, and our environmental responsibility. An increasing share of it is going to new businesses. This last year we spent $540 million on decarbonization projects.

We are an industry and a company where the numbers are big, but when you break them down and you look at.... We pay more than 50% of what we make every year—and are proud to do it—in taxes and royalties. We're investing back, not only to maintain our existing business but to create those new businesses that I think we would agree are important to the country.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

I would have liked to go more into the decarbonization discussion, but the chair telling me to move on.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Kruger.

I should have said in advance that the yellow card is a 30-second warning, and the red means your time is up. You have my apologies.

[Rich Kruger]

I'm colour blind, so I'll just work off of which hand they're in.

[The Chair, Liberal, George Chahal]

We'll now move to Monsieur Simard from the Bloc Québécois for six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Mr. Kruger, we have one thing in common, since I'm also colour blind.

In your presentation earlier, you spoke of Suncor's vision for the future and the action it's taken. While I may not agree with you, you do seem firmly committed to decarbonizing the oil and gas sector.

Are you and I on the same page in that respect?

[Rich Kruger]

One of our priorities is to continue to decarbonize our existing hydrocarbon businesses.

[Mario Simard, Bloc, Jonquière, QC]

I'm sorry, I'm going to have to move quickly because I don't have a lot of time.

You also talked about fuel blends and carbon capture strategies. I'd like you to answer my next question clearly.

Do you agree with the clean fuel regulations?

[Rich Kruger]

Do I agree with the clean fuel regulations? I have not studied the regulations in my six months in the job here. However, what I would say is that, whether it's at our Petro-Canada sites or anywhere else, we comply with all regulations that are there. In terms of agree or disagree, I don't know if that's as relevant. As a company we believe in reducing the carbon—

[Mario Simard, Bloc, Jonquière, QC]

Okay. I understand completely.

When you talk about fuel blends, aren't you alluding to the fact that there may be components of fuel with lower carbon intensity?

[Rich Kruger]

There are two things. There's the energy mix, broadly, in all different types of energy. If you're talking explicitly fuel—transportation fuels and aviation fuels—our priority is to continue to bring an increasing renewable component to those fuel supplies.

[Mario Simard, Bloc, Jonquière, QC]

I understand.

You'll see what I'm getting at.

People are saying that the clean fuel regulations will have an impact and that consumers will pay the price at the pump, since they will cost the oil and gas companies. Under the Pathways Alliance, the costs associated with decarbonizing the oil and gas sector are enormous. We're talking about $24 billion in investments. Who are you going to pass that on to? Will you pass it on to consumers? Can clean oil be profitable without government funding?

If some people, particularly my Conservative colleagues, are saying that the bill is going to be passed on to consumers for something as simple as the clean fuel regulations, then I'm confident that you're going to pass the bill for your carbon capture strategies on to consumers as well.

Would you agree with me on that?