As a leading Canadian-based integrated energy company, we offer perspectives on a wide range of topics related to our industry and are committed to being an active, constructive and factual voice. Review our position on key issues and public policies to learn more about what matters to us and our stakeholders.
Our views on key issues
- We share the world's concerns about climate change and are continuing to advance initiatives to further reduce Cenovus's greenhouse gas (GHG) emissions.
- Cenovus has a target of reducing our absolute emissions from operations* by 35% by year-end 2035, and an ambition of achieving net zero emissions from operations by 2050. Learn more about our Climate and GHG emissions target here.
- Cenovus is also a founding member of the Pathways Alliance, representing the six largest oil sands producers in Canada, operating 95% of oil sands production. The Alliance includes Cenovus, Canadian Natural Resources, ConocoPhillips Canada, Imperial, MEG Energy and Suncor Energy.
- Pathways Alliance has set a goal, which aligns with Cenovus's own goal, of achieving net zero emissions from oil sands operations by 2050. Learn more about Pathways Alliance here.
*Emissions reductions are in reference to scope 1 and 2 emissions, on a net equity basis. Scope 1 emissions are direct GHG emissions from owned or operated facilities by the reporting company. This includes emissions from fuel combustion, venting, flaring, industrial processes and fugitive leaks from equipment. Cenovus accounts for emissions on a gross operatorship basis. The company also reports its net-equity share of emissions from all of its assets. Scope 2 emissions are indirect GHG emissions associated with the purchase or acquisition of electricity, steam, heat or cooling for use at the owned or operated facility.
The role of oil and natural gas in a low carbon future
- As the world transitions to a lower carbon future, people around the world will continue to need access to a secure, diversified mix of affordable and reliable energy, including responsibly produced oil and natural gas.
- All credible independent forecasts indicate hydrocarbons will continue to be a part of the global energy mix for decades – as both a transportation fuel and a building block for many of the products we use every day.
- The current and future use for hydrocarbons is extensive. Fuel, heat, clothes, asphalt for paved roads, fertilizer to grow food, high-tech plastics used in millions of everyday products such as smartphones, contact lenses and computers, carbon fibre products used to build lighter aircraft and electric vehicles, and other innovative products which will help drive lower emissions.
- In the International Energy Agency (IEA) Net Zero by 2050 scenario, oil production and incremental oil development continues to be required to help meet the world’s demand for energy.
- Since oil and gas will continue to play a key role in meeting the world’s demand, those barrels should come from jurisdictions like Canada that have a track record for responsible production, transparency and strong environmental, social and governance (ESG) performance.
- The risks of taking energy security lightly were underlined by the turmoil in global commodity markets following Russia’s invasion of Ukraine in early 2022. The resulting energy shortages and spike in commodity prices also made clear the critical role Canada’s oil and natural gas industry can play in helping ensure Canadians have continued access to affordable, abundant and reliable energy supplies needed to maintain our quality of life in a lower carbon future.
- Canada is uniquely positioned to contribute to global energy security by becoming a preferred supplier of responsibly produced, lower carbon oil and natural gas.
- Our country has large, long-life, low-cost and geographically concentrated reserves, with a strong track record of companies working together on emissions reductions.
- Canada's oil sands are the largest known proven oil reserves in North America, about 170 billion barrels, and the fourth largest in the world (after Venezuela, Saudi Arabia and Iran).
- Canadian companies, including Cenovus, are top sustainability performers among global peers when it comes to environmental, social and governance (ESG) scores (see slide below).
- Canada has a stable democracy and strong regulatory system.
- By working together with industry peers and government, we can support Canada’s climate commitments, help ensure energy security for Canadians and protect the tens of billions of dollars the oil and gas sector contributes to the Canadian economy each year. That includes hundreds of thousands of good-paying direct and indirect oil and gas jobs across the country. Learn more about how we’re working together with peers to support Canada’s climate commitments through Pathways Alliance.
- We recognize our responsibility to support reconciliation with Indigenous people. Our approach to working with Indigenous communities focuses on engagement and consultation, relationships built on trust, business and employment opportunities and investment in social programs. We also believe one of the most important ways we can support reconciliation is through economic inclusion. Learn more here.
