The business leader responsible for nearly $540 billion of Canadian pension investment has no plan to sell off interest in companies just because they are involved in oil and gas.
The critical task of reducing global emissions will require the skills of people inside these companies, according to John Graham, CEO of CPP Investments.
“We continue to invest in oil and gas with a view that here we have a sector that understands energy; that understands how to get energy into people’s hands. Divestment is cutting off all the engineering and scientific know-how that resides within that sector,” Graham told delegates at a recent event held by the Canadian Club of Toronto.
“Our view is to be an engaged owner/investor within the companies we invest in and express our expectation of a path towards net zero.”
Energy demand is rising as the world’s population increases. Total energy consumption – regardless of source – is expected to be 27 per cent higher in 2050 than it was in 2019, according to the International Energy Agency (IEA).
The expected growth in renewable energy will not be enough to cover the increased demand. The IEA projects that the share of renewables in the energy mix will grow to 26 per cent in 2050 compared to 12 per cent in 2021. Meanwhile, the share of oil and gas will stay about the same – at 50 per cent in 2050 compared to 53 per cent in 2021.
CPP Investments has set the target to reach net zero emissions across its portfolio by 2050. For the world to reach that target will require “an entire economy transition,” Graham said.
“This is going to be hard. This is going to be non-linear. This is going to require lots of capital.”
CPP Investments is working with Canadian oil and gas companies to decrease emissions.
For example, in 2015 it founded Wolf Midstream, and has invested $1.7 billion in the company. Wolf Midstream built and operates the Alberta Carbon Trunk Line, the world’s largest CO2 pipeline.
The system in central Alberta transports CO2 captured from an oil refinery and a fertilizer plant to a mature oil field, where it is used to produce previously unrecoverable resources while being sequestered deep underground.
Since startup in 2020 the Alberta Carbon Trunk Line has stored more than 2.5 million tonnes of CO2 underground, the equivalent of taking more than 525,000 cars off the road.
Maintaining support for Canadian oil and gas companies incorporating new technologies to reduce emissions will do more to reduce emissions than arbitrarily selling these investments, Graham said.
“If the goal is to actually remove carbon from the economy, then selling doesn’t achieve that,” he said.
“All selling does is sell to someone else who may not share the same values [and] may not have the same objective.”
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