Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Norway’s US$1.3-trillion sovereign wealth fund, the world’s biggest, continues to lose interest in grubby resource companies. Last month, we learned it blacklisted 15 businesses in 2020.

Four were Canadian, each an oil sands player: Canadian Natural Resources , Cenovus Energy , Imperial Oil and Suncor . “We divest from companies where we no longer want to be a shareholder for ethical or sustainability reasons,” the fund said. “By not investing in these companies, we reduce our exposure to unacceptable risks.”

The fund, which owns on average 1.4 per cent of every listed company in the world and generated a return of US$123-billion last year, was sending yet another message that the era of Big Oil is coming to an end and the future belongs to renewable energy players.

Story continues below advertisement

It’s easy to accuse the fund of blatant hypocrisy. Its fabulous wealth was built on Norway’s abundant offshore oil and natural gas riches, and it continues to invest in hydrocarbon companies, though less so every year – last year’s tally was 225, down from 311 in 2019. It’s also happy to ignore the credible efforts of the four banished oil sands companies to lower their carbon intensity.

But never mind. The four remain big emitters of greenhouse gases – they had to go. Some significant Japanese and European investors have already ditched their oil sands investments, and others will follow.

For all oil companies, especially those of the oil sands variety, the trend is clear and unsettling. Vanishing investors will make it harder for them to raise capital, boosting the cost of doing business. As their market values fall, index funds that seek out companies with big market values will have to give them a pass (rebounding oil prices have boosted values in recent months, though almost all oil companies are still down in the past year).

Higher carbon prices will intensify the misery. The European Union, for instance, is counting on carbon pricing to drive down emissions. The EU is targeting a 55-per-cent drop from 1990′s level by 2030. It runs the world’s biggest emissions trading scheme. Carbon allowances have already gone from €8 a tonne in 2018 to €40 today and may have to double to encourage all industrial companies, from oil and shipping to utilities and automobiles, to achieve net-zero emissions.

What are oil companies, especially those in the oil sands, to do to save themselves? Reducing their Scope 1 and 2 emissions – those directly related to their operations, the result of burning diesel fuel for trucks and generating electricity purchased from nearby power plants – can only go so far. Barring breakthroughs in technology, the yearly reductions will be relatively small.

Vancouver’s Teck Resources is speeding up the process by getting out of the oil sands. Its 21.3-per-cent stake in the Fort Hills project, operated by Suncor, is for sale. Unloading it won’t be easy in a market that is becoming aggressively anti-oil sands.

BP has the most radical idea so far. It plans to reduce its oil and gas production by 40 per cent by 2030 and drop its refining output by 30 per cent. Its emissions will fall correspondingly, a massive clean-up act that, so far, has not caught investors’ imaginations because less oil out the door means less cash flow.

Story continues below advertisement

But BP, and other oil companies planning similar makeovers, may pick up momentum if they go from Big Oil to Big Energy, which apparently is BP’s plan. Twenty years ago, it rebranded itself from British Petroleum to Beyond Petroleum. The idea was to keep emissions flat and dive into the renewable energy business. The rebranding made little progress and was dropped after a few years.

But the climate debate, renewable-energy technologies and investors’ attitudes toward highly polluting companies have changed a lot in the past two decades. Investors don’t want to prop up old oil companies; they want to propel green energy companies into the big leagues, and it has worked amazingly well so far.

Most of the new energy giants began life in the hydrocarbon business – oil and gas production, oil refining or coal-powered electricity generation. They’re busy burying their hydrocarbon pasts and diving into solar, wind and hydro power.

The ones with the greatest success so far are Orsted of Denmark, which evolved from a national oil company into the world’s biggest offshore wind company; Enel of Italy, Europe’s biggest utility and the top renewable energy producer outside China; Spain’s Iberdrola, the world’s third-biggest utility en route to becoming a global clean-energy powerhouse; and NextEra, America’s largest renewable energy producer.

All four of them were flying under the investor radar a decade ago. Today they are superstars, and their market values are approaching, and sometimes exceeding, those of the oil biggies. On Friday, Enel had a market value of US$97-billion, about US$10-billion more than BP’s.

Can the Canadian oil sands companies pull off similar transformations? Not easily, since they are well behind in the renewable energy game. But what choice do they have but to try? Norway’s decision to banish them is not a one-off punishment. Their shares will remain in the doghouse unless they realize that the oil sands are a sunset – and unloved – industry.

Story continues below advertisement

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies