Divestment Hurts Canadians
Is fossil fuel divestment in Canada actually helping the global environment? Not at all. In fact, it’s hurting Canadian families and Canadian revenues, while failing to keep one barrel of oil in the ground.
The unintended consequences of fossil fuel divestment in Canada should be a cause for concern for everybody. Canada’s oil and gas industry is a global leader in environmental, social and governance (ESG) investor criteria. We produce oil and gas to some of the highest environmental standards in the world while upholding and protecting transparency, democracy and human rights.
When Canada doesn’t produce and supply the energy the world needs because of fossil fuel divestment, that energy is then produced elsewhere – often in a country with lower environmental, social, human rights and governance standards.
Divestment Won't Keep Oil in the Ground
Take for example French energy giant Total, which recently decided to write off $9.3 billion in oilsands assets in July of 2020 but then increased investment and its focus in Africa, Brazil and the Middle East. No country in these regions comes even close to Canada’s rankings on ESG metrics.
Or consider the fact that Norges Bank recently excluded several oil sands companies from its Government Pension Fund Global Investment Portfolio, while it maintained tens of billions of dollars invested in other oil and gas producing nations like China, Saudi Arabia, Qatar, Oman, Bahrain and the UAE. Needless to say, all these countries rank much lower than Canada on ESG criteria.
HSBC also said it would stop providing funding for oil sands back in 2018. After divestment from Canada, HSBC shifted its focus to Saudi Arabia, becoming a majority shareholder. Saudi Arabia pales in comparison to Canada on several ESG-related indexes such as the Resource Governance Index, or Environmental Performance Index, among many others.
What was the result of all these divestment decisions, for Canada and the global environment?
> Fewer jobs for Canadians across the country who rely on the sector to provide for themselves and their families
> Fewer government revenues that could be used to pay for things like clean technology, schools, hospitals and public infrastructure / social programs plus the jobs that staff them
> Fewer opportunities for rural workers, especially Indigenous communities who have more people working in the natural resource sector on average than other sector in Canada
> More oil and gas revenues diverted from Canadians to countries with repressive regimes and inferior rankings for social progress
> More market share diverted from Canada to producers with lower environmental standards
Divestment Offers No Balance or Compromise
Apart from hurting Canadian families, communities and public programming, divestment sees economics as “black and white.” This view ignores the stark reality that the transition to a lower-carbon future will take many years.
Oil and gas will remain a majority supplier to the world’s energy mix for decades to come - regardless of any projection models you wish to consider - and countless billions of investment will be needed to supply that future world demand.
The lack of balance and compromise in this conversation risks driving away investments. And those are the investments Canadian oil and gas producers would have to make if they were to seize the opportunity to supply the world with a more environmentally responsible and sustainably produced barrel.
Of the world’s top 10 oil and gas exporters, Canada’s industry ranks number one on environmental, social and governance (ESG) investor criteria, Our nation’s excellent record means we should be a supplier of choice for the world.
Divestment Draws Attention Away from Effective Climate Policies
A lower-carbon future means looking seriously at policies that can have a short-term effect on global emissions today. For example, the divestment away from Canadian fossil fuels could prevent new LNG facilities in Canada, with the lowest GHG emissions intensities in the world, from displacing coal power generation in parts of Asia. It diverts attention away from realistic short-term opportunities that could make a huge dent on global GHG emissions and contribute in the fight against climate change.
The United Nation’s Intergovernmental Panel on Climate Change (IPCC) itself says replacing coal-fired generation with natural gas can decrease emissions by half:
“GHG emissions from energy supply can be reduced significantly by replacing current world average coal-fired power plants with modern, highly efficient natural gas combined-cycle (NGCC) power plants or combined heat and power (CHP) plants, provided that natural gas is available and the fugitive emissions associated with its extraction and supply are low or mitigated (robust evidence, high agreement).”
The International Energy Agency agrees. According to The Role of Gas in Today’s Energy Transitions released in July of 2019, switching from coal to gas is a potential quick-win for emissions reductions. According to the report, there is potential in today’s global power sector to reduce emissions by up to 1.2 gigatonnes of CO2 by switching from coal to existing gas-fired plants. Doing so would reduce global power sector emissions by 10 percent and energy-related CO2 emissions by 4 percent. Let’s just say that 1.2 gigatonnes is no small reduction.
Divestment also tends to focus on blaming others, when climate policy really needs to encourage both consumers and producers to reduce carbon-intensive activities. Let’s not forget that about 80 percent of human-caused GHG emissions are a result of consumers and the daily decisions they make. Vilifying the producer will do nothing to accomplish real, tangible results when it comes to emission reductions. Again, divestment away from Canadian fossil fuel investment can lead to support for nations with much less stringent environmental regulations.
Invest in Canada – We Are Global ESG Leaders
Divesting from fossil fuel production in Canada has several unintended consequences that should catch the attention of anyone who wants to champion the environment, social progress and human rights.
Fact is that if you care about reducing emissions, and supporting clean technology and innovation for sustainable oil and gas production, then you’ll invest in Canada. The oil and gas sector has excelled at improving environmental performance over the past several years, and is the largest spender on clean tech and environmental protection in the country by a wide margin.
As global leaders in environmental, social and governance metrics, Canada should be a supplier of choice for as long as the world requires oil and gas. We invite you to join us and stand up against the divestment movement which only benefits foreign oil producers and injures Canadians from every region and walk of life.
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