It may surprise many to learn that Suncor, along with other fossil fuel energy companies, invest in renewable energy sources. This fact occasionally surprises even informed industry observers.
Why would firms whose prime expertise is developing oil and natural gas resources divert capital and management time to wind power, bioethanol, solar power and other alternative energy projects? After all, renewable energy projects present quite different technical and logistical challenges, and are typically less profitable than hydrocarbon ones.
Why renewable energy?
Pembina notes oil and gas companies have key skills necessary to develop renewable energy, from understanding energy markets and complex technologies to running large projects and working with communities. Oil and gas firms also have access to capital, thanks to good credit histories and valuable resource assets.
Pembina also observes socially responsible investments from people committed to climate change initiatives want oil and gas firms to more aggressively pursue carbon reduction and offsetting and renewables can help on that front.
Renewable energy sources are definitely important for diversifying companies’ project portfolios, and take advantage of emerging energy opportunities. While renewables may currently have a lower rate of return, they’re still an important part of the energy mix. Renewables can be financially successful for oil and gas companies, especially when it comes to on-site and off-grid power generation. Pressure from political stakeholders to take some carbon off the balance sheet is another good reason to taking renewables seriously.
Suncor may have some of the largest reserves in the oil sands, but we are also one of the largest renewable energy players in Canada, with investments in wind power and ethanol.
We now have investments in six wind energy projects in three provinces and recently doubled the capacity of our ethanol production plant near Sarnia, Ontario. It is estimated that Suncor’s combined renewable energy portfolio currently displaces about one million tonnes of carbon dioxide per year — the equivalent of the tailpipe emissions of about 200,000 cars.
Future energy sources
Given Suncor’s long-term view to energy development, these investments make sense for the company, as wind power and bio fuels are among the energy sources for the future.
The viability of renewables is getting better, but it’s not likely to improve dramatically in the short term. As we’ve noted in previous OSQARs, energy systems transitions take a long time. The International Energy Agency, the world’s foremost experts on energy demand and production, expects fossil fuels to remain dominant in the global energy mix through to 2035.
Nevertheless, current investment in renewables by oil sands and conventional energy developers is healthy, as is its commitment to alternative energy sources for the long term. After all, with the world’s population expected to grow to 9 billion people by 2043, we’ll need all the energy we can get.