Climate change leadership

Corporate Responsibility

Climate change leadership

Canada’s approach to climate change ensures that crude oil and natural gas continues to be developed responsibly with world-leading environmental performance. In this way, Canada’s crude oil and natural gas will be an important part of a lower carbon energy future. At Canadian Natural, we believe that strong environmental policy, regulation and performance standards, together with innovation and technology, are necessary for an effective approach to greenhouse gas (GHG) emissions management.

Among the most significant environmental challenges facing industry, governments, and stakeholders, is finding the most effective policies to achieve major GHG emissions reductions. Canadian Natural continues to work together with other producers and environmental organizations to provide policy advice to governments. In November 2015, Alberta announced a significant Climate Leadership Plan that incents ongoing innovation and technology investment in the oil and natural gas sector. We believe that supporting research while developing and adopting innovative technology is the best way to reduce GHG emissions.

Strong commitment to GHG emissions reduction

Canadian Natural, along with our industry partners within Canada’s Oil Sands Innovation Alliance (COSIA), has a goal to lower our GHG emissions, comparable to emissions of crude oil from global sources. Canadian Natural’s integrated emissions reduction strategies to meet performance goals and comply with requirements for GHG emissions and air pollutants — such as sulphur dioxide (SO2) and oxides of nitrogen (NOx). We participate in both the Canadian federal and provincial regulated GHG emissions reporting programs and quantify annual GHG emissions for internal reporting purposes.

Our GHG management strategy

Canadian Natural GHG emission reduction strategy is an integrated corporate approach that involves: • Integrating emission reduction in project planning and operations.

• Leveraging technology to create value and enhance performance.

• Investing in Research and Development (R&D) and supporting collaboration.

• Focusing on continuous improvement to drive long-term emissions reductions.

• Leading in Carbon Capture and Sequestration/Storage (CCS).

• Engaging proactively in policy and regulation to effectively manage climate risks and opportunities, including trading capacity and offsetting emissions.

More about our long-term GHG emission reduction strategy is in our 2016 Stewardship Report to Stakeholders.

Pathway to a lower carbon energy future

Natural gas is another integral part of our plan and the pathway to long-term emission reductions. Natural gas reliable, affordable, as well as a lower GHG intensive energy source, that is making a significant impact in lowering global GHG emissions. Global demand for natural gas is expected to grow, and Canadian Natural has a diversified and balanced asset portfolio with vast natural gas resources to support future energy demand. Natural gas will continue to be an important source of energy in the pathway to a lower carbon energy future.

Collaboration and continuous improvement are also essential to delivering long-term emission reductions along the pathway to a lower carbon energy future. Together with a broad group of industry sectors, academia and governments, we are sharing technologies and working to find innovative solutions through Canada’s Oil Sands Innovation Alliance (COSIA). As an example of innovation opportunities, Canadian Natural is supporting the US$20 million NRG COSIA Carbon XPRIZE, a global competition to identify new technologies that transform CO2 emissions from industrial facilities into valuable and usable products. The governments of Canada and Alberta, together with industry partners and the Shepard Energy Centre (a joint venture of ENMAX and Capital Power), have invested in the development of the Alberta Carbon Conversion Technology Centre (ACCTC). NRG COSIA Carbon XPRIZE finalists will test their technologies at the ACCTC — one of the few places in the world where carbon conversion technologies can be tested on a large, commercial scale. Learn more about Canadian Natural’s leading work with COSIA.

Driving GHG reductions

At Canadian Natural we continue to focus on continuous improvement and innovation on in our day-to-day operational practices to achieve incremental gains, increase productivity and GHG reductions. Leveraging technology and innovation have led to a reduction in Canadian Natural’s GHG emissions intensity of 16% since 2012.

We have also decreased venting volumes by 65% from 2012 to 2016 in our Alberta heavy oil operations, significantly reducing methane emissions.

For more information on our environmental performance, see our 2016 Stewardship Report to Stakeholders.

We have programs in place to maintain high air quality standards through emission reduction. These programs aim to reduce flaring and venting, conserve fuel and natural gas, and capture CO2, and are driving GHG reductions.

Climate change risk management

Our integrated emissions reduction strategy also ensures compliance with existing and future emissions reduction requirements. We use a multi-disciplinary risk management process which considers climate change risks and opportunities as part of our evaluation of business risk and opportunities.

Canadian Natural’s balanced portfolio and product mix is being developed responsibly with world-leading performance standards in Canada, including emissions regulations and programs, carbon pricing regimes and investments in carbon capture and storage. We continue to develop strategies that will enable Canadian Natural to deal with the risks and opportunities associated with new GHG and air emissions policies. In addition, we work with governments through the Canadian Association of Petroleum Producers (CAPP) as they develop and implement new GHG emissions laws and regulations, to ensure that new policies encourage technological innovation, energy efficiency, and targeted research and development while maintaining industry competitiveness.

For example, we support the governments of Canada and Alberta’s goal to reduce methane emissions by 45% by 2025. In 2016, we established a cross-functional Methane Steering Committee to coordinate methane reduction projects and track policy/regulatory development.

Internal quarterly management reviews are completed to monitor GHG emissions performance. As per regulatory requirements for specific facilities and/or jurisdictions where we operate, GHG emissions reports are submitted annually.

Further details on environmental risks, GHG emissions management strategies and climate change policies and regulations can be found in our Annual Information Form and Management Information Circular, as well as in our 2016 CDP Climate Change Submission.