Page 5 - NorthAmOil Week 46

NorthAmOil COMMENTARY NorthAmOil
Natural Resources Canada has reported paying out CAD37mn ($28mn) – out of a CAD50mn ($38mn) commitment in total – under its Clean Growth Program for nine pro- jects that help oil and gas firms reduce their carbon footprints.
Meanwhile, Innovation, Science and Eco- nomic Development Canada announced that it would award two projects CAD49mn ($37mn) each to help build facilities in Alberta for con- verting propane into polypropylene, which is not currently produced in the country.
Pulling back
While Ottawa is trying to prop up its ailing energy industry, however, international inves- tors – particularly European ones – are pulling back amid mounting concerns over the carbon footprint of the Alberta oil sands and other Canadian fossil fuel sources.
Last week, Sweden’s central bank, the Riks- bank, said it had sold off bonds from Alberta and parts of Australia because it felt that the greenhouse gas (GHG) emissions of both were too high.
Also last week, the European Investment Bank (EIB) announced that it would not invest in fossil fuel projects after 2021.
This follows Norway’s largest pension fund, Kommunal Landspensjonskasse (KLP), announcing in November that it would no longer invest in companies that derive more than 5% of their revenue from the oil sands. The move led to the fund dropping four Canadian energy companies from its investment list.
And earlier this month, Norway’s central bank warned that climate risk must be consid- ered in all assessments before investments are made.
Alberta’s government has pushed back against such decisions. Commenting on the Riksbank’s move last week, the provincial gov- ernment argued Alberta had some of the highest environmental standards in the world, and that the energy industry was constantly looking for ways to reduce its carbon footprint.
“If the Swedish central bank is really con- cerned with making a difference on climate change they need to be investing more in ethical producers such as Alberta which have shown dramatic gains in reducing emissions,” Chris- tine Myatt, a spokeswoman for Alberta Premier Jason Kenney, said.
However, Alberta’s efforts to reduce emis- sions do not appear to have had an impact on public perceptions of the oil sands to date. Around CAD30bn ($23bn) worth of capital is estimated to have exited Canada’s energy indus- try in the past three years.
It is not the oil sands alone that could suffer as more international investors pull back from fos- sil fuels. In the wake of the EIB’s announcement that it would end funding for fossil fuel projects, consultancy Wood Mackenzie’s research direc- tor, Nicholas Browne, warned that natural gas projects also stand to be affected.
“The EIB’s new financing criteria will make lending to gas projects very difficult. It highlights that gas is also increasingly in the spotlight of the climate debate,” Browne said.
This could be a worrying development for an industry that has been turning increasingly to natural gas as part of the solution to mitigating climate change while still meeting global energy demand. And it may also be cause for concern in Canada, where an LNG megaproject is cur- rently under construction, potentially with more to follow.™
Sweden’s central bank, the Riksbank, said it had sold off bonds from Alberta and parts of Australia.
Efforts to showcase emissions reduction efforts in the oil sands do not appear to have had an impact on foreign investors to date.
Week 46 20•November•2019 w w w . N E W S B A S E . c o m
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