A Matter of Fact

Calls for the Canada Pension Plan to divest from oil and gas producers fails to acknowledge industry's evolution

By CEC Staff

Issue: Investing in Canadian oil and gas.

What was said: In a recent report, the Corporate Mapping Project — a research initiative that looks at the fossil fuel industry, led by the University of Victoria, the Canadian Centre for Policy Alternatives and the Parkland Institute – criticized the Canada Pension Plan for investing in oil and gas producers, particularly Canadian oil sands companies. As the world moves to different forms of energy, continuing to hold investments in Canadian oil and gas exposes Canadian pension beneficiaries to the risk of stranded assets (which are assets that no longer have value), the report said.

The broader view: Canada’s oil and gas sector is a world leader in environmental, social responsibility and governance (ESG) – in the way it regulates industry, protects the environment and treats people impacted by operations. Here’s why Canada should be the producer of choice:

Fact: The world will continue to rely on oil as all forms of energy will be needed to meet demand, fueled by leading developing economies, according to the latest forecast of the International Energy Agency.

Consider: If the Canadian oilsands were phased out, producers with lower ESG standards – such as Saudi Arabia, Iraq, Venezuela, Mexico – would take over Canada’s share of the market, while making Canadians dependent on purchasing even more oil from foreign suppliers, transferring immense wealth and exposing Canadians to the risk of higher oil prices.

Fact: Canada’s oilsands account for 0.15% of global emissions.

Consider: Phasing out the oilsands and replacing them with supplies from other countries would only reduce global GHG emissions by an estimated 0.03 per cent, according to a recent submission to the Canadian Senate from Mac Van Wielingen, founder and partner of ARC Financial Corp.

Fact: The oilsands industry has embraced innovation. Thanks to technological and operational efficiency improvements, per barrel, oil sands emissions have decreased 28 per cent from 2000 to 2017. Improvements are continuing. Oilsands companies like Cenovus Energy Inc. are generating emission levels that are close to or below emission levels of the average global barrel.

Consider: As well, Canadian Natural Resources Ltd. and MEG Energy Corp., are aiming for net zero emissions in their oilsands operations.

Fact: Canada is one of the highest-ranking countries for ESG practices, according to rankings including the World Bank Governance Index and the Yale Environmental Performance Index.
Consider: It’s because of Canada’s high ESG standards that countries like Japan are eager to import Canada’s oil and gas.

Fact:  Canada is among the least corrupt countries in the world, ranked 9th by Transparency International in 2018. Norway is the only other oil producer in the top 10. Consider: In that same list, Canada’s top oil-producing rivals are ranked: the United States 22; Saudi Arabia 58; Iran, Mexico and Russia all at 138; Nigeria 144; and Iraq and Venezuela at 168.

Fact: Canada’s oilsands companies are among the largest employers of Canada’s Indigenous people and spend an average of $1.8 billion a year on procurement from Indigenous owned companies.

Consider: If the oilsands were phased out, Indigenous unemployment could soar and Indigenous businesses would lose a unique opportunity to contribute to Canada’s economy.

Fact: Of the world’s top 10 oil producing countries, Canada is the only jurisdiction with a carbon pricing system in place. The first carbon tax in North America was introduced in Alberta in 2007.
Consider: Alberta continues to charge a $30 per tonne carbon tax on large emitters, including oilsands projects.

Parting thought: Bill Gates, co-founder of Microsoft, told the Financial Times recently that he believes divestment in oil and gas has no impact on emission reductions and that activists would be better off putting their money and energy behind disruptive technologies that slow carbon emissions and help people adapt to a warming world. “Divestment, to date, probably has reduced about zero tonnes of emissions. It’s not like you’ve capital-starved [the] people making steel and gasoline,” Gates said. “I don’t know the mechanism of action where divestment [keeps] emissions [from] going up every year.”