An oil exec was on the hot seat. But should the government be feeling the heat?

On Parliament Hill this week, MPs grilled Rich Kruger, the CEO of Suncor, over comments he made on an investor call this summer.

He had told shareholders that Suncor, the Calgary-based energy giant, was too focused on the energy transition and had to get back to its fundamental business the oilsands.

Kruger told theHouse standing committee on natural resources his comments were misinterpretedand that his focus is on ensuring the company is making profits now to be able to afford the required investments in decarbonization.

"It's good for business, and it's the right thing to do," said Kruger, a former executive at Imperial Oil and ExxonMobil. "When those things can overlap, we are sufficiently incentivized to spend money to research and to pursue new business opportunities."

WATCH | Canada was called out for expansion of fossil fuel production in the last year.

Canadian climate commitments scrutinized at UN climate summit

12 months ago

Duration 2:03

As countries call for more urgent action on fossil fuel emissions, Canada was called out for expansion of fossil fuel production in the last year. Canada defended its record, pointing to the coming emissions cap of the country's oil and gas sector.

But in many cases across the industry, that hasn't happened. After pledging in recent years to cut back on production and emissions and focus on renewables, oil and gas companies have in recent months walked those commitments back despite seeing record profits.

Catherine Abreu, founder of Canadian non-profit Destination Zero, which works with climate groups across the country, said the dynamic that played out during the hearing revealed less about Suncor's profit motive than it did about the federal government's failures.

"We should not be surprised that the CEO of a publicly traded company is primarily interested in returning profits to his shareholders," Abreu said in an interview.

"In order to meet our climate goals, we need to be seeing the hand of government step in."

Oil production ramping up in Canada

The president of Shell Canada, Susannah Pierce, made the point recently that oil companies can only decarbonize as fast as the rest of the economy.

"[If you are] a company that is servicing its customers that are still demanding a fossil fuel energy source, it's very difficult to then not provide your customers with that energy they demand," she said.

In the United States, domestic oil production just hit an all-time high last week, and Canada could lead the world in oil production growth in 2024.

There has also been a wave of high-profile mergers and acquisitions in both the United States and Canada, in what experts say is a sign of an industry flush with cash and increasingly confident in the short- and medium-term outlook.

"As the world looks to transition and find lower sources of affordable energy with lower emissions, fossil fuels oil and gas are going to continue to play a role over time," ExxonMobil CEO Darren Woods told CNBC after acquiring Pioneer Natural Resources for almost $60 billion US.

"That may diminish with time. The rate of that is, I think, not very clear at this stage. But it will be around for a long time."

Peak is near for oil, IEA says

That prognosis is at odds with a much-discussed report released last month by the International Energy Agency, which predicted oil and gas production would peak by the end of the decade.

According to the IEA, investments in renewables could reach $1.8 trillion this year, with solar investments set to eclipse oil investments for the first time.

The report warned, though, that a failure to sufficiently ramp up renewables between now and 2030 would create "additional climate risks."

It would make achieving the Paris agreement goal of limiting warning to 1.5 degrees Celsius difficult and largely dependent on carbon removal technologies, which are both expensive and unproven at the scale that would be required.

That challenge underscores the importance of the COP28 climate summit that begins next month in Dubai, where world leaders will try to reach an agreement on the way forward to reduce global emissions.

Warren Mabee, a Queen's University professor and director of the school's Institute for Energy and Environmental Policy, said the oil boom will eventually come to an end sooner than later as economies turn toward renewable energy sources.

"Executives and company leaders, I think that they must be aware that this is coming," he said.

"The big question is, are they prepared to do what needs to be done? Or are they just hoping that when the day does come that governments will just bail them out?"

Need for a 'stringent' policy

The oil and gas sector accounts for more than a quarter of Canada's total emissions, and experts say Canada won't meet the country's 2030 target without a substantial decline in carbon emissions from pumping oil and gas out of the ground.

Katya Rhodes, an assistant professor at the University of Victoria's school of public administration, said Canada's oil and gas emissions won't decline until there is "a stringent and compulsory climate policy in place."

This would require putting in place a cap on oil-and-gas emissions, beyond the carbon pricing system and clean fuel regulations, she said in an email exchange.

Even though governments "face strong lobby from the oil and gas sector, the costs of climate-related damages should outweigh political costs of inaction," she said in an email.

Environment Minister Steven Guilbeault said again this week that a cap will be put forward this fall (though it could take another year to go into effect), and that the coming policy won't be affected by a recent Supreme Court of Canada decision that found parts of the federal environmental assessment legislation were unconstitutional.

For her part, Abreu said the government also needs to introduce details of its more stringent methane regulations and green taxonomy plan, which will serve as a framework for sustainable investing, to lead "an orderly transition out of the oil and gas sector."

"We are in a place globally right now where we can no longer afford for every producing country to be vying to produce the last barrel of oil and the last unit of gas that gets sold on the market," she said.