The perennially besieged airline industry responded by cancelling thousands of flights, cutting in-flight passenger services and threatening to impose fuel surcharges on tickets. The European Union also announced it would seek to “optimize” jet fuel distribution among member states and look for alternative supply.

You’d think this geopolitical convulsion might mark the long-promised inflection point for sustainable aviation fuel (SAF), a class of biodiesel additives seen by some as a way of weaning air travel from its reliance on fossil fuels. “Iran really is a ‘sharpen the markets’ case for domestic-waste-based SAF,” says Chris Cooper, CEO of XCF Global, a Reno, Nevada–based producer. The war, he adds, “[exposes] the fragility of the fossil crude inputs and supply. We’re fighting with other countries just to produce a product that brings more conflict to the global economy.”

Yet the reality is that SAF – despite years of research and development and policy stimulus on both sides of the Atlantic – has failed to establish itself as a bona fide low-carbon additive to one of the highest-emitting fossil fuels. There has been a conspicuous silence on the part of aviation players that, not so long ago, enthusiastically promoted SAF as a pathway to reduce the sector’s carbon consumption and meet its climate goals. Neither Air Canada nor the Greater Toronto Airports Authority responded to requests for comment on their own adoption timelines. Nova Sustainable Fuels, the company behind a planned multibillion-dollar SAF plant in Nova Scotia, won’t talk. And Delta yanked references to SAF from its sustainability reports a month into the war, Bloomberg reported.

All this circumspection is telling. If SAF can really decarbonize the aviation industry, why are the proponents staying quiet in the midst of the worst fossil fuel crisis since the 1970s?

Mixed signals

Among all transportation modes, aviation has been the most resistant to the adoption of alternative fuels, despite years of efforts to develop jet fuel substitutes. About 5% of fuel for road transport comes from low-carbon sources, such as biofuels, according to the International Energy Agency. Aviation has seen the highest growth in fuel demand; however, SAF still accounts for only 0.7% of all jet fuel production, with European carriers among the main users.

Not so long ago, the prospect of fostering an SAF market and supply chain generated all kinds of official and policy enthusiasm, such as the “SAF Grand Challenge Roadmap” concocted in 2022 by the U.S. departments of Energy, Transportation and Agriculture, as well as the Environmental Protection Agency. The European Union last year even mandated that all jet fuel supplied at European airports contain 2% SAF, with that benchmark rising to 70% by 2050.

The Trump administration has gutted climate policy, yet the waning of enthusiasm for SAF predates his election. In 2024, the International Air Transport Association bemoaned the “disappointingly slow growth” in SAF production, despite all the mid-pandemic progressive hype. “Governments are sending mixed signals to oil companies, which continue to receive subsidies for their exploration and production of fossil oil and gas,” the association’s director general, Willie Walsh, said at the time. “Investors in new-generation fuel producers seem to be waiting for guarantees of easy money before going full throttle.”

The regulatory nudges didn’t seem to be working. “Several countries have put policies and regulations in place to increase SAF use, such as SAF mandates in the European Union and the United Kingdom,” the International Energy Agency noted in a 2025 report. “In the accelerated case, the global SAF share climbs to 15% by 2035.” However, the operative term here is “accelerated,” which makes it more of a fond wish than a takeoff trajectory.

In the United States, some of the SAF-related tax credit from the Biden-era Inflation Reduction Act survived Trump’s backsliding. But the new credit tends to favour biodiesel, says Andy Navarrete, a researcher for the International Council on Clean Transportation, so SAF production remains limited.

Technical holdups

The delays in SAF adoption are also a direct result of the difficulty in ensuring that the chemistry behind these formulations is both reliable and resilient. “We identified very early on that aviation was going to be a particularly difficult sector to decarbonize,” says renewable-energy expert Warren Mabee, a Canada Research Chair at Queen’s University. Jet fuel, he says, has to remain stable under extreme temperatures and pressure changes to ensure that planes don’t suddenly experience a loss of power in mid-air.

