Alberta Pension fund invests in Coastal GasLink pipeline, the latest risky fossil fuel investment

Carbon Tracker, the group which originated the term “stranded assets, published two new reports about the financial risks of fossil fuel investment in June:  It’s Closing Time: The Huge Bill to Abandon Oilfields Comes Early  and Decline and Fall: The Size & Vulnerability of the Fossil Fuel System on June 4 .  Banking giant Goldman Sachs also released a new report, Carbonomics: The Future of Energy in the age of climate change , which sees a fundamental shift from fossils to renewable energy investments.

Yet even as the drumbeat of fossil fuel decline continues, the public sector pension funds of Alberta and South Korea purchased a majority ownership stake in the Coastal GasLink pipeline from TC Energy on May 25,  using  the  retirement savings of millions of individuals.  “Alberta and South Korea’s pensions just bought the Coastal GasLink pipeline: 8 things you need to know” in The Narwhal (June 10) analyses the situation and cites a report from Progress Alberta :  Alberta’s Failed Oil and Gas Bailout , with this subtitle provided: “How AIMCO invested more than a billion dollars of pensioners and Albertans money into risky oil and gas companies with more than $3 billion in environmental liabilities and how the people running those companies got rich through huge salaries, share buybacks, dividends and conservative political connections.” Besides exposing the political shadows and environmental liabilities of many AimCo energy investments, the report makes recommendations, including for a public review of the investment performance and governance of Aimco; to divest from risky fossil fuel investments; to allow pension plans whose funds are being managed by AIMCo to appoint representatives to its board ; and to allow pension funds the freedom to leave AIMCo.

The recommended reforms are necessary because of the changes made by the Kenney government in November 2019,  described by WCR here and by Alberta unions in:  Union leaders tell UCP: ‘The money saved by Albertans for retirement belongs to them, not to you!’    Alberta’s Failed Oil and Gas Bailout   report urges: “The mismanagement of pensions and the Heritage Fund today offers opportunities for unions, political parties, civil society groups and organizers to engage and activate people who otherwise might never get involved in political collective action. People’s retirements and Alberta’s savings fund from its fossil fuel wealth are at stake.”

Pembina proposes a low-carbon blueprint to create 67,2000 jobs in Alberta

alberta emerging economyA report released on June 15 calculates  that, with supportive government policies, 67,200  jobs could be created in Alberta by 2030 in four key areas: renewable electricity; transit and electric vehicle infrastructure; energy efficiency in buildings and industry; and environmental cleanup and methane reduction in the oil and gas industry.  Alberta’s Emerging Economy: A blueprint for job creation through 2030  was funded by the Alberta Federation of Labour  and written by researchers at the Pembina Institute.  It provides detailed data for each of the four sectors, along with well-informed policy discussion. Notably, the number of jobs forecast represents a significant diversification of the labour market for the province: 67,200 jobs is equal to 67% of the total workforce of the mining, and oil and gas extraction industry in 2019.

Alberta’s Hydrogen initiative

Alberta’s Emerging Economy does not consider the potential jobs from new technologies such as carbon capture and storage, or hydrogen production.  Fundamental to understanding that technology is the difference between “grey hydrogen”,  “blue” hydrogen and “green” hydrogen”- explained by an expert at the International Energy Agency here , or in Green Tech Media in “The Reality Behind Green Hydrogen’s Soaring Hype”.

On May 14, the Alberta Industrial Heartland Hydrogen Task Force was launched as “an independent working group created to develop a framework to implement a hydrogen economy in the region” and “produce a public report detailing the approach and steps needed to advance a zero-emission fuel economy in Alberta’s Industrial Heartland.” The Task Force includes local mayors from Alberta and Saskatchewan (including  Edmonton Mayor Don Iveson). The full list of Task Force members and advisors is here , and is organized by Transition Accelerator – itself launched in 2019, by the University of Calgary research group CESAR.  A recent report in their  “The Future of Freight” series, Implications for Alberta of Alternatives for Diesel  advocates for “blue hydrogen” production (hydrogen made from natural gas by steam-methane reforming (SMR) coupled to carbon capture and storage (CCS)).

Hydrogen production is described in the Globe and Mail on June 14, “Ottawa, Alberta develop new hydrogen strategies” .  An overview in Corporate Knights magazine on May 14  claims “Hydrogen can make Canada an energy superpower again”.  It concludes:

We live in Alberta, so know the danger in including the words ‘national’ and ‘energy’ in the same sentence. But picture a Canada where hydrogen is the focus of a pan-Canadian strategy that would have all provinces working together for a net-zero emission energy future that revitalizes our economy and again positions Canada as an energy superpower.

