Rainforest Action Network is one of the advocacy groups which monitor fossil fuel investment on an ongoing basis: their Fossil Fuel Report Card for 2020: Banking on Climate Change was released on March 18. As it does every year, the report calculates how much money has been invested in fossil fuels since the Paris Agreement was signed in 2015 – in 2020, that has reached $2.7 Trillion. The report also names and ranks the banks behind the fossil fuel financing, which continue to be dominated by the big U.S. banks: JPMorgan Chase, Wells Fargo, Citi, and Bank of America. Canada’s RBC ranks 5th in the world, having invested $141 billion since the Paris Agreement, wit TD ranking 8th, ScotiaBank 10th and Bank of Montreal ranked 16th.
Against this entrenched position in support of fossil fuels comes the plummeting price of oil and an industry in crisis. An April 1 blog by the International Energy Agency explains the five key dimensions – including the Covid-19 crisis – which explain that “The global oil industry is experiencing a shock like no other in its history”. The panic setting in to the industry is captured in the Wall Street Journal article on April 14, “Thirst for Oil Vanishes, Leaving Industry in Chaos”. The Carbon Tracker Initiative published “COVID-19 and the energy transition: crisis as midwife to the new” which states: “Fossil fuel demand has collapsed and may never surpass the peaks of 2019. By the time the global economy recovers, all the growth may be met by renewable energy sources….. And once the peak is passed, the fossil fuel sector as a whole will face an eternal scrappy battle for survival, struggling with overcapacity and stranded assets, with low returns and high risks.”
Forbes is even more blunt in “After COVID-19, The Oil Industry Will Not Return To “Normal” (April 5), which states: “Canada and the United States are in a bind. There is a temptation to bail out oil, if only to keep people employed and ensure that these over leveraged companies don’t drag banks underwater…. Financial support for oil workers is an imperative, but support for the oil sector is a waste of money, whether the Saudis and Russians stay their course or not. Investments in shale and the Canadian oil sands are bound to become stranded assets, even if we return to “normal.” Oil’s days were numbered before coronavirus, and they will be numbered after it.”
The Canadian picture
Andrew Nikoforuk provides a Canadian view in “The other emergency is crashing oil and gas prices” in The Tyee (Mar. 18). A Globe and Mail article on March 19 (updated Mar. 20) outlines political calculations and lobbying, and predicts that the federal government will offer a multi-billion dollar post-Covid-19 rescue package to the oil and gas industry (although determined lobbying is also pushing for investment in clean energy instead. Jim Stanford addresses the issue in “We’re going to need a Marshall Plan to rebuild after Covid-19 ” (in Policy Options, April 2), and writes: “ With the price of Western Canada Select oil falling to close to zero (and no reason to expect any sustained rebound to levels that would justify new investment), it is clear that fossil fuel developments will never lead Canadian growth again. ….. However, the other side of this gloomy coin is the enormous investment and employment opportunity associated with building out renewable energy systems and networks (which are now the cheapest energy option anyway). This effort must be led by forceful, consistent government policy, including direct regulation and public investment (in addition to carbon pricing). Another big job creator, already identified by Ottawa and Alberta, will be investment in remediation of former petroleum and mining sites.” By April 9, the Globe and Mail published “Climate, clean tech could take centre stage in federal economic recovery plans” . The Narwhal argues “Doubling down on Alberta’s oil and gas sector is a risk Canadians can’t afford to take” (April 14).
Despite this, in what Common Dreams calls “a shameful new low”, the Alberta government announced a $1.5 Billion cash infusion to “kickstart” the Keystone XL Pipeline on March 31. Ian Hussey of the Parkland Institute reacted with “Alberta’s Keystone XL investment benefits oil companies more than Albertans” (April 2). Bill McKibben reacted with outrage in “In the Midst of the Coronavirus Pandemic, Construction Is Set to Resume on the Keystone Pipeline” in The New Yorker . Other reactions, circling back to the role of Canadian banks: “Reckless Keystone XL Decision by TC Energy Endorsed by JPMorgan Chase, Citi and Canadian Peers” (Rainforest Alliance Network); and “Bank of Montreal, RBC, Blackrock Among the Backers for Alberta’s ‘Reckless’ Keystone XL Subsidy” (The Energy Mix , April 5) .