Emerging SAF technologies that rely on cellulosic materials, like corn husks and other types of agricultural residues, or certain forms of municipal solid waste, promise lower carbon emissions but have not yet reached full commercial viability, Navarrete says. “There is a good amount of that material that’s available, but it’s not easy to convert into a liquid fuel.”

So for now, the adoption continues to be dogged by the same sorts of hard questions that orbit around other types of biofuels – namely, the source and quality of the feedstock. The EU discourages the use of waste cooking oils because of limited supply, even though such feedstocks, on average, promise an 80% reduction of greenhouse gas emissions compared to conventional jet fuel and are considered to be the least expensive feedstock. “SAFs that use crops as feedstock may not reduce life-cycle [greenhouse gas] emissions at all,” Navarrete adds. “When land is cleared and repurposed for agriculture, carbon stored in the soil and vegetation can be released.”

The EU, in turn, has pushed producers to disclose the full life cycle of their production methods.

Sustainable aviation fuel made from virgin oilseeds like canola, Mabee points out, also tends to be insufficiently dense in terms of chemical makeup, rendering it less suitable for power-hungry jet engines. “This is one of the things about these fuels, they’re not chemically identical to what goes into today’s jet fuels,” he says. “But it has to be similar enough that the engines respond the same way, because there’s really no room for error in these fuels.”

Alternatives to the alternative

Some investors are looking at new alternatives to the old alternatives, such as waste biomass from forestry or municipal solid waste. Nova Sustainable Fuels, based in Halifax, late last year won conditional approval for a large-scale SAF and renewable methanol processing plant powered by wind and solar energy. The facility is to be located in Goldboro, N.S., and will run on a diet of sawmill waste and underbrush from forest management operations, with the resulting SAF exported overseas.

While the company hasn’t formally released the size of the investment, recent media reports estimate that it will cost $4 to $6 billion, with the bulk of the financing coming from Octopus Energy, a leading British renewable-energy supplier with operations around the world. Despite the size of the project (situated on 313 hectares of private and public land) and its positioning as a future mainspring of Nova Scotia’s green energy sector, Octopus didn’t respond to requests for comment, while Nova declined to schedule an interview.

XCF, the Reno firm, has an annual production capacity of 38 million gallons of SAF on a 10-acre site and is expanding its Nevada plant as well as building two others in Australia, thanks in part to new incentives adopted by that country’s national government. Cooper, an oil industry veteran, says XCF uses waste oils created by the ethanol industry, as well as by soybean processing. “We produced the product through our refinery, and then we sold all of the production back to [the oil refiner] Phillips 66,” he says. XCF’s current off-take agreement is with BGN, an energy trader based in Houston.

The most established player in this space is the Finnish energy giant Neste, which generated €19 billion in revenues last year and earned profits of nearly €1.5 billion. The company has plants in Finland, the Netherlands, California and Singapore and is the world’s largest producer of biodiesel. SAF, which is just one of Neste’s products, is processed using waste materials such as residual biomass and cooking oil.

According to its 2025 annual report, Neste’s global SAF production capability is 1.5 million tons per annum, which will grow to 2.2 million tons per year by 2027 after the expansion of its Rotterdam facility. (The company, which is partially owned by the Finnish government, makes most of the world’s SAF.) “We have seen very positive developments recently within the U.S. and in Europe regarding renewable fuel policies,” a Neste spokesperson said in a statement to Corporate Knights. “They provide a solid outlook for years ahead. Renewables provide an alternative for fossil markets that are heavily Middle East–dependent, therefore governments should see renewables as a means to increase energy supply security.”