 

Global reports call for renewables to lead a green recovery from Covid-19

Renewable Power Generation Costs in 2019 was released on June 2 by the International Renewable Energy Agency (IRENA), showing that “more than half of the renewable capacity added in 2019 achieved lower power costs than the cheapest new coal plants.” The analysis spans around 17,000 renewable power generation projects from around the world, and includes discussion of job impacts in the industry. A statistical dashboard is searchable by country  , including Canada, and by jobs statistics.

The report emphasizes the importance of renewables in a global economic recovery strategy, stating:

“Renewables offer a way to align short-term policy action with medium- and long-term energy and climate goals.  Renewables must be the backbone of national efforts to restart economies in the wake of the COVID-19 outbreak. With the right policies in place, falling renewable power costs, can shift markets and contribute greatly towards a green recovery.”

On June 10, the Global Trends in Renewable Energy Investment report was released by the U.N. Environment Programme, with a press release  with a similar message:  “As COVID-19 hits the fossil fuel industry, the GTR 2020 shows that renewable energy is more cost-effective than ever – providing an opportunity to prioritize clean energy in economic recovery packages and bring the world closer to meeting the Paris Agreement goals. ….. In 2019, the amount of new renewable power capacity added (excluding large hydro) was the highest ever, at 184 gigawatts, 20GW more than in 2018.” The 80-page Global Trends in Renewable Energy Investment  is an annual report commissioned by the UN Environment Programme in cooperation with Frankfurt School-UNEP Collaborating Centre for Climate & Sustainable Energy Finance, produced in collaboration with Bloomberg NEF, and supported by the German Federal Ministry for the Environment, Nature Conservation, and Nuclear Safety.

The argument for the cost advantage of clean energy is demonstrated with detailed modelling for the United States by researchers at the University of California Berkeley Goldman School of  Public Policy. Their new report,  2035: The Report: Plummeting solar, wind and battery costs can accelerate our clean electricity future  “uses the latest renewable energy and battery cost data to demonstrate the technical and economic feasibility of achieving 90% clean (carbon-free) electricity in the United States by 2035. “The 90% Clean case avoids over $1.2 trillion in health and environmental costs, including 85,000 avoided premature deaths, through 2050”… and “ supports a total of 29 million job-years cumulatively during 2020–2035. ….These jobs include direct, indirect, and induced jobs related to construction, manufacturing, operations and maintenance, and the supply chain. Overall, the 90% Clean case supports over 500,000 more jobs each year compared to the No New Policy case.”

renewables 2020Another report,  Renewables 2020 Global Status Report   was released by REN21 on June 16, with a  36-page summary of Key Findings . The report provides detailed global statistics re capacity and investment trends, and  also discusses the considerable impact of the coronavirus. There is much good news – for example, over 27% of global electricity now comes from renewables, up from 19% in 2010…. The share of solar photovoltaic (PV) and wind power has grown more than five times since 2009” .  But there is also an urgent call to end fossil fuel subsidies and for other policy actions under the heading: “Momentum in renewable power hides a profound lag in the heating, cooling and transport sectors”.  The report states:

“It would be short-sighted to celebrate advances in the power sector without acknowledging the alarmingly low shares and slow uptake of renewables in the heating, cooling and transport sectors. …. Renewable shares in heating and cooling are low (10.1%) and struggle to increase, even as the sector accounts for more than half of total energy demand. Similarly, energy demand in transport – which accounts for a third of total energy demand – is growing the fastest by far, yet renewable shares barely exceed 3.3%. Ongoing dependence on fossil fuels for heating, cooling and transport is related to a lack of policy support for renewables in these sectors. There is still no level playing field. Many countries continue to uphold fossil fuel subsidies, which in 2018 increased 30% from the year before. Global fossil fuel subsidies totalled USD 400 billion, more than double the amount that governments spent on renewable power. ….. The massive support for fossil fuels hinders the already difficult task of reducing emissions and must be brought to a halt. “ In 2019, a record 200 gigawatts (GW) of renewable power capacity was added, more than three times the level of fossil fuel and nuclear capacity. Over 27% of global electricity now comes from renewables, up from 19% in 2010.– a remarkable rise attributed largely to continued cost declines for these technologies.”

