Global Financial Giants Swear Off Funding an Especially Dirty Fuel

The Syncrude Canada plant at the Athabasca oil sands near Fort McMurray, Alberta.

Credit…Ben Nelms/Bloomberg

 

Some of the world’s largest financial institutions have stopped putting their money behind oil production in the Canadian province of Alberta, home to one of the world’s most extensive, and also dirtiest, oil reserves.

In December, the insurance giant The Hartford said it would stop insuring or investing in oil production in the province, just weeks after Sweden’s central bank said it would stop holding Alberta’s bonds. And on Wednesday BlackRock, the world’s largest asset manager, said that one of its fast-growing green-oriented funds would stop investing in companies that get revenue from the Alberta oil sands.

They are among the latest banks, pension funds and global investment houses to start pulling away from fossil-fuel investments amid growing pressure to show they are doing something to fight climate change.

“If you look at how destructive oil sands can be, there’s a very strong rationale,” Armando Senra, head of BlackRock’s iShares Americas funds, said in an interview, saying that the oil sands, along with coal, are “the worst offenders, if you want, from a climate perspective.”

Despite the pressure from foreign investors, oil-sands production has continued to increase in part because local Canadian banks and pension funds have remained willing to lend. And, as Alberta’s government is quick to point out, some of the same companies pulling away from oil sands are continuing to invest in oil projects elsewhere in the world including in countries such as Saudi Arabia.

Nevertheless, the clash over foreign divestment in Alberta — and the strong response it has provoked from local leaders — suggests the potential for the financial industry to influence climate policy if firms follow through on their early pledges to incorporate climate change into their investment strategies.

Alberta, meanwhile, has fought back hard against the divestment. In April, voters elected a provincial leader who promised to punish companies that stopped financing the oil sands. Then, in December, Alberta opened what it called a war room to attack anyone perceived as criticizing the industry.

“We have been targeted by a foreign-funded campaign of special interests,” Alberta’s premier, Jason Kenney, said after winning office last year. “When multinational companies like HSBC boycott Alberta, we’ll boycott them.” HSBC, the largest bank in Europe, has said it will stop financing new oil sands developments.

Alberta officials didn’t immediately respond to questions about BlackRock’s announcement on Wednesday.

Financial institutions worldwide are coming under growing pressure from shareholders and activists to pull money from high-emitting industries. At the same time they are waking up to the fact that they have underestimated the climate-change risk in their portfolios.

Oil has made Alberta one of the wealthiest regions in North America, but the process of extracting petroleum from oil sands releases an unusually large volume of greenhouse gases. Because Alberta’s oil is locked in geological formations that make it particularly energy-intensive (and therefore environmentally damaging) to extract, it has provided an easy early target for investors eager to make a statement.

The oil sands have long been a target of environmentalists’ ire. But in 2017, the campaign against them shifted to the world of finance. That summer, the largest pension fund in Sweden, AP7, said it had divested from TransCanada, the company building Keystone XL, a pipeline to carry crude from the oil sands to the United States.

Other international lenders followed, announcing they would divest not only from pipelines but from oil-sands extraction projects as well. They include BNP Paribas Group and Société Générale of France, and Norway’s sovereign wealth fund

Premier Jason Kenney of Alberta in Ottawa in December. 
Credit…Blair Gable/Reuters

It wasn’t just financing that suddenly seemed at risk. Some of the world’s largest insurance companies, including AXA, Swiss RE and Zurich Insurance, announced they would stop providing coverage to projects in the oil sands, which are sometimes referred to as tar sands, as well as no longer investing money in those projects.

In December, the American insurer The Hartford said it would no longer insure or invest in companies that get more than a quarter of their revenue from oil sands or thermal coal mining. “We selected coal and tar sands because they have been identified as leading contributors to carbon emissions,” said David Robinson, the company’s general counsel.

Even large international oil companies began pulling out of the oil sands, including Shell in 2017.

A Shell representative said the company left because other companies with more oil-sands experience were better able to work there. But Andrew Leach, a professor of energy economics at the University of Alberta, said Shell was also responding to pressure from its own investors to pull out, given the high levels of greenhouse gases associated with oil extraction there.