Perhaps the most promising policy can be found in the United Kingdom, Navarrete says. There, regulators have mandated a minimum ratio of SAF for all jets. But over time, a progressively smaller proportion of the SAF can come from spent cooking oils. As well, the government has fixed a price floor for producers, an approach they also used to drive wind power investment. A combination of a mandate and a price guarantee provides demand-side and supply-side incentives for SAF refiners looking to invest in newer technologies that offer scalable production – without gobbling up valuable agricultural land. “We don’t have anything similar to that in the US,” he says.

Asking the right question

For the foreseeable future, there’s no technology competition for SAF, notwithstanding a very limited number of experiments with battery-powered small planes, such as Harbour Air’s “e-plane,” a refurbished six-seat de Havilland Beaver, which flies around B.C.’s lower mainland. If a large aviation manufacturer like Airbus or Boeing decided to develop a battery-powered passenger jet, it would likely take well over two decades to design, engineer, test and certify such a vehicle, Mabee says. “The commercial biofuels are the only real option on the table.”

Besides the lingering technical difficulties associated with blending biodiesel into jet fuel, the SAF industry’s main problem is that the price differential is too great; the financial incentives, too thin. Mabee learned this implacable fact while working with farmers on the potential for biodiesel. “Farmers will tend to deviate towards the market that’s going to give them a lot of value,” he says. “I can tell you that with biofuels, the value-add is not necessarily there. They can generally make more money selling their product for food than they can for fuel.” Which is just as well, given how ethanol distorted U.S. corn farming.

Indeed, when the International Council on Clean Transportation a month prior to the Iran war tallied up the cost of SAF compared to conventional jet fuel, the price differential was bracing. A litre of SAF cost about eight times more than a litre of jet fuel, and a range of EU-adopted regulatory subsidies reduced the gap by less than a half.

XCF’s Chris Cooper says that state and federal tax and carbon offset credits, both to biofuel refiners as well as to suppliers of the feedstock, have been instrumental in making a business case for its product. (In Canada, Mark Carney’s Liberal government last year launched a consultation about amending federal clean-fuel regulations so they stay abreast of what’s on offer for biofuel producers in the United States.) But, Cooper adds, the most salient selling point is that SAF offers essentially a hedge against the price volatility caused, in part, by geopolitical conflict. “What we’re actually providing the airlines is a bit of stability when these prices are moving.”

Should climate-forward governments be stoking a fuel that’s stuck in neutral? To answer that question, it’s worth noting the largesse that fossil fuels enjoy. As the International Energy Agency has noted, the world spent $600 billion on fossil fuel subsidies in 2023. The calculus around SAF, in other words, might finally change if the price of jet fuel wasn’t being kept artificially low.

“The danger is that the environmental element gets lost in the shuffle,” Navarrete warns. “If [policymakers] start to see SAF as a good on its own, without thinking about the sustainability implications, then we might be shooting ourselves in the foot.” 

John Lorinc is a journalist and author specializing in urban issues, business and culture.

The post The moment appears ripe for sustainable aviation fuels, but the market’s still hedging appeared first on Corporate Knights.

Natural rubber is an essential raw material used to produce more than 40,000 products, including tires, mattresses, shoe soles and surgical gloves. A vast majority of the world’s supply of natural latex is commercially produced from Hevea brasiliensis rubber trees, which are native to the Amazon basin and require labour-intensive monitoring and tapping during harvest. Today, more than 90% of the world’s natural rubber comes from Thailand, Indonesia, Malaysia and Vietnam, an area that has battled extreme flooding, droughts and plant diseases in recent years, causing some experts to speculate that we could soon face a global rubber shortage.

But what if the world’s supply of rubber wasn’t so dependent on one corner of the world? That’s what dandelion researchers are working to find out – and what the U.S. government is betting big on.

