Cenovus Energy is a publicly listed fully integrated oil and gas company headquartered in Canada. In 2020, it had USD 10.37 billion in revenue and a reported 2,361 employees*. Cenovus’ recent acquisition of Husky Energy will significantly increase the company's overall emissions impact, especially given its lack of a credible transition plan and measures to reduce scope 3 emissions.
Cenovus is aiming to reach net-zero scope 1 and 2 emissions by 2050. It has an intermediary goal of reducing scope 1 and 2 emissions intensity by 30% between 2019 and 2030. However, these targets include offsets and avoided emissions, and could therefore not be assessed. The target also only applies to operated facilities and so excludes the company’s 50% stake in three US oil refineries. Cenovus has also set no emissions reduction target for its scope 3 emissions, which accounted for nearly 78% of its total scope 1, 2 and 3 emissions in 2019.
Cenovus’s locked-in scope 3 emissions from its oil and gas fields are expected to exceed its 1.5°C carbon budget by a massive 132% between 2019 and 2050. This is largely due to Cenovus’s acquisition of Husky Energy, another Canadian oil and gas company, in January 2021. Rather than using mergers and acquisitions to increase the proportion of clean energy in its portfolio, Cenovus’ acquisition of Husky will increase its overall oil and gas production significantly, and consequently increase the emissions impact of the company for years to come.
Cenovus, alongside four other companies, recently announced the Oil Sands Pathways to Net Zero initiative. This initiative aims to develop a carbon capture, use and storage (CCUS) system similar to the Northern Lights project in Norway. This will reduce emissions from oil sands production, as well as provide CO2 transport and storage solutions to other industries. Cenovus can show this initiative is credible by disclosing how much capital expenditure (CapEx) it will dedicate to CCUS. It can further improve the credibility of the initiative by setting out a clear time frame and targets for how much carbon it expects to capture.
Cenovus’ management of climate change issues is still lacking on several fronts. None of its board members appear to have significant expertise related to the low-carbon transition. Cenovus’ executive renumeration is linked to a corporate scorecard, which includes a 2.5% weighted oil sands emissions intensity metric. In contrast, a metric incentivising increased production volumes, and consequently increased emissions, accounts for 20% of executive remuneration.
Furthermore, Cenovus’s transition plan fails to consider scope 3 emissions and lacks any financial commitments. Although the company has considered carbon prices ranging from USD 50 to USD 300 in its climate scenario analysis, it does not yet use an internal carbon price.
Cenovus is a member of at least two trade associations that have lobbied against climate policy. It is a member of the American Petroleum Institute (API), which has opposed numerous climate policies in the USA. Further, Cenovus’s President and CEO is Chairman of the Board of Governors at the Canadian Association of Petroleum Producers (CAPP), which sought to weaken Canada’s Clean Fuel Standard by lobbying for excluding upstream oil and gas from it. The company should establish a robust process to review the climate policy positions of the trade associations it engages with and to withdraw from associations that oppose climate policy.
Cenovus receives a trend score of -. If the company were reassessed in the near future, its score would likely decrease. Cenovus would need to decrease its scope 1 and 2 emissions intensity between 2019 and 2024 at 4 times its reduction rate between 2014 and 2019 to align with its 1.5°C pathway. The company’s recent acquisition of Husky Energy will lead to a significant increase in its overall scope 1, 2 and 3 emissions. Despite this, Cenovus has set out no plans to reduce scope 3 emissions and has no clear plans to develop low-carbon business activities.
Cenovus has set a goal of reaching net-zero scope 1 and 2 emissions by 2050. It has also set an target to reduce scope 1 and 2 emissions intensity by 30% between 2019 and 2030, which includes avoided emissions and offsets.
Cenovus has identified several levers to reduce scope 1 and 2 emissions. It is introducing a solvent-aided process to reduce the steam needed in processing oil sands, cogeneration of heat and electricity and a fugitive emissions management programme. It does not have a plan to reduce scope 3 emissions.
Cenovus recently joined other Canadian oil companies in announcing the Oil Sands Pathways to Net Zero initiative, which includes using CCUS, hydrogen and electrification to reduce scope 1 and 2 emissions. However, no time-bound targets or financial commitments for the Oil Sands Pathways to Net Zero initiative were found.
Cenovus’s scope 1, 2 and 3 emissions intensity only saw a marginal decreasing trend overall between 2014 and 2019. This was due to a slightly higher share of gas in its fuel mix in 2018 and 2019, which is less emissions intensive in its combustion phase. Its scope 1 and 2 emissions intensity showed a marginal decrease as well.
Cenovus has no plan to reduce scope 3 emissions that accounted for approximately 78% of the company’s total scope 1, 2 and 3 emissions in 2019. The company lacks a review process for trade associations and is a member of two associations that that have opposed climate policy in recent years.