WINNIPEG, Manitoba/TORONTO (Reuters) – Canadian oil sands companies have shelved nearly C$2 billion in green initiatives in a cost-cutting drive to weather the coronavirus pandemic, a reversal in some of their commitments to reduce emissions and clean up their dirty-oil image.

International oil firms left Canada in droves in recent years due to the high costs to turn a profit in the sector. Some investors and banks, meanwhile, halted financing in part to pressure the world’s fourth-largest crude producer to reduce the environmental impact of oil-sands production.

This year, top producers Suncor Energy (SU.TO), Canadian Natural Resources (CNQ.TO) and Cenovus Energy (CVE.TO) have cut a combined C$1.8 billion ($1.32 billion) in planned spending on green initiatives as losses mount due to economic lockdowns that have hammered oil demand.

“This has strengthened our view on the matter, that our decision that we took (to block oil sands) was correct,” said Jeanett Bergan, KLP’s head of responsible investments.

KLP, Norway’s largest pension fund, exited oil sands investments last year, while the country’s $1 trillion wealth fund in May blacklisted Suncor and other large producers for producing excessive greenhouse gas emissions.

The Canadian industry has the highest upstream emissions intensity among major world oil and gas producers, at 39 kilograms per barrel of oil equivalent, more than triple that of the United States, consultancy Rystad Energy said in May.

The picture in Canada contrasts with Europe, where the biggest oil and gas companies have diverted a larger share of their cash to green energy, even through the outbreak.

The oil sands industry is more carbon-intensive than other forms of crude production, and faces more intense pressure from investors to limit emissions. Canadian oil producers will have a harder time convincing investors and environmentalists of their role in a future lower carbon economy if their commitment to green initiatives is wavering.

Canada’s oil firms have invested in recent years to reduce their emissions intensity. But Western Canada’s overall emissions increased 14% from 2005 to 2018, as oil output doubled.

INVESTMENT CUTS

Suncor, which made most of the cuts, shelved a C$300 million wind power project and a C$1.4-billion cogeneration plan, which would replace coke-fired boilers with natural gas units at its base operations, reducing carbon emissions and other pollutants.

Suncor vice president of sustainability Jon Mitchell said it and other green investments hinge on the financial health of the company’s core business extracting crude.

“The deferral and delay in some of those projects does not diminish their importance,” he said.

Cenovus, which is targeting net zero emissions by 2050, cut its technology budget by 78%, or C$137.5 million, saying in a filing it was only advancing select initiatives that had both cost and environmental benefits. The budget included work on green initiatives such as solvent-aided extraction and a new design for oil sands facilities.

A spokeswoman said Cenovus’s commitment to green targets had not changed.

Canadian Natural put off a C$46 million pilot project that would reduce emissions by extracting bitumen at the mine face, limiting the need for trucks and equipment, the company said. A spokeswoman said that while the company has deferred some projects, its commitment to environmental targets remains.

Filings show that Suncor, Cenovus and Imperial Oil (IMO.TO) most recently budgeted roughly C$1.2 billion combined on research and development annually, which includes green initiatives, aside from capital projects.

Suncor, Canadian Natural and Imperial declined to say how much of those budgets have been cut this year. MEG Energy (MEG.TO) did not respond.

Alberta, heart of most of Canada’s production, reduced environmental monitoring requirements temporarily, saying it was necessary to comply with health orders regarding the pandemic. The suspended types of monitoring included certain water quality tests and some monitoring of soil and wildlife.

Alberta’s move is worrisome, said Jamie Bonham, director of corporate engagement at NEI Investments, a firm focused on responsible investing, which holds stakes in the sector to advocate for green improvements.

“The province is simultaneously opening up the economy – you can go to a barber, get a massage or sit in a restaurant – but you can’t take an environmental reading at a wellsite?” Bonham said.

The pause is only for “short-term relief,” said Kavi Bal, spokesman for the province’s energy minister. He noted that a major commercial carbon capture project began operations this month.

The federal government has used pandemic aid to launch two new green initiatives – cleaning up abandoned wells and loans to help companies reduce methane emissions.

Such steps, however, are too little and too late to draw back many investors, banks and insurers that shunned the industry in recent years, according to a Reuters survey.

Eight investors, banks and insurance companies reached by Reuters, including Royal Bank of Scotland and France’s AXA, that publicly reduced their oil sands involvement in recent years over climate change said industry efforts to reduce environmental impacts did not change their opposition to the sector.

While Canada has set a target of net-zero emissions by 2050, it has not outlined a plan. “Right now we do not have one,” Natural Resources Minister Seamus O’Regan said in May on a panel.