Last spring, the Goodyear Tire & Rubber Company launched a multimillion-dollar research effort supported by the U.S. Department of Defense (DoD), the Air Force Research Laboratory (AFRL) and BioMADE, a plant-based synthetic biotechnology company. The multi-year project focuses on a species of dandelion known scientifically as Taraxacum kok-saghyz – TK for short – which is native to Eastern Europe and China. Slightly smaller than the common dandelion, TK dandelions also differ in their ability to produce large amounts of natural rubber in their roots – a rubber that has a molecular structure and mechanical properties comparable to the kind harvested from traditional rubber trees. But unlike rubber trees, which must be at least five to seven years old to produce the latex needed for rubber production, the dandelions can be planted and harvested every six months. Because they can be grown on U.S. turf, that dramatically cuts the carbon footprint of transporting the material from Asia. The widespread adoption of dandelion-rubber-based tires could also alleviate the pollution caused by synthetic tires shedding microplastics into the environment as they wear down.

If they can be grown to scale, TK dandelions have the potential to launch a robust, resilient and bio-based U.S. rubber industry, helping the country become more self-sufficient. “Given the current demand for natural rubber and possible future supply chain issues, there is a compelling need for a domestic source,” says Barry Burton, a program manager at AFRL. “Successful completion of this project will pave the way for wider-spread adoption of domestic natural rubber as a replacement.”

Of course, the U.S. government’s interest in growing a more sustainable domestic economy extends far beyond these rubber-producing flowers. Valued at nearly $1 trillion (all figures in U.S. dollars), the country’s bioeconomy accounts for more than 5% of U.S. gross domestic product, which is more than the contribution from the construction industry. For the last two decades, consumers have been driving demand for more bio-manufactured products, which involves using plants and other renewable agriculture-, marine- and forestry-derived materials and by-products to produce everything from plant-based burgers and natural food dyes to recyclable bioplastics and biofuels.

“In consumer products, where people are going to the grocery store and picking things off the shelf, there is absolutely a driver for bio-based and natural [products],” says Dan Derr, an executive advisor for consumer care at Integrity BioChem, a company that specializes in developing bio-based surfactants (surface-active agents used in personal care), as well as in agriculture, mining and other markets. He’s seen the widespread desire to get away from products that contain plastics and petroleum-derived chemicals take off in the last five to seven years.

Since the pandemic started in 2020, there has been a wave of investment going toward building up the biotech and other bio-based industries in the U.S. Recognizing that it has relied too heavily on imports, the federal government is desperate to foster its bioeconomy.

Last September, President Joe Biden signed an executive order to support the development of a U.S.-centred supply chain for the thriving biomanufacturing industry, joining previous orders for domestically manufactured semiconductors and electric vehicles. Called the National Biotechnology and Biomanufacturing Initiative (NBBI), it opens up more than $2 billion in funding aimed at strengthening supply chains and lowering prices, expanding domestic production of bio-made goods, and spurring more opportunities for the country’s agricultural industry.

Biden’s latest initiative may seem like just another way to drum up popular support by pushing U.S.-made products. After all, agencies like the DoD and the National Aeronautics and Space Administration (NASA) are already legally mandated to procure American-made goods, products and materials if they are available. And the Department of Agriculture’s BioPreferred Program, created in 2002 and expanded by the 2018 Farm Bill, aims to increase the purchase and use of bio-based materials in order to reduce the country’s reliance on petroleum to the benefit of American farmers.

But from a global perspective, the United States is a relative newcomer to the bioeconomy game and has a lot of catching up to do. Canada, which still lacks a comprehensive national bioeconomy strategy, is even further behind. In 2012, Germany and the United Kingdom became some of the first nations in the world to develop roadmaps for building a high-value bioeconomy. China’s heavy investment in its biotechnology, biopharma and bioenergy industries has led it to become one of the U. S.’s biggest competitors. Other countries have also invested heavily in their bio-based industries, with Israeli start-ups focused on cultivated meat production and agritech innovations and Singapore positioning itself to become a leader in biomedical research, all while U.S. public investment in scientific research and development has been on the decline for decades.