“They were under significant pressure from their shareholders to pull out,” Dr. Leach said.

The latest blow came in December, when the rating company Moody’s downgraded the creditworthiness of Alberta’s debt to its lowest level in 20 years, citing, among other concerns, the province’s dependence on the oil sands and the environmental costs of extracting the oil.

In response to that pressure, Alberta has only increased its support of the oil sands.

Mr. Kenney, Alberta’s premier, has publicly vilified investors that left, complaining that some of those same investors also finance oil production in countries such as Iran and Saudi Arabia, which have lower greenhouse gas emissions per barrel but far worse human-rights records.

Mr. Kenney also promised to strip government contracts from companies such as HSBC and also threatened to put up billboards in the London subway, where the bank is based, intended to embarrass it for investing in Saudi Arabia while spurning Alberta.

Spokeswomen for HSBC and for Mr. Kenney both declined to say whether Alberta had canceled government contracts with the bank.

“I refuse to allow us to be lectured to by European banks and insurance companies” that do business with Middle Eastern oil producers, Mr. Kenney said in October. “We’re going to take that right to their doorsteps in Europe.”

After Moody’s downgraded the province in December, Mr. Kenney lumped it in with other global finance companies as biased, misinformed, or both.

“Increasingly, financial institutions, and this includes apparently Moody’s, are buying into the political agenda emanating from Europe,” Mr. Kenney said, adding that those institutions are often making decisions “based on data distorted, torqued data provided by green left pressure groups.”

HSBC said in 2018 it would pull out of investments in coal, oil sands, arctic drilling and other fossil fuel projects.
Credit…Brent Lewin/Bloomberg

Later that month, Alberta opened its war room, which has a budget of 30 million Canadian dollars and a mandate to rebut criticisms of the oil sands. One of its first items, which are designed to look like online news articles, attacked a nonprofit group that teaches schoolchildren about climate change and criticized school administrators for letting the group talk to Alberta students.

“The center will take a fact-based approach, counteracting myths and lies being spread about our province and about our energy sector,” Sonya Savage, Alberta’s energy minister, said of the war room, whose formal name is the Canadian Energy Center.

Oil sands extraction leads to about 70 percent more greenhouse gas per unit of energy on average than the global mean, according to research published in the journal Science in 2018 using data from 2015. Of the 90 countries whose oil extraction was studied, few generated more greenhouse gas per barrel.

The government’s antagonism toward overseas investors and other perceived critics reflects a political calculation, according to Melanee Thomas, a professor of political science at the University of Calgary: Railing against foreign influence plays well with conservative voters.

The problem with that approach, she said, is that the government has made it harder for voters or the oil sands industry to hear the message those banks are delivering: The world’s appetite for the most polluting fossil fuels is fading.

“The market’s already pointed in a particular direction,” Dr. Thomas said. “You can scream at it as it goes, but that’s not going to change it.”

In response to written questions for Mr. Kenney, his spokeswoman, Christine Myatt, wrote that investors should evaluate oil sands projects individually, adding that some projects have lower greenhouse gas emissions than others. “It is unscientific to draw a line around a region and say it is off-limits for investment,” Ms. Myatt said.

Mr. Kenney’s position “is not a campaign tactic,” she added. “It’s about responding to an existential threat to Alberta’s — and Canada’s — economy and to the livelihoods of hundreds of thousands of Canadians.”

Despite the political rancor, the divestment campaign has yet to curtail production. More oil was extracted from the oil sands last year than during any previous year on record, according to data provided by the Canadian Association of Petroleum Producers, the industry’s trade group.

That’s partly because Canadian banks and pension funds have remained willing to lend. Those institutions are more wary than their global counterparts of prompting a backlash from the Canadian public, experts said.

Credit…Ian Willms/Getty Images

A senior Alberta official, speaking on the condition that he not be identified, said the frustration inside the government revolved around the belief that foreign investors are pulling out of the oil sands to earn the good will of environmentalists and activists. That tactic imposes no great sacrifice on those investors, the official said, since the returns from the energy industry have been low anyway compared with other industries.

The official also said the investors were ignoring progress that oil sands companies are making on greenhouse gas emissions, as well as the fact that some oil sands operations are closer to the global average on emissions.

