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Alberta Premier Jason Kenney in Ottawa on May 2, 2019.Justin Tang/The Canadian Press

Max Fawcett is a freelance writer and the former editor of Alberta Oil magazine and Vancouver magazine.

"Skate to where the puck is going, not to where it’s been.”

This pearl of Wayne Gretzky’s wisdom has become Alberta’s go-to metaphor, and it shows up in the speeches of virtually every elected official and the reports and recommendations of every business leader and management consultant who has spent more than 10 minutes in the province.

But as anyone who has ever played hockey understands, Mr. Gretzky’s advice is far easier to say than actually follow. And right now, for the global divestment movement that has identified Alberta’s oil and gas industry as one of its primary targets, new Premier Jason Kenney might be about to get trapped in the offensive zone just as the puck heads the other way.

Mr. Kenney scored a convincing election win over Rachel Notley’s NDP on the back of a promise to fight harder for the oil and gas industry.

In addition to threatening to shut off the flow of oil to British Columbia, where drivers are already dealing with record-high gasoline prices, and pledging to crack down on any foreign funds flowing to anti-fossil-fuel environmental non-governmental organizations, he’s also taken a shot at one of the world’s biggest banks.

“HSBC is boycotting Alberta’s oil sands,” he tweeted last month. “Meanwhile the CEO of HSBC is ‘excited’ to be headlining a conference promoting investment in Saudi Arabia, which executed 37 people yesterday. The next Alberta Government will not tolerate this kind of hypocrisy.”

Mr. Kenney is referring to the changes HSBC made in 2018 to its lending policy for oil and gas companies, which featured a restriction on investments in new oil sands projects and heightened performance standards for ones in existing operations.

Mr. Kenney’s government can, in theory, refuse to work with HSBC in selling Alberta’s bonds and otherwise financing the operation of the government, although that’s more or less what his predecessor already did. But that won’t change the fact that the oil and gas industry is still subject to the Wizard of Id’s version of the golden rule, which is that whoever has the gold makes the rules. And the rules they’re making are, whether Jason Kenney likes it or not, increasingly focused on the environmental risks associated with investments in oil and gas.

This isn’t because they care deeply about climate change, mind you. It’s because they, like any competent steward of capital, want to maximize their return on investment. And they’re increasingly concerned that investments in longer-life assets such as an oil sands project, which can take upwards of a decade just to pay out the initial capital, may not be viable as the world becomes increasingly concerned about climate change. The demand for fossil fuels will peak some time in the next 10 to 25 years, and investors don’t want to be left standing when the music stops. Shell has already cited divestment as a material risk to its business, and if it’s material to a global powerhouse such as Shell it’s even more so to comparatively smaller Canadian companies.

Indeed, for all the talk about the ethical merits of divesting from fossil fuels, it’s the economic one that should scare the industry the most.

The global divestment movement now counts more than US$6-trillion – yes, trillion – in funds that have been diverted out of fossil fuels on the part of over 1,000 institutional investors. The insurance industry alone is responsible for half of that amount, but it also includes everything from postsecondary institutions to pension funds and even the entire country of Ireland. Norway’s sovereign wealth fund, which is worth more than US$1-trillion (sorry, Alberta), has even taken the step of divesting from companies that are in the business of looking for new oil and gas reserves, while remaining invested in ones such as Shell and BP that have renewable energy divisions.

This is a very real threat to Canada’s oil and gas business, which has always depended on foreign capital to fund its operations. According to the 2019 Fossil Fuel Finance Report Card, Canada’s big five banks are now the biggest lenders to the sector, along with U.S. bank JP Morgan Chase. And JPMorgan, not surprisingly, has come under heavy pressure from pro-divestment campaigners to shift its portfolio away from Canadian energy companies and implement a policy that limits so-called “high-carbon financing.”

Those sorts of policies, as well as the broader ESG (environmental, sustainability and governance) trend within the corporate world, are gaining traction. In a recent blog post, Calgary energy economist Peter Tertzakian identified this as one of the most pressing issues facing Alberta’s oil and gas industry today. “Many big funds won’t put money into companies unless they demonstrate mitigation of carbon emissions below a threshold. Some are jettisoning their oil and gas investments altogether to bring down portfolio emissions. This ESG trend is gaining momentum, it’s not unique to Canada and it puts a de facto carbon tax on the industry’s cost of new capital.”

Depending on how quick Canadian banks are to come along for the ride, Alberta’s energy sector could face consequences that range from a higher cost of capital to its almost complete disappearance. The good news is that big companies such as Suncor and Cenovus have spent the past few years reducing the carbon intensity of their production..

They are, in other words, skating to where the puck is headed. But they need their new government to do a bit of back-checking of its own. It might be tempting to skate deep into the other team’s end and stay on the offensive, but that’s an awfully good way to get scored on – and potentially lose the game.