Up until 10 years ago, the U.S. accounted for almost half of all biotechnology patents filed worldwide, a position it’s struggled to maintain as the global biotech industry has rapidly expanded. According to one estimate, China alone has invested more than $100 billion into the biotech sector.

Can the NBBI’s $2 billion in funding really help the American biomanufacturing industry catch up with its global competitors? And even if the U.S. is finally getting serious about growing its bioeconomy, will the investment make an impactful difference on the environment? After all, just because a product is classified as bio-based doesn’t necessarily mean it’s good for the planet. Displacing food crops to grow Roundup Ready corn for biofuel and burning trees as an energy source are prime examples of how contentious bio-based products can be.

Biden’s executive order speaks generally about mitigating climate change by reducing our dependency on fossil fuels and petrochemicals and mentions that bioproducts could be more sustainable than traditional crops. But it focuses more on strengthening local supply chains and bringing more bioproducts to market than it does on measuring the carbon emissions associated with doing so. Japan and the European Union have been much more explicit about connecting their bioeconomy strategies with a sustainable and circular economy that operates in a closed loop.

“If it stimulates manufacturing in the U.S., if it means things cost a little less, makes us less reliant on other nations, and it increases [interest, funding and diversity in science, technology, engineering and math (STEM)], then great,” says Christopher Reddy, a senior scientist at Woods Hole Oceanographic Institution who studies marine pollution and petroleum geochemistry and develops natural products for the cosmetic industry.

Beyond growing the value of its bioeconomy, the U.S. government has another vested interest in producing more bio-made products stateside: national security. Derr, who worked with biofuels for two decades before moving into the surfactant industry, points to the DoD’s interest in renewable fuels around 2005 as an example. “It became clear right around that time that if the United States wanted to, we could develop all of our transportation fuel from renewable-grown energy here,” he says. “What the Department of Defense sees when they hear that is ‘Oh, we don’t have to protect shipping lanes from the Middle East anymore in order to have fuel to fly our jet fighters. And if we can grow it here, that’ll mean we won’t have to burn up as much jet fuel, right?’”

Now, nearly 20 years later, the DoD is buying into the promise that the country can someday meet its own demand for rubber tires – all from a type of dandelion that, unlike rubber trees, thrives on American soil.
It might be too early to say whether American investments like this will pay off. But it’s not all for nothing. “Even if [the investment in growing the American bioeconomy is] a net-negative, we end up being less reliant and we’re training more next-generation scientists and engineers,” says Reddy. “And that has clearly been shown to be good for an economy.”

Shelby Vittek is a New York–based journalist who writes about food, wine and agriculture.

The post Why the U.S. Department of Defense is pouring money into growing dandelions appeared first on Corporate Knights.

It’s a question that’s been tripping up national carbon calculators around the globe since the days of the Kyoto Protocol. From the late 1990s, industry and governments have largely considered burning wood pellets in power stations to be renewable, zero-emitting energy, since planting new trees should, theoretically, absorb enough carbon dioxide to cancel out the emissions that come out of smokestacks as they burn.

But doubts regarding the science behind those claims and the sustainability of the practice have been mounting as more countries ramp up the burning of woody biomass as a replacement for coal.

In October, the world’s largest biomass-burning power generator, Drax Group, was one of 15 companies booted off the S&P Global Clean Energy Index. S&P also ditched the French bioenergy firm Albioma. The reason given: their “carbon-to-revenue footprint” was too large. S&P didn’t offer company-specific details beyond that, saying only that changes to the S&P Global Clean Energy Index were integrated “in order to enhance index diversification, improve transparency, further reduce the index’s carbon footprint, and align the index methodology with market trends and sustainable investing norms.”

That same month, a study led by Princeton University, published in the journal Science, called out a “serious” error in the climate accounting rules widely applied to biomass energy since the Kyoto Protocol. “This accounting erroneously treats all bioenergy as carbon neutral regardless of the source of the biomass…. For example, the clearing of long-established forests to burn wood or to grow energy crops is counted as a 100% reduction in energy emissions despite causing large releases of carbon.