The critics of divestment aren’t just in Alberta.

Michael Sabia, chief executive for the Caisse de Dépôt et Placement du Quebec, one of the country’s largest pension funds, said it continues to invest in oil sands companies, while pushing the companies to reduce greenhouse gas emissions.

SOURCE

“What does divestment get you? What you get is, you get a headline,” Mr. Sabia said in an interview. “But you haven’t done anything really to direct your organization to be a positive contributor to the energy transition that the world has to go through.”  SOURCE

Wall Street Invading Wet’suwet’en Territory

Wet’suwe

t’en fishing site on Bulkley River and the entrance of Moricetown Canyon, in Moricetown, British Columbia, Canada. Photograph Source: Jerome Charaoui – FAL

The uprising across Canada in support of Wet’suwet’en First Nation land defenders shows no sign of stopping. As of February 11, ports, bridges, rail lines, highways and roads have been blockaded across much of the country by solidarity protesters, who have also occupied the offices of politicians and at least one bank.

These actions were prompted by the RCMP’s invasion of Wet’suwet’en territory on February 5, after which they began arresting Indigenous members opposed to the 670 kilometers (416-mile), $6.2 billion Coastal GasLink pipeline being constructed on their unceded territory in B.C.

The Wet’suwet’en have never signed a treaty and in 1997 the Supreme Court of Canada ruled that they hold “Aboriginal title” to the land on which the pipeline is being built.

The Coastal GasLink pipeline will carry fracked natural gas from northeastern B.C. to Kitimat, B.C., where a liquefied natural gas (LNG) terminal is being built by LNG Canada – a partnership of Shell, Petronas, PetroChina, Mitsubishi, and Korean Gas.

While protesters have rightly condemned the RCMP actions, they (and the corporate media) have largely overlooked the role of a major player in this whole debacle: Wall Street titan Kohlberg Kravis Roberts & Co., better known as KKR.

Mega-Rich Titan

On December 26, 2019 KKR announced the signing of a “definitive agreement” to acquire – along with Alberta Investment Management Corporation (AIMCo) – a 65 percent equity interest in the Coastal GasLink Pipeline Project from TC Energy.

Only days later, on December 31, a B.C. Supreme Court judge extended an injunction to stop Wet’suwet’en members from blocking access to Coastal GasLink’s work camp. The injunction will reportedly be operative until the pipeline project is completed.

KKR is mega-rich, even by Wall Street standards. It has US$208 billion in assets under management and US$153 billion in fee-paying assets under management. [1] AIMCo has $108.2 billion in assets that it manages on behalf of 31 Alberta pension, endowment and government funds. [2]

KKR is what is now called a “private equity” firm – a rebranding of what used to be called “leveraged buyout firms,” which pump money into struggling companies and then re-sell them for major profits. In 2014, KKR opened an office in Calgary with a $2 billion fund to find Canadian energy investments, especially in unconventional oil and gas projects.

In its December 26, 2019 press release, KKR’s Brandon Freiman stated that “Coastal GasLink represents our third investment in infrastructure supporting Canada’s natural gas industry.”

When contacted, KKR’s media office told me that the “other projects Brandon was referring to in his quote are Veresen Midstream and SemCams Midstream.”

 

Buying Up Midstream

In oil-industry parlance, midstream refers to the equipment and pipelines that transport oil and gas from “upstream” production facilities to the “downstream” users such as refineries or LNG terminals.

Shortly after KKR set up its Calgary office, in December 2014 Encana Corp. sold its natural gas pipeline and processing assets in Western Canada’s Montney region to Veresen Inc. and KKR for $412 million. The deal allowed Encana to concentrate on drilling and fracking (“upstream”), while Veresen Midstream LP handles transportation and expansion of infrastructure. The assets sold in this deal “comprise those in the Dawson, B.C. area operated by Encana independently and in a partnership it has with Japan’s Mitsubishi Corp.” [3] At about the same time, the partnership committed to invest $5 billion of new midstream expansion in the Montney region.

