Page 74 - Suncor AR English

RISK FACTORS

opposition to new North American pipeline systems, such • Issues related to offset requirements for various land

as the Keystone XL or the Northern Gateway proposals, or disturbances;
incrementally over time, through increasingly stringent
• Reformulated gasoline to support lower vehicle
environmental regulations or unfavourable income tax and emissions;
royalty regimes. The result of such changes can also lead to
• U.S. state or federal calculation and regulation of fuel
additional compliance costs and staffing and resource
levels, and also increase exposure to other principal risks of life-cycle carbon content; and

Suncor, including environmental or safety non-compliance • Regulation or policy by foreign governments or other
and permit approvals.
organizations to limit purchases of oil produced from

unconventional sources, such as the oil sands.
Environmental Regulation

Changes in environmental regulation could have a material Climate Change Regulation
adverse effect on our business, financial condition, results Future laws and regulations may impose significant

of operations and cash flow by impacting the demand, liabilities on a failure to comply with their requirements;
formulation or quality of our products, or by requiring however, Suncor expects the cost of meeting new

increased capital expenditures or distribution costs, which environmental and climate change regulations will not be
may or may not be recoverable in the marketplace. The so high as to cause material disadvantage to the company

complexity and breadth of changes in environmental or material damage to its competitive positioning. While it
regulation make it extremely difficult to predict the currently appears that GHG regulations and targets will
potential impact to Suncor. Suncor positions itself to be
continue to become more stringent, and while Suncor will
ahead of proposed changes or engages in the discussion continue efforts to reduce the intensity of its GHG
on proposed changes to ensure Suncor’s interests
emissions, the absolute GHG emissions of our company will
are recognized.
continue to rise as we pursue a prudent and planned

The company anticipates capital expenditures and growth strategy.
operating expenses could increase in the future as a result
As part of its ongoing business planning, Suncor assesses
of the implementation of new and increasingly stringent potential costs associated with carbon dioxide emissions in
environmental regulations. Failure to comply with its evaluation of future projects, based on the company’s

environmental regulation may result in the imposition of current understanding of pending and possible GHG
significant fines and penalties, liability for cleanup costs regulations. Both the U.S. and Canada have indicated that

and damages, and the loss of important licences and climate change policies that may be implemented will
permits, which may, in turn, have a material adverse effect attempt to balance economic, environmental and energy

on our business, financial condition, results of operations security concerns. In the future, the company expects that
and cash flow. Through industry associations, Suncor regulation will evolve with a moderate carbon price signal,

participates, both directly and indirectly, in the consultation and that the price regime will progress cautiously. Suncor
process for the design of proposed regulations and other will continue to review the impact of future carbon

efforts to harmonize regulations across jurisdictions within constrained scenarios on its strategy, using a price range of
North America.
$15 to $60 per tonne of carbon dioxide equivalent as a

Some of the issues that are or may in the future be subject base case, applied against a range of regulatory policy
options and price sensitivities.
to environmental regulation include:
The Canadian federal government has indicated a
• The possible cumulative regional impacts of oil sands
development;
preference for a sector-specific approach to climate change
regulation; however, it is unclear what form any regulation
• The manufacture, import, storage, treatment and
will take for the oil and gas sector, and what type of
disposal of hazardous or industrial waste
compliance mechanisms will be available to large emitters.
and substances;
At this time, the company does not believe it is possible to
• The need to reduce or stabilize various emissions to air;
predict the nature of any requirements or the impact on

• Withdrawals, use of, and discharges to water;
Suncor’s business, financial condition, results of operations
and cash flow. The impact of developing regulations
• The use of hydraulic fracturing to assist in the recovery
cannot be quantified at this time in the absence of detail
and production of oil and natural gas;
on how systems will operate.

• Issues relating to land reclamation, restoration and Although Suncor does not actively market into California,
wildlife habitat protection;
the implications of other states or countries adopting
similar Low Carbon Fuel Standard legislation could pose a

70 SUNCOR ENERGY INC. ANNUAL REPORT 2013