“Burning wood to produce energy can actually worsen climate change, at least through the year 2100 – even if wood displaces coal, the most carbon-intensive fuel.”

 –John Sterman, MIT

The carbon-neutral assumption might be true if you’re using perennial grasses or twigs, but scientists say that tree plantations don’t store as much carbon as natural forests, and regrowth takes time. It could take 40 to 100 years for planted trees to absorb the carbon debt released by biomass power plants (in boreal forests those estimates jump to 100 years).

Back in 2018, MIT scientist John Sterman concluded that “burning wood to produce energy can actually worsen climate change, at least through the year 2100 – even if wood displaces coal, the most carbon-intensive fuel.” In early 2021, the European Academies’ Science Advisory Council affirmed that using woody biomass for power “is not effective in mitigating climate change and may even increase the risk of dangerous climate change.”

Meanwhile, the carbon accounting loophole has fuelled a boom in the biomass industry in Europe, the U.S., Canada and the U.K., where it’s highly subsidized. In the EU, biomass accounts for about 59% of all renewable energy consumption.

Once the largest coal generator in western Europe, Drax now gets two-thirds of its biomass from southeastern U.S. forests and a growing percentage from western Canada. Last April, Drax purchased British Columbia’s Pinnacle Renewable Energy, which the company says should increase its annual operational capacity to 4.9 million tonnes of biomass pellets by 2022, up from 1.6 million tonnes. Drax now owns more than half the pellet mills in B.C.

Pellet makers generally say they don’t cut down whole trees and instead use fallen branches, sawdust and other waste wood, but environmental organizations in both the U.S. and Canada say otherwise. The Natural Resources Defense Council has said that “multiple independent investigations show that wood sourced from clearcuts of mature and biodiverse forests routinely enters Drax’s supply chain.”

Drax says that its biomass meets the “highest sustainability standards” and that, in B.C., “harvesting increased significantly to utilise the dead and dying timber [affected by mountain pipe beetle] as lumber in sawmills whilst it was still viable.”

Ben Parfitt, a researcher with the Canadian Centre for Policy Alternatives (CCPA), takes issue with the statement. “Photographs, videos and publicly available data clearly show that Drax doesn’t discriminate between living or dead trees. It takes whatever it can get its hands on,” says Parfitt, who wrote an investigative report on the pellet industry in April. He adds, “It’s time the B.C. government commissioned an independent expert to investigate.”

Until then, CCPA is calling for a ban on any new pellet mills in the province. The Vancouver-based environmental group Stand.earth has called for a moratorium on the logging of B.C.’s primary forests for pellets. Across the pond, 50 MPs wrote a joint letter to Britain’s energy minister in December, calling the burning of wood to create power a “scandal.”

Drax maintains that its bioenergy has slashed its CO2 emissions from power generation by more than 90% since 2012. The firm is looking into piloting carbon-capture technology, which CEO Will Gardiner says will make the company carbon-negative by 2030.

The post Tree-burning Drax power plants dropped from green energy index appeared first on Corporate Knights.

“If that doesn’t tell you a story about how the math has changed, nothing will,” says Andrew Grant, the head of Oil, Gas and Mining at Carbon Tracker, a London-based not-for-profit think tank that researches the impact of climate change on financial markets. “I think it’s become very clear that the world is different now.”

The contours of that new world were mapped out in BP’s 2020 Energy Outlook, which the company released in mid-September. Gone was its bullish scenario from the previous year’s forecast that suggested oil demand could rise to 130 million barrels per day by 2040. Instead, it thought the best that oil producers should hope for is that demand levels recover to approximately 100 million barrels per day and flatline there for the next decade or so. But in both its “rapid” and “net-zero” scenarios, where climate policy is adopted around the world to varying degrees of ambition, demand falls off much more rapidly.