On  June 11, the U.S.  Solar Energy Industry Association released its Solar Market Insight Report for the 2nd Quarter of 2020, forecasting a 31% drop in solar installations in 2020 over 2019, mostly  as result of Covid-19.   The SEIA  press release estimates that 72,000 workers in the U.S. have lost their jobs .  The Executive Summary  discusses the impact of the coronavirus extensively; only the Executive Summary is available for free. The report analysis is done by Wood MacKenzie consultants, and the full report is pricey.

Export Development Canada continues to undermine climate change goals, using Covid-19 recovery to fund Coastal GasLink pipeline

Reforming Export Development Canada:  Climate-Related Risk Management and the Low Carbon Transition  is an important new report released on June 9,  commissioned by advocacy groups Above Ground and Oil Change International.  The report analysis was conducted by consultancy Horizon Advisors, who calculate that the crown corporation Export Development Canada (EDC) has provided roughly $45 billion in support for the oil and gas sector since 2016, compared to $7 billion for clean technology. “These investments not only undermine Canada’s international climate efforts but also increase EDC’s exposure to carbon risks.”  The report recommends that the government amend the Export Development Act to bar EDC from supporting any fossil fuel energy projects, including new fossil fuel infrastructure such as pipelines, and that the agency should “stress-test its investment decisions against Canada’s climate targets.”

The Reforming Export Development Canada report is not the first time EDC has been examined for its fossil-friendly investment strategy  and criticized for undermining Canada’s climate change progress. Oil Change International and Above Ground published  Risking it All: How Export Development Canada’s Support for Fossil Fuels Drives Climate Change in 2018,  which documents investments of more than $10 billion a year to oil and gas between 2012 and 2017 ( twelve times more support than it offered for clean technologies).

Fossil fuel companies cashing in on Covid-19 Recovery Funds in Canada and worldwide

RiskingItAllcoverDianne Saxe, the former Environmental Commissioner of Ontario, cited the 2018 Risking it All report in her April 2020 Opinion piece in the National Observer, reacting to the federal $750 million Emissions Reduction  funding as part of the Covid-19 Recovery stimulus.  Environmental Defence voiced similar suspicions in their April response :  “… hidden inside this new law were changes that will make it easier for Canada’s export credit agency, Export Development Canada, to funnel billions more towards domestic oil and gas operations — without public scrutiny.”

And sure enough, following the recovery stimulus announcement,  in May EDC signed an agreement to loan up to $500 million to Coastal GasLink pipeline  – the same pipeline project which Wet’suwe’ten First Nations had blockaded, causing RCMP arrests which triggered Canada-wide solidarity  protests and crippling rail blockades  in Ontario and Quebec in the winter of 2020.  (And despite objections from the Wet’suwe’ten  Hereditary chiefs, reported in the Toronto Star ). “Meet Export Development Canada , the secretive crown agency financing the big oil bailout” (May 27) is a blog by Environmental Defense Canada, calling  out EDC investments and calling for greater transparency.

Oil Change International and Friends of the Earth U.S. address this ongoing issue Still-Digging-Cover-Image-pdf in  Still Digging: G20 Governments Continue to Finance the Climate Crisis , released on May 27.  From the Oil Change International Press release: “G20 countries have provided at least $77 billion a year in public finance to oil, gas and coal projects since the Paris Climate Agreement was reached. This government-backed support to fossil fuels from export credit agencies, development finance institutions, and multilateral development banks is more than three times what they are providing to clean energy. China, Japan, Canada, and South Korea are the largest providers of public finance to oil, gas, and coal, together making up over two-thirds of the G20 total.” The report is endorsed by Environmental Defense Canada and Climate Action Network Canada , among many others.

From Still Digging, a warning:

“with the health and livelihoods of billions at immediate risk from Covid-19, governments around the world are preparing public spending packages of a magnitude they previously deemed unthinkable.…. The fossil fuel sector was showing long-term signs of systemic decline before Covid-19 and has been quick to seize on this crisis with requests for massive subsidies and bailouts. We cannot afford for the wave of public finance that is being prepared for relief and recovery efforts to prop up the fossil fuel industry as it has in the past. Business as usual would exacerbate the next crisis—the climate crisis—that is already on our doorstep.”

Alberta oil and gas voices calling for innovation while Newfoundland’s Hibernia workers face layoffs on June 12

Alberta’s Minister of  Energy, Sonya Savage outraged many Canadians with her comments on May 25  that the Covid-19 pandemic offers a “great time to build pipelines” because of the lack of protestors , and construction on the TransMountain pipeline began in Kamloops B.C.  on June 2.  Yet,  Max Fawcett, former editor of Oil and Gas magazine writes in a CBC Opinion piece, “Alberta could be fighting its last pipeline battle”   (May 27), stating:

“It will be difficult for a government that prides itself on its willingness to fight for one vision of the oil and gas industry to adapt to this rapidly changing landscape…..It will be tempting for it to continue railing against the federal government, environmental activists, and all of its other enemies, foreign and domestic. And if Biden wins the White House, and follows through on his pledge to cancel Keystone XL’s presidential permit, that temptation may prove overwhelming.