- One of our environmental, social and governance (ESG) targets is to spend a minimum of $1.2 billion with Indigenous businesses by year-end 2025 (from 2019) and attain gold Progressive Aboriginal Relations certification from the Canadian Council for Aboriginal Business by year-end 2025.
- In the first quarter of 2023, we surpassed $1.2 billion of spending, and while we've met our minimum, we will continue looking for additional opportunities to work with Indigenous businesses.
- Since 2009, we’ve spent more than $4 billion on goods and services with Indigenous businesses – ranging from camp services to earthworks.
- Our Indigenous Housing Initiative, the largest community investment in Cenovus’s history, indirectly supports our Indigenous reconciliation targets, and is helping to address one of the most pressing issues facing Indigenous communities in Canada – inadequate housing that forces many families to live in overcrowded and sometimes unsafe conditions. Learn more about the initiative here.
Our public policy positions
As a Canadian-based integrated energy company with oil and natural gas production in Canada and the Asia Pacific region, and upgrading, refining and marketing operations in Canada and the United States. We actively monitor and evaluate public policy developments that impact our industry and work constructively with all levels of government to seek sensible policy solutions that ensure a strong business environment and align with our corporate objectives, strategy and environmental, social and governance (ESG) approach. While Cenovus is affected by numerous public policy issues at the national, regional and local level in the jurisdictions where we operate, the issues outlined below are the ones we currently deem most impactful to our company and that we have taken a public position on.
Our current positions
- Currently, Cenovus is exposed to carbon pricing on its upstream and downstream production in Canada.
- Cenovus generally supports a price on carbon as an effective tool to reduce greenhouse gas emissions, provided consumer affordability and the international competitiveness of heavily trade-exposed sectors, such as oil and natural gas, isn’t compromised.
- Cenovus believes companies should be able to use any payable carbon compliance fees to offset the costs of building and operating their decarbonization projects. This ensures a carbon price signal is maintained while efficiently allocating capital to decarbonization of the sector.
- Canadian oil producers are in competition with global producers, most of whom operate in jurisdictions with no price on carbon. If carbon pricing regulations become overly onerous, it could undermine Canada’s international competitiveness and lead to carbon leakage as investment dollars, production capacity, jobs and resource revenues move to lower-cost jurisdictions, many of which don’t have the same level of transparency or stringent environmental regulations or ambitions as Canada.
- A viable, competitive energy industry in Canada is able to continue to support the economy, provide jobs, ensure energy security and affordability for Canadians and other markets we serve while also reducing emissions.
- Cenovus has set ambitious goals to achieve significant absolute emissions reductions on the path to net zero emissions from operations by 2050. Learn more about our goals as well as the goals of the Pathways Alliance.
- Canada was one of the first countries in the world to regulate methane emissions from the oil and gas sector at the national level. It is also the first country to commit to developing a plan that includes regulations requiring at least a 75% reduction by 2030, from 2012 levels.
- We have established a corporate milestone to reduce absolute methane emissions from our upstream operations by 80% by year-end 2028, from a 2019 baseline. This is a key milestone towards our target to reduce absolute GHG emissions from operations 35% by year-end 2035 as we build toward our net zero ambition. Our upstream operations represent over 90% of our methane emissions.
- While we support the commitment to reduce methane emissions from the oil and gas sector, it will be extremely important to design and implement practical and achievable regulations, supported by impactful early-action incentive programs.
- Provinces are the best suited regulator for oil and gas operations, including methane emissions, and we support the province maintaining that regulatory authority.
- The currently proposed federal methane regulatory amendments create a strong possibility that the cost burden, level of ambition, pace of implementation, and lack of viable technological solutions and trained resources will make compliance technically and economically unachievable.
- Given government’s position that federal emissions policy should not be designed to compel the shut-in of production, Cenovus will work with government to help them calibrate policy in a way that achieves significant methane abatement without the unintended consequences of lost production. We need methane emissions policy that is realistic, achievable and focused, without compromising health and safety or production.
