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Suncor Energy Inc.’s SU latest initiative aligns with the national goal of Canada and is about 25% stronger on an intensity basis per barrel than its 2015 target.
In 2015, the Canada government announced a climate target to reduce 30% of the country’s greenhouse gas (“GHG”) emissions below the 2005 levels by 2030. The company went a step further than its peers to slash overall emissions across its operations by 10 million tons per year by 2030. Notably, this would imply a nearly 30% reduction in GHG emissions, which amounted to 29 million tons in 2019.
Moreover, Suncor, the second-largest oil producer in Canada, intends to increase production to an unprecedented level of 800,000 barrels per day within 2021-25, while reducing more than one-third of GHG emissions. The company plans to raise oil production by debottlenecking or enhancing the efficiency of its existing facilities instead of developing new projects.
Energy companies, which use carbon-intensive techniques for oil and gas exploration and production, are facing immense pressure from investors and activists to reduce emissions. Most importantly, producers in Canada’s high-carbon oil sands suffered significantly as investors increase pressure on the oil industry to meet the concerns regarding climate change.
The company also mentioned that it will not divest assets to achieve its emission-reduction targets as some European oil majors such as Royal Dutch Shell Plc RDS.A, BP plc BP and TOTAL SE TOT exited the oil-sands, believing that offloading carbon-intensive assets would result in actual emissions cuts.
Suncor plans to steadily invest C$500 million per year in the coming years to achieve its emission-reduction targets. Notably, this would represent about one-third of the company’s C$1.5 billion for growth capital or 10% of the total capital spending of C$5 billion on emission-reducing initiatives and renewable projects such as wind farms.
Suncor aims to increase its profitability by C$2 billion per year by 2025. Moreover, the company is planning to collaborate with utility ATCO Ltd. to develop a clean hydrogen project in Alberta in one of the most significant ways adopted by an oil sands producer to reduce emissions.
Company Profile & Price Performance
Headquartered in Calgary, AB, Suncor is a premier integrated energy company.
Shares of the company have outperformed the industry in the past six months. Its shares have gained 43.8% compared with the industry’s 29.5% growth.
The company currently flaunts a Zack Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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