BP’s net-zero scenario made headlines around the world for suggesting that demand for oil has already peaked, and the company is acting like it believes that will happen. In addition to announcing that it will reduce its oil and gas production by 40%, it also pledged to cut its refining output by 30% within 10 years, all while shifting approximately one third of its new investments to low-carbon energy.

BP isn’t the only European oil and gas company that has recently announced a shift toward a lower-carbon business model. In April, Royal Dutch Shell committed to reaching net-zero emissions by 2050, with CEO Ben van Beurden noting that “global society, overall, may have until around 2060 to reach net-zero emissions. But Shell recognizes that it stands within a section of society that needs to move faster. And so that is what we intend to do.” France’s Total SE has also pledged to eliminate greenhouse gas emissions associated with its operations by 2050, while Italy’s Eni went even further by committing to hitting that target by 2040. But BP’s pledge to reduce its actual production, rather than simply eliminate the greenhouse gas emissions associated with it, is a major step forward. “It’s been a bit of an arms race, or so it seems, over the last year or so,” Grant says. “And BP has really jumped into the lead in that race.”

“It’s been a bit of an arms race, or so it seems, over the last year or so, and BP has really jumped into the lead in that race.”

–Andrew Grant, head of Oil, Gas and Mining at Carbon Tracker

Here in Canada, though, the race has been slower to get underway. Take Enbridge, which has one of the biggest renewable energy portfolios in Canada. In a June piece in the Financial Post, CEO Al Monaco said his company would take a “gradual” approach to increasing its exposure to renewable energy, which currently makes up approximately 5% of its total assets. Large companies like Suncor, Cenovus, and Canadian Natural Resources have all signalled their intention to reach net-zero emissions by 2050, but they haven’t fleshed out how they’re actually going to do that. Instead, there’s been a lot of hand-waving toward technological innovation and the ability of the industry to rise to challenges, with a focus on things like improved extraction processes and the replacement of coke-fired boilers with higher-efficiency cogeneration units.

These are the sorts of improvements that have helped drive the per-barrel emissions associated with oil-sands production down by 21% between 2009 and 2017. But they haven’t prevented the industry’s overall emissions from rising, as soaring production has swamped these efficiency gains. For all the recent talk about low-carbon innovation, some industry watchers point out that Canadian oil companies haven’t really taken any meaningful risks yet. Suncor, for example, recently announced a $15-million investment in LanzaJet, a new venture that will make lower-carbon jet fuel and renewable diesel; the company also added $50 million to the $76.3 million it had already invested in Enerkem’s biofuels. But those figures are only a fraction of Suncor’s revised 2020 capital budget, which is expected to range between $3.6 and $4 billion.

“I think our pseudo-national oil companies are the least innovative national oil companies in the world,” says Sean Collins, founder of Terrapin Geothermics and an Energy Futures Lab fellow. “Even your Saudi Aramcos of the world are putting billions of dollars into direct renewables, and we’re nowhere to be seen.”

“I think our pseudo-national oil companies are the least innovative national oil companies in the world.”

–Sean Collins, Energy Futures Lab fellow

The idea of reducing production, rather than just the emissions associated with it, to meet net-zero goals remains largely taboo among industry leaders. When asked by the Financial Post back in February if his company would consider letting its production decline in the face of growing environmental concerns, Suncor CEO Mark Little said, “We don’t think that’s a solution.” By June, however, Little had written an op-ed in Corporate Knights stating that energy companies are “best positioned to invest in and lead energy transformation,” noting that “now is the time to take a big step forward.”