But the ground has shifted under the Government of Alberta’s feet, just as it has for all of us, due to COVID-19.

The sooner it comes to terms with that, and helps the rest of Alberta do the same, the better.”

Fawcett also criticized the Alberta government of Jason Kenney in  “Still waiting for Alberta to get the memo on climate-conscious investing”,   commenting  on the implications of the Norway’s Government Pension Fund decision to divest from Canadian oil and gas companies  because of their excessive climate impacts. Fawcett  calls for Alberta to tell a “more honest story”.

Notably, voices from Canada’s oil sands industry “Establishment” are also speaking out and signalling a shift in attitude.   On June 1, as part of the  Climate Knights Planning for a Green Recovery series, Mark Little, the CEO of Suncor Energy and Laura Kilcrease, CEO of the government agency Alberta Innovates  wrote an OpEd titled, “Canada’s oil sands are best positioned to lead the energy transformation”.  Hearkening back to the 1970’s in Canada and citing a 2019 BNP Parabas report on the declining future of oil , they acknowledge the inevitable coming transition with this:

“While Canadian oil and gas will remain a significant part of the global energy mix for some time, we have to take advantage of new opportunities that offer attractive growth prospects. The temporary economic lockdown triggered by the 2020 pandemic is giving us a glimpse into a not-too-distant future where the transformation of our energy system could disrupt demand on a similar scale. Disruption breeds opportunity and forward-looking companies and countries will need to step up and lead.

Now is the time to take a big step forward. As the history of the oil sands reveals, disruption and transformation are nothing new for Albertans and we’re optimistic that the Canadian energy industry is up to the challenge and best positioned to invest in and lead energy transformation.”

Industry response to the joint OpEd appears in “Suncor, Alberta Innovates op-ed a game-changer as oil and gas industry finally embraces energy transition” appeared  in EnergiMedia (June 2).  noting “ ….. it cannot be a coincidence that the same day the op-ed was published, Alberta finance minister Travis Toews told Postmedia that the Alberta government is preparing an economic recovery plan that will focus on diversifying “various industry sectors that we know have a great future in the province, certainly energy and agriculture as you would expect.”

Layoffs in June as Newfoundland’s Hibernia and offshore oil industry in crisis 

offshore rigOn June 3, CBC reported “Hibernia layoffs about to begin ‘with heavy hearts,’ drilling company says” , summarizing the announcement by Hibernia Management Development Corporation (HMDC) that it will suspend drilling operations starting June 12, as a cost-cutting measure in response to a collapse in oil prices.  The 18-month suspension of drilling  had already been announced in April , even before the negative impacts on demand by the COVID-19 pandemic.   The total number of layoffs may approach 600 members of  Unifor Local 2121 , which represents workers at  the Hibernia offshore installation and also at the affected Terra Nova FPSO vessel.  According to Article 32 of the current collective agreement  , six months’ written notice was required “In the event of platform closure, partial platform closure, technological change or restructuring, which will involve permanent reduction of regular rotation employees….”

These developments are the latest in a series of setbacks which constitute a crisis for the oil and gas industry in Newfoundland, summarized in  in “How a pandemic and production war thrashed one of N.L.’s 4 producing oil fields” (May 20) . The political lobbying for federal funds is described in “N.L. oil industry, former premier, rally behind MP Seamus O’Regan in quest for federal help”  (May 14)  and a Canadian Press article “N.L. warns of exodus of oil and gas industry without more federal help”  (May 26).

On June 4, the provincial government of Newfoundland announced  a “New Regional Assessment Process Protects the Environment and Shortens Timelines for Exploration Drilling Program Approval”  which  reverses a 2010 decision and places authority for exploration approval back with the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB), rather than the federal Canadian Environmental Assessment Agency (CEAA). Calling the drilling of offshore exploration wells a “low impact activity”, the press release promises a faster approval process which “allows the province to become more globally competitive while maintaining a strong and effective environmental regulatory regime.”   This comes a week after the government-appointed  Wilderness and Ecological Reserves Advisory Council released their long-delayed report, A Home for Nature   which proposes  32 protected areas and a framework for ecological protection on land and offshore.