By October 2015, that expansion included Veresen’s announcement of approval of the $860 million Sunrise Gas Plant, which can process 400 million cubic feet per day. Located near Dawson Creek, the Sunrise Gas Plant has been described as “the largest gas plant to be commissioned in western Canada in the last 30 years,” with Veresen Midstream’s President and CEO David Fitzpatrick stating that his company’s “footprint in the Montney will grow substantially.” [4]

KKR also entered into a joint venture with Energy Transfer on SemCams Midstream, which owns and operates six gas processing plants and 700 miles of natural gas pipelines in the Montney and Duvernay areas of Western Canada.

You may recall that Energy Transfer is the company involved in the Dakota Access Pipeline protests of 2016, when NoDAPL indigenous protesters from the Standing Rock reservation in the U.S. were met with severe corporate and state-supported opposition.

So KKR not only has a primary position in the midstream natural gas industry of Western Canada, it also has scandalously partnered with a company well-versed in stopping indigenous protests.

Greenwashing

Equally odious, in 2007 KKR teamed up with the Environmental Defense Fund (EDF) on something called the Green Portfolio Program through which participating companies could “develop eco-beneficial products and services and develop ways to grow revenue through environmental improvements.” [5]

That decade-long greenwashing effort has especially been useful for KKR’s financial investment in fracking. In 2012, Forbes magazine (not known for its radical environmentalism) singled out KKR in a piece called “Guess Who’s Fueling the Fracking Boom?”, revealing how KKR has been pumping money into expanded fracking by upstream drillers, and then flipping the companies in sales deals that bring billions in profits to KKR. [6]

Perhaps not surprisingly, KKR Global Institute’s Chair is David Petraeus, the former Director of the CIA, who has wholeheartedly endorsed fracking. [7]

In the KKR Global Institute’s latest report (issued on January 15, 2020), the company touts itself for partnering “with companies that mitigate climate change, enhance resilient development [and] protect water quality … As a result, ‘doing well by doing good’ remains a growing investment theme in KKR in 2020.” [8]

LNG Canada in Kitimat, where the Coastal GasLink pipeline will bring the fracked natural gas, has claimed that it will be the lowest carbon-emitting LNG plant in the world, and that LNG exports will substitute for dirtier fuels like coal. But critics such as the Pembina Institute and the Canadian Centre for Policy Alternatives have seriously questioned this notion of LNG as a so-called “bridge fuel” to a low-carbon future, especially because of the methane leaks implicit in upstream, midstream and downstream processes. In terms of the climate emergency, methane is dozens of times more polluting than CO2.

Indeed, The Georgia Straight recently highlighted a statement by Stanford University professor Mark Z. Jacobson about methane leaks from an ExxonMobil fracking site: “Next time some paid liar in the fossil fuel industry insists fracked gas is helping solve the climate crisis, remind them a single @exxonmobil fracking site ‘leaked more methane in 20 days than all but 3 European nations over an entire year’.” [9]

Paid Liars

Wall Street’s KKR private equity titan appears to be packed with some very well-paid liars, who croon about “doing well by doing good” while invading Wet’suwet’en territory with their Coastal GasLink project and watching while the RCMP carry out the arrests. It’s time the focus should be placed on them. SOURCE

Virginia lawmakers pass major renewable energy legislation

Image result for virginia greenhouse gas targets

RICHMOND, Va. (AP) — The Virginia House and Senate passed sweeping energy legislation Tuesday that would overhaul how Virginia’s utilities generate electricity and, supporters say, move the state from the back of the pack to the forefront of renewable energy policy in the United States.

Critics, though, warned that the legislation, drafted privately by a group that included industry representatives and environmental advocates, strips state regulators of some oversight and leaves ratepayers on the hook for what could be excessive costs.

The measure, called the Clean Economy Act, lays out a plan to get Virginia to 100% renewable generation. The House version would demand that goal be met by 2045 and the Senate’s version sets a deadline of 2050, in line with a goal Democratic Gov. Ralph Northam set in an executive order in September.

Differences between the two versions will have to be worked out before the measure can be sent to Northam, whose administration has been involved in negotiating the bill.

In a floor speech, House sponsor Del. Rip Sullivan called the bill “transformative,” saying it would propel Virginia “into the future and into the top tier of states in terms of climate and energy policy.”