Oil and gas emissions cap
- The Canadian government introduced a proposed regulatory framework in December 2023 to cap greenhouse gases from the oil and gas sector. The framework aims to progress Canada’s climate ambitions and commitments, as outlined in the 2030 Emissions Reduction Plan, by limiting greenhouse gas emissions from the oil and gas sector to 35-38% below 2019 levels.
- The regulatory framework will follow a cap-and-trade model that sets a regulated limit on emissions from the sector. At the end of the compliance period, every facility that operated during the period would need to remit one allowance for every tonne of emissions it emitted. Oil and gas facilities that have a surplus of allowances can trade them on an emissions trading market.
- The federal government has stated that its regulatory design principles seek only to limit emissions and not restrict oil and gas production. The government also states that the policy is designed to encourage investment in decarbonizing the sector while considering energy security and competitiveness challenges, aiming to minimize the risk of carbon leakage. Cenovus agrees with and advocates for these important design principles. Unfortunately, the currently drafted proposal fails to achieve them.
- International jurisdictions that have seen significant progress in carbon capture and sequestration infrastructure rely heavily on incentives and simplicity of policy design that recognizes investor requirements for a return on capital. Canada’s approach has gone in the opposite direction. The emissions cap proposes to stack a highly complex regulatory structure on top of rigorous existing emissions regulations. Cenovus believes the emissions cap is not needed to achieve meaningful emissions reductions and unnecessarily complicates investors’ ability to assess and manage policy risk.
- Cenovus believes existing emissions policies (including carbon pricing and methane abatement regulations) have the capacity to achieve an orderly decarbonization of the Canadian oil and gas sector. What is missing is an effective incentive structure that rivals leading decarbonizing oil and gas nations like Norway and the United States.
- Cenovus has set our own ambitious climate target to reduce absolute GHG emissions from operations by 35% by year end 2035 and build toward our long-term ambition for net zero by 2050. Achieving this target will require effective collaboration with and support from the federal and provincial governments.
Clean Fuel Regulations
- Canada’s Clean Fuel Regulations (CFR) took effect in July 2023, replacing the federal Renewable Fuels Regulation. The policy sets increasingly stringent requirements on fuel producers and importers to reduce the lifecycle carbon intensity (CI) of liquid fuels used in Canada, supporting the production of cleaner fuels, including cleaner fossil fuels and lower carbon intensity biofuels.
- The policy requires liquid fossil fuel (gasoline and diesel) suppliers to gradually reduce the carbon intensity – or the amount of emissions – from the fuels they produce and sell for use in Canada over time, leading to a decrease of approximately 15% (below 2016 levels) in the carbon intensity of gasoline and diesel used in Canada by 2030. Offsets credits can be used where carbon intensity reductions are not achieved.
- The target is to achieve 30 million tonnes of annual reductions in greenhouse gas emissions by 2030, contributing significantly to Canada's goal of reducing national emissions by 30% below 2005 levels by the same year.
- The federal government, Advanced Biofuels Canada, and a Parliamentary Budget Officer’s report estimate gasoline prices could increase by between 6 and 17 cents per litre as a result.
- The CFR were initially drafted to allow the generation and sale of emissions credits for the implementation of all upstream carbon capture and sequestration projects. This could have helped significantly improve the economics of Canadian carbon capture projects. Government later excluded any projects associated with oil that is exported - approximately 80% of Canadian oil production – from being eligible. Cenovus has recommended this exclusion be lifted and eligibility criteria be simplified so that abated emissions from any CCUS-produced barrel can generate a credit.
Clean Electricity Regulation
- Canada’s draft Clean Electricity Regulations (CER) aim to transition Canada to a net-zero electricity grid by 2035. Clean electricity is a key component in Canada's strategy to address climate change and achieve net-zero emissions by 2050. The proposed regulations are expected to cut over 340 megatonnes of greenhouse gas pollution by 2050 and are intended to stimulate investment in renewable energy and emerging technologies. The federal government expects to finalize these regulations in 2024.
- We agree emissions reductions in the electricity sector are needed and they must be done in a way that protects reliability and affordability of the grid. But as currently structured, the regulations do not reflect Alberta’s very real challenges. Alberta simply has a different geographic and industrial structure, which would require the province to transform 80% of its power grid. That’s the biggest burden of any province in Canada. Saskatchewan is also heavily reliant on natural gas and coal fired power generation, so this would be an enormous lift in that timeframe.