Canadian companies have yet to really take those steps – or undertake the same transformations that are proving profitable in Europe. In November 2017, for example, Italy’s ERG received €270 million for selling off its share of a joint venture that included 2,600 service stations and a minority stake in an oil refinery. That completed its transition from a company that owned refineries, pipelines and gas stations to one that invested primarily in wind, solar and hydroelectric projects – and since then, its shares are up nearly 50%. Earlier that year, Denmark’s Ørsted (formerly the Danish Oil and Gas Company) completed a similar transformation by selling its oil and gas business to petrochemical company Ineos for €$1.05 billion. Its shares have more than doubled since then. And the value of an investment in Finland’s Neste, which began as that country’s state oil company but has built a growing fleet of renewable diesel plants in recent years, has tripled over the same period. By comparison, the S&P Commodity Producers Oil & Gas Exploration & Production Index has been cut in half.

That sort of pivot would be harder to make for Canada’s oil and gas companies, which have many decades worth of reserves on their books (and nobody to sell them to). But they may not have to pivot as aggressively as their European peers. Instead, they could tap into those reserves and put them to uses other than combustion, from the creation of high-strength carbon fibre (which can displace steel) to the production of lower-carbon blue hydrogen. “That feels like a much different proposition than getting into solar or wind,” says Jamie Bonham, the director of corporate engagement at NEI Investments. “It feels like something that’s more in their wheelhouse.”

But if Canada’s oil and gas companies aren’t keeping up with the European supermajors, they’re at least ahead of their peers south of the border. The climate pledges of large integrated companies like ExxonMobil and Chevron are conspicuously modest, while the ones made by shale producers are effectively non-existent. Canadian oil companies have largely accepted the nature of the challenge and the need for tools like carbon pricing to help meet it. “The existence of this trajectory is something that’s no longer a debate,” Bonham says. “That puts the industry in a better place than its U.S. peers.”

Husky Energy, for example, recently announced that its executives will now be paid in part based on how effective the company is at achieving its target of reducing greenhouse gas emissions by 25% by 2025. “The conversation is beginning to occur in Canada,” says Janet Annesley, Husky’s senior vice-president of corporate affairs and human resources. Meanwhile, the relatively concentrated nature of Canada’s industry, both in terms of the number of companies and the geographic footprint of the assets they control, gives it an edge when it comes to deploying new technology. “When you have the world’s second-largest oil resource in one place, and projects that have a 30- to 50-year lifespan, you have the ability to focus on finding those solutions – versus some of the shale plays that are much shorter in life-span and are more dispersed and make the cost of applying those solutions so much greater,” Annesley says. “They can’t even really capture their methane down there because they don’t have the pipeline network.”

The big question now is whether those Canadian companies will take advantage of these relative strengths or squander them if and when oil prices recover. “The Canadian companies will say the words,” says Collins. “But do they believe it in their souls – that it’s the future? Because if you don’t, then as soon as prices rise again it’s back to your comfort zone.” Even if they continue moving in the right direction, Bonham worries that it’s not fast enough. “I feel like they’re on the right path, and they’re attacking some of the right issues. But it’s not entirely clear to me that the urgency of the moment is being fully embraced.”

Max Fawcett is a freelance writer and the former editor of Alberta Oil magazine.

Big Oil’s clean investments are still small fry

With oil companies committing to net-zero targets, Corporate Knights decided to follow the money to see exactly how much has been allocated to low-carbon investments so far. We tallied spending in R&D, capital expenditures, acquisitions and other investments (including joint ventures and share purchases in other companies). Here’s how it breaks down:

What % of their investments were clean in 2019?

BP: 0.77%
Chevron Corp.: 0.0%
Exxon Mobil Corp.: 0.0%
Royal Dutch Shell: 0.07%

Total SE: 0.0%

METHODOLOGY: Investments were determined to be clean if they corresponded with the Corporate Knights Clean Revenue Taxonomy. General commitments and future-oriented pledges were not included. If investments were spread over multiple years (e.g. a wind farm being built over three years) and the annual investment was not disclosed, the total investment was divided by the years the project would take to complete, determining an approximate annual expenditure. If no financial data was available, the investment value was marked as $0. All companies were contacted to verify the numbers.

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