The legislation paves the way for an enormous expansion of solar and offshore wind generation plus battery storage , and sets an energy efficiency standard that utilities must meet. It also includes language that would add Virginia to the Regional Greenhouse Gas Initiative, a carbon cap-and-trade program.

Both the House and Senate versions would effectively block new fossil fuel generation facilities in the short term while state officials study whether a permanent ban should be enacted. The House version contains a provision that says if state officials determine by 2028 that the greenhouse gas reductions are not on target, then there will be a moratorium on the issuance of permits for new fossil fuel-fired generating facilities by 2030.

Bill sponsors said in committee hearings that hundreds of hours of negotiations had gone into crafting the legislation. Participants in those talks included Dominion Energy, influential environmental groups including the Virginia League of Conservation Voters and the Southern Environmental Law Center, plus solar interests and Advanced Energy Economy, a national association of businesses.

The lawmakers carrying the measure have said it will help address climate change by moving Virginia toward a carbon-free future while creating thousands of good-paying jobs at the same time.

The bill clears the way for the development of up to 5,200 megawatts of offshore wind, which is costlier than other forms of renewable energy, by declaring it in the public interest. Dominion currently has a small pilot project underway and has previously announced plans for a 220-turbine project in federal waters.

Advocates have noted that a race is underway among East Coast states jockeying for a spot in a supply chain expected to develop for the nascent offshore wind industry. They say Virginia could reap thousands of new, high-paying manufacturing and construction jobs, a boost to the state’s port, and billions of dollars in private investment while supporting an industry that will help the environment.

But critics are raising concerns about the price tag.

“In this century, we now have technologies to produce electricity that are clean and cheap,” Tom Hadwin, a former utility executive who does consulting work for Virginia environmental groups and reviewed the legislation, wrote in an email. “This bill encourages the ‘clean’ but loses the ‘cheap.’”

Attorney General Mark Herring’s office has cautioned lawmakers that language in the bill expressly eliminates the State Corporation Commission’s role in determining whether “enormous costs” of implementing its plans are reasonable and prudent and therefore can be passed along to customers.

“In our view the legislation will prevent the regulator from being able to work to accomplish the Commonwealth’s clean energy goals in a manner consistent with ratepayer protections,” Senior Assistant Attorney General Meade Browder told a Senate committee considering the bill.

An SCC analysis of one version of the bill found that the typical residential customer would likely see an increase of $23.30 a month between 2027 and 2030. The legislation currently includes provisions intended to protect low-income people from seeing a rate increase.

The Senate sponsor of the bill, Sen. Jennifer McClellan, said she disagreed with the SCC’s analysis, in part because it didn’t consider the “staggering” cost of doing nothing.

“We have got to do something to break our dependence on energy that is destroying our planet. Period,” she said Tuesday. SOURCE

BP sets net zero carbon target for 2050

New CEO Bernard Looney reveals plan to invest more in low-carbon businesses

 BP will cut the carbon intensity of the oil and gas it sells by 50% by 2050 at the latest. Photograph: BP

BP’s new chief executive has set an ambitious target to shrink the oil firm’s carbon footprint to net zero by 2050 by cutting more greenhouse gas emissions every year than produced by the whole of the UK.

Bernard Looney, who replaced Bob Dudley as chief executive this month, said it was clear that BP needed to change. He said BP would aim to become a net zero company by 2050 or sooner by tackling “all the carbon we get out of the ground as well as all the greenhouse gases we emit from our operations”.

BP is following the lead of other large oil firms by setting a target to reduce its contribution to the climate crisis, which will require the company to remove more than 400m tonnes of carbon emissions a year from its oil and gas business. MORE

What if Carbon Left Your Tailpipe as Solid Chunks?

Together, all the cars on Earth would leave quite the pile of carbon behind—every day.

Image result for What if Carbon Left Your Tailpipe as Solid Chunks?

This video undercuts any justification for continuing to drive any vehicle using gas.

Many environmentalists say that making some doubters appreciate the scale of carbon pollution is difficult because CO2 is invisible. This clever video illustrates what it would look like if your tailpipe emissions came out as solid chunks of carbon — or “car turds.”