Time's running out!
Canada’s largest oil company has once again made it onto a popular list that annually ranks the world’s 100 most sustainable corporations. Calgary-based Suncor Energy earned the honours this year by having an industry-leading portion of its revenues labelled as clean, mainly stemming from its investment in biofuels — an area that is subsidized by governments.
Suncor Energy is ranked number 44 on the 2019 Global 100 list by Toronto-based research and media firm Corporate Knights, released Jan. 22. It scored highly on clean revenues, innovation, low injury rate and gender diversity on its board. It most recently made the list in 2015.
In terms of its finances, Suncor was able to demonstrate that 0.9 per cent of its revenues were considered to be clean. Suncor runs Canada's largest ethanol production facility in Canada, called the St. Clair Ethanol Plant south of Sarnia, Ont.
Despite the revenue percentage being very low, the result was the best in its peer group, said Toby A.A. Heaps, the CEO and co-founder of Corporate Knights.
“Suncor earns (roughly) one per cent of its revenue from clean sources, the most significant of which is biofuels. This, believe it or not, is an industry-leading ratio far ahead of Shell, BP, and other oil majors, so Suncor gets a high score on this heavily-weighted metric,” said Heaps.
“Going forward, Suncor will need to ramp up its green exposures to keep pace with many of the oil majors who, while starting from a low base, now have more significant green capital investment programs than Suncor.”
The firm is one of six Canadian companies to make the list. The others are mining giant Teck Resources, insurer Sun Life, retailer Canadian Tire, manufacturer Celestica and transportation company Bombardier.
According to CBC News, Suncor was the biggest recipient of Ontario subsidies for ethanol firms, receiving $189.5 million from 2007 to 2016 from the provincial government.
Suncor was also one of the top recipients of funding from Natural Resources Canada, according to Postmedia, with roughly $117 million in subsidies for biofuels from 2007 to 2013.
The previous Harper government offered these subsidies despite being warned in a 2006 memo sent to then-environment minister Rona Ambrose that ethanol, largely produced from corn and wheat in Canada at the time, was consuming "large amounts of water, natural gas, biomass, electricity and fertilizers," Postmedia reported in 2008. The memo also said that biofuel production would cause more harm to the environment than benefits.
Biofuels industry group Renewable Industries Canada, however, says ethanol reduces greenhouse gas emissions by over 60 per cent relative to gasoline.
Ontario, Ottawa propose ethanol expansion
The St. Clair Ethanol Plant, which opened in 2006, doubled production in 2011 and now takes 40 million bushels of corn annually to turn it into 400 million litres of ethanol per year, the company says. Corporate documents show the plant emitted 0.164 million tonnes of carbon pollution in 2018.
Ethanol is often blended into gasoline that’s sold at the pumps. In Suncor’s case, the company blends its ethanol into gasoline at its refineries in Sarnia, Montreal, Edmonton and in the U.S., and for gas that's sold at Petro-Canada stations, where it can comprise up to 10 per cent.
In Ontario, gas companies, suppliers and sellers must maintain an annual average of five per cent ethanol in the gas at all facilities.
But that number might increase: the Ford government’s environmental plan for Ontario recommends increasing the ethanol content of gasoline to 15 per cent “as early as 2025.” The government is still consulting on its proposal through Jan. 28, 2019.
Ethanol will also likely qualify as a “low-carbon fuel” when the fuel charge program of the federal government’s carbon pricing system comes into effect.
A proposal for this program, called the Clean Fuel Standard, that was released in December will allow producers and importers of fuels that pollute less than the fuels they’re replacing to gain “credits” instead of being taxed.
As well, in 2022 when the program’s regulations come into effect, they will require a five per cent renewable content in gasoline nationwide.
Transportation makes up a quarter of Canada's carbon pollution, and almost half of that comes from cars and light trucks. Ethanol is seen by many as a way to lower the carbon emissions of vehicles without a wholesale change in the way they're powered.
Suncor’s operation of the ethanol plant aligns with the company’s strategic belief that “liquid fuels will remain the primary fuel source of vehicle mobility for many years,” according to its recent corporate sustainability report.
“The most effective action we can take is to continue to reduce the emissions intensity of our liquid fuels,” it stated.
But the federal program does not yet include calculations that tackle one of the biggest environmental concerns that critics have had over the replacement of fossil fuels with biofuels like ethanol.
That is what's known as “indirect land-use change,” which address the impact of landscape changes like deforestation that is required to grow more and more biofuels crops, as demand for them rises.
The Intergovernmental Panel on Climate Change has said land-use change is a key driver of climate change.
Environment and ClimateChange Canada decided to initially rule out these calculations, saying it would revisit the issue at a later date, but the latest document confirms it is still off the table.
Meanwhile, the federal government has made a commitment to expand electric vehicles on Canadian roads.
Ontario, however, opted out of a federal-provincial statement this week on addressing climate change in the transportation system. A struggle with the provinces has led to a delay on the rollout of a promised federal electric vehicle strategy, which is now overdue.
Finnish refining firm takes top energy spot
Corporate Knights, which focuses on sustainability and responsible business issues, examined roughly 7,500 companies with over a billion dollars in revenues and subjected them to a range of metrics. It published its 15th annual list of top performers in Davos, Switzerland this week, coinciding with the World Economic Forum taking place there.
They say their work shows how corporate sustainability is consistent with returns on investment. The opposite seems to be a persistent myth in capital markets. Michael Sabia, the president of Caisse de dépôt et placement du Québec, which manages $300 billion in assets, said in September that too many investors still see climate action as a restraint on profit.
The top ranked energy company overall is Neste, a Finnish oil refining and marketing company. Neste was the third-highest sustainable company on the list overall. Fully one quarter of its revenues were considered clean by Corporate Knights.
Beginning as a state firm, the government of Finland is still Neste’s largest shareholder, with 36 per cent of shares under direct state ownership, and another 8.3 per cent owned by the state business development company, Vake Oy. The company has petroleum refineries but markets itself as a renewable diesel leader, producing 2.6 million tons a year.
Suncor beat out the only other competitor in its peer group category of “integrated oil and gas” company in the top 100, France’s Total SA, which placed a few spots below it, at 57. Total SA had only 0.81 per cent clean revenues. However, the French company is also quite larger.