Page 65 - AIF - English

(GHG emissions per unit of production) and are required to compliance periods (the first period having commenced

reduce their intensity limits by 12% from an established January 1, 2013 and ending December 31, 2014), and
baseline. With the divestiture of the Hanlan gas processing must either reduce their emissions or purchase eligible

plant in 2013, four facilities now operated by Suncor in compliance mechanisms to cover their emissions above a
Alberta (Oil Sands Base plants, MacKay River operations, specified cap. Quebec is responsible for setting the cap for

Firebag operations and the Edmonton refinery) are subject the province and allocating allowances to emitters in its
to, and continue to comply with, this legislation. For 2012, jurisdiction. As of January 1, 2014, Quebec’s cap-and-trade

the total cost to comply with the SGER was approximately system became formally linked to the WCI. Allowances and
$20.5 million based on $15/tonne of CO. Compliance offsets are fungible across the WCI, such that Quebec-
2e
under the SGER was achieved through reduced emissions issued allowances and offsets can be bought and sold with
per unit of production, and purchase and retirement of the larger trading system, which currently consists solely of

offset credits and payments to Alberta’s Climate Change Quebec and California. It is anticipated that the Green
and Emissions Management Fund (Alberta Technology Fund will eventually be replaced by the cap-and-trade

Fund). For 2014, the total compliance costs to Suncor are system.
estimated to be between $20 million and $25 million,
based on a cost of $15/tonne of CO. The SGER is set to Ontario continues to consult with stakeholders on the
2edevelopment of a GHG reduction program for Ontario’s
expire in September 2014. The Alberta government has industrial sector, intended to achieve equivalency with
indicated that the regulation will likely be renewed
federal government regulation. Suncor’s assets in Ontario
although any renewal may include changes such as include a refinery, a biofuel plant and a lubricants plant.
increased intensity limits, decreased emissions thresholds

and increased costs to the Alberta Technology Fund beyond U.S. GHG Regulations
the current $15/tonne of CO.
2eIn an effort to build a green economy, the current
Several Canadian provinces (including British Columbia, administration of the United States has supported a clean

Ontario and Quebec) are members of the Western Climate energy standard that would reduce GHG emissions from
Initiative (WCI), a multi-jurisdictional partnership, whose the power sector and increase the use of cleaner sources

members also include individual U.S. states, created in of energy, including natural gas, nuclear power and ‘‘clean’’
2007 to address climate change.
coal. It is expected that the President’s Administration will

The Province of British Columbia enacted a carbon tax in work to advance his 2013 Climate Action Plan to reduce
GHG emissions. In the absence of other federal legislation
2008, which began at $10/tonne of CO2e and escalated by
$5/tonne per year until 2012 when it reached its maximum on GHG emissions, the current administration of the
United States is endorsing the U.S. Environmental
of $30/tonne. This carbon tax is revenue neutral, in that
revenues are recycled back to taxpayers via tax reductions, Protection Agency (EPA) to regulate GHG emissions under
the Clean Air Act, starting with the thermal power sector.
and is applied on consumption. Under these regulations,
Suncor’s natural gas production and gathering facilities in The implications of the oil and gas industry being regulated
under the EPA and the timing of such regulation remain
B.C. are classified as one facility, which in aggregate in
prior years has exceeded the 25,000 tonne threshold that unknown. In the meantime, the EPA has implemented a
mandatory GHG reporting rule for all large facilities
requires the reporting of emissions to be verified by third
parties. As a result of Suncor’s divestiture of various natural (emitting greater than 25,000 tonnes of CO2e per year),
which includes Suncor’s Commerce City refinery.
gas assets in 2013, the threshold for third-party verification
is no longer met, but reporting of emission levels on its The EPA has also mandated Renewable Fuel Standards 2,

remaining properties remains a requirement. Similarly, which encourages ethanol blending of up to 15% from the
Suncor’s refined product distribution terminals in B.C. are current 10% limit. Several factors will impact the ability of

required to report emissions, but do not exceed the refiners and producers to achieve these requirements,
threshold that requires third-party verification.
including the lead time required for fleet turnover, the

In 2007, Quebec introduced a tax on hydrocarbon ability of retail stations to simultaneously provide both 10%
and 15% fuels, and the inherent liability for ensuring
production and imports, with the revenues going into a
Green Fund, to support transit and other emissions- consumers use the appropriate fuel for their vehicle.

reducing projects. This tax impacts Suncor’s refining and The State of California has passed AB32, which provides
marketing activities in the province.
for a Low Carbon Fuel Standard (LCFS). In December 2011,

Suncor’s Montreal refinery is subject to Quebec’s the United States District Court ruled against California’s
LCFS, stating that it was in violation of the Commerce
cap-and-trade system for GHG emissions because it
produces more than 25,000 tonnes of COper year. Clause of the United States Constitution. The State of
2e California successfully appealed the ruling in 2013. The
Emitters must verify their emissions during specified

SUNCOR ENERGY INC. ANNUAL INFORMATION FORM 2014 63