The race to net-zero: grounded in reality or wishful thinking?

Just a few months ago, Spanish oil company Repsol made a splash in global headlines by announcing that it would get to net-zero carbon emissions by 2050. This announcement triggered a cascade of similar pledges from other oil and gas giants in Canada and around the world, including CNRL, MEG Energy, Teck Resources, Cenovus, and most recently BP, who have all committed to achieving carbon neutral operations over the next 30 years. BP and Repsol are even tying executive compensation to the company’s ability to meet these interim targets. These are bold and important commitments, and if realized, could be game changing for decarbonization efforts in Canada and around the world. The announcements came on the heels of the UN Climate Action Summit last fall, where dozens of countries—including Canada—promised to achieve net-zero by 2050. And as one of the largest and fastest growing sources of greenhouse gas (GHG) emissions in the country, the oil and gas sector will be critical for Canada’s ability to deliver on its goal. But does the industry have a real plan to reach net-zero, or is it just wishful thinking? Right now, it’s a little bit of both. The companies have each laid out slightly different plans for how they can reach net zero. Most companies, such as Teck Resources, Equinor, and Cenovus, have committed to achieving net-zero emissions across their upstream operations, while CNRL has narrowed its target to its oilsands operations only. Others, such as BP and Repsol, are going bigger by committing to reaching net-zero across their global upstream oil and gas operations, and also to reducing emissions from the production of downstream petrochemical products they sell on the market. Most of the companies have set interim carbon intensity reduction targets between 20 and 40 per cent by 2030 and up to 70 per cent by 2040. There are commonalities in how the companies intend to reach the net-zero objective. The first is through implementing known technologies in the short and medium-term to reduce leakages, improve operational efficiencies, electrify processes that were previously run on hydrocarbons, or procure greater amounts of electricity from renewable sources. In addition, carbon sequestration technologies, like the Alberta Carbon Trunk Line, will be essential. These represent easy and early wins for reducing emissions. But they aren’t enough to get to net zero. So, most of these companies are also hoping new and novel technologies will emerge to bridge the gap and drive further emissions reductions. There is quite a bit of skepticism around this, with some critics denouncing the pledges as lip service from oil and gas executives vying for a better shot at project approvals. But, it is not unreasonable to think that new technologies will emerge, especially given the big dollars and big players behind the push to do so. The Oil and Gas Climate Initiative—a consortium led by multinationals that make up 30 per cent of global oil and gas emissions—represents a fund worth more than $1-billion with the sole purpose of investing in finding solutions to decarbonize the sector. The Canadian Oil Sands Innovation Alliance (COSIA) is behind the Carbon X-PRIZE—a $20-million competition to stimulate technologies that will turn captured carbon dioxide into marketable products like building materials. And CRIN—the Clean Resource Innovation Alliance—was recently awarded $100-million by the federal government to develop and commercialize clean hydrocarbon technology. This brings us to the remaining piece of net zero: the “net.” For most of these companies, it’s unlikely that production emissions will ever truly hit zero. In order to make up the difference, the companies will need to purchase carbon offsets or fund projects with a negative carbon emission footprint. It’s also important to consider what the net-zero pledges don’t address: emissions that arise from the combustion of the fuel product by the end consumer (when we drive our cars or heat our homes). Roughly 80 per cent of emissions come from end-use combustion. This means that even if net-zero promises are achieved, the fuel and other petrochemical products we use still wind up releasing an abundance of GHG emissions into the atmosphere. This is an issue that the industry has yet to address. Meeting net-zero targets—for both the industry and the federal government—will require immediate and significant investments into research and development. And once again: skepticism is warranted. But there are legitimate reasons to believe that it could happen, and the significance of these promises—and the work that it will take to get there—shouldn’t be underestimated. Jade McLean is a policy analyst and Marla Orenstein is the director of the Natural Resources Centre at the Canada West Foundation. The Hill Times