- As currently proposed, the CER will drive up costs for consumers and businesses, and significantly harm economic competitiveness and impact reliability of electricity supply. Alberta has already reduced emissions by an enormous amount (more than 50%) with the phase-out of coal and conversion to gas. Both the Alberta and Saskatchewan governments have stated strong opposition to the timeframe proposed by these regulations and expect to challenge them in court.
- Cenovus’s emissions targets and ambitions are aligned with the goals of Clean Electricity Regulations; however, we are concerned about the timeline of reaching the government’s goals by 2035. We rely on governments at all levels to create coordinated policies that achieve emissions goals without jeopardizing the affordability and reliability of the electricity grid for Canadians.
Impact Assessment Act
- The Canadian Impact Assessment Act (IAA) is a legislative framework that governs how the federal government assesses the impacts of designated projects, including those on federal lands. The Impact Assessment Agency of Canada leads these assessments.
- In October 2023, the Supreme Court of Canada ruled that parts of the IAA are unconstitutional. The majority of the Court (5-2) ruled that the IAA's provisions addressing the assessment of "designated projects" exceeded federal legislative authority, as they regulate projects in their entirety rather than limiting the assessment to areas within federal jurisdiction. We support Alberta’s position that the federal law improperly encroached on provincial constitutional jurisdiction.
- We view the Supreme Court decision as positive for oil and natural gas producing provinces in Canada in that it reaffirms the role of the province (which owns the resource) as the jurisdiction best placed to regulate major energy projects. The Impact Assessment Act will require significant revision to align it with the Supreme Court’s ruling.
- We will continue to advocate for regulatory regimes that allow our sector to provide responsibly produced lower emissions energy to increase energy security and maintain energy affordability for the markets we serve.
Investment tax credit
- In Canada, the federal government has proposed to use Investment Tax Credits (ITCs) as a strategic financial tool to promote private sector investment in certain technologies and projects that contribute to the government’s climate ambitions. These credits allow businesses to offset a portion of their capital investment costs in areas such as renewable energy, energy efficiency, carbon capture and low-emissions technology.
- Canada’s Carbon Capture, Utilization and Storage (CCUS) ITC proposes to refund a percentage of “eligible equipment” costs until 2030. The CCUS ITC can be applied to cover 60% of eligible carbon capture equipment used in Direct Air Capture, 50% for upstream carbon capture equipment, and 37.5% for eligible transportation, storage and carbon use equipment. After 2030, the ITC rates will be reduced by half. The CCUS ITC excludes operating costs, a significant expense for CCUS projects. It also excludes the use of CO2 for Enhanced Oil Recovery, which in the United States has provided stable revenue to offset the costs of nearly all existing CCUS projects.
- Other leading decarbonizing oil and gas nations provide significantly more support than Canada for both capital and operating costs and they provide it in a simpler-to-access manner that reduces funding risk. Their incentive structures are also available for longer periods which reflects a more realistic understanding of the high costs and years required to plan, design, permit, sanction, finance, procure, construct and certify large infrastructure projects. This puts Canadian projects at a significant economic disadvantage.
- While Cenovus supports Canadian government efforts to incentivize investment into much needed CCUS technology, the definition of “eligible equipment” is unclear and the relatively short period the full ITC will be available for is also a risk.
- Cenovus advocates for decarbonization capital and operating funding support through tax credits at a level that is competitive with leading oil and gas producing nations that are tackling the emissions challenge.
Indigenous access to capital
- Economic reconciliation provides an important opportunity for corporations to support meaningful inclusion of Indigenous peoples who live near our operations in Canada and the U.S. Learn more about Cenovus’s Indigenous reconciliation targets and progress.
- In Canada, the federal government has promised to provide details of a proposed Indigenous loan guarantee program in its next federal budget, expected in March 2024.
- At Cenovus, we believe access to competitive capital is critical to increasing Indigenous participation and investment in the economy. We support the idea of a federal Indigenous loan guarantee program. It is important that Indigenous peoples determine which investments make the most sense for their communities or businesses and that the program should not be prescriptive.
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