The group’s report, titled Funding Failure, focuses on international spending on carbon capture and fossil-based hydrogen subsidies, which continues despite ample data showing that the technological fixes have “failed to make a dent in carbon emissions” after 50 years of research and development.

The report details how five countries account for 95% of all carbon capture spending, with the U.S. investing the most taxpayer money in the technology, at $12 billion in subsidies over the last 40 years.

Norway comes in second with $6 billion going to carbon capture and storage, while Canada has spent $3.8 billion, the European Union has spent $3.6 billion, and the Netherlands has poured $2.6 billion into the technology, with which carbon dioxide emissions are compressed and utilized or stored underground.

Harjeet Singh, global engagement director for the Fossil Fuel Non-Proliferation Treaty Initiative, told The Guardian that the subsidies amount to a “colossal waste of money.”

“It is nothing short of a travesty that funds meant to combat climate change are instead bolstering the very industries driving it,” Singh said.

While proponents claim that carbon capture and storage reduces planet-heating carbon emissions, OCI notes, it was originally developed in the 1970s “to enhance oil production, and this remains its primary use,” with the technology “barely” reducing emissions.

High-profile carbon capture failures in the U.S. include the Petra Nova project in Houston, Texas, which cost nearly $200 million in taxpayer funds and whose captured emissions were later used for crude oil production, and the FutureGen project, “which swallowed $200 million and never materialized.”

“Investing in carbon capture delays the transition to renewable energy,” OCI’s report says. “Instead of wasting time and money on technologies that do not work, governments must commit to justly and urgently phasing out fossil fuels before it’s too late.”

RELATED:

Most carbon capture and storage projects are failing, researchers say

Can carbon capture be a meaningful climate solution?

Canada’s new greenwashing law rattles fossil fuel industry 

Despite the lack of data supporting the use of carbon capture, the group said, countries including the U.S. are “preparing to waste hundreds of billions of taxpayer dollars on these ineffective technologies, further benefiting the fossil fuel industry.”

OCI highlighted how the U.S. and Canada, while ostensibly fighting the climate crisis, have spent a combined $4 billion in public money to explicitly “pay oil companies to produce more oil,” with the subsidies going to carbon capture for “enhanced oil recovery.”

The report also found that in addition to the $12 billion in taxpayer funds the U.S. has spent on carbon capture and fossil hydrogen – a leak-prone gas produced through energy-intensive processes that cause their own emissions – the government has spent an estimated $1.3 billion on the 45Q tax credit, which allows companies to write off tax for every ton of carbon dioxide they store underground.

The Inflation Reduction Act (IRA) increased the amount given to companies in 45Q tax credits from $35 to $60 per ton, meaning that the subsidy could grow to more than $100 billion in the next 10 years.

OCI’s Policy Tracker shows that overall public spending on carbon capture and hydrogen could grow by between $115 billion and $240 billion in the coming decades.

“We need real climate action, not fossil fuel bailouts!” OCI said in a post on social media.

The group’s report also highlights that fossil fuel giants such as ExxonMobil have shifted from carbon capture skeptics to outspoken proponents of the technology – with the company bragging to investors that carbon capture and hydrogen would help its Low Carbon Business Unit make “hundreds of billions of dollars” and grow to be “larger than ExxonMobil’s base business.”

Exxon didn’t launch its carbon capture efforts until 2018, having spent several years and hundreds of millions of dollars on another “climate solution” that ultimately failed: the use of algae to make biofuels.

Since then, Exxon has “pushed for direct government funding for carbon capture, particularly at the U.S. Department of Energy (DOE),” successfully lobbying for $12 billion allocated in the Bipartisan Infrastructure Bill in 2021 for “carbon management research, development, and demonstration.”

Exxon also lobbied for the increased rate of the 45Q tax credit in the IRA and “played a ‘central role’ in drafting a 2019 DOE-sponsored report on carbon capture that determined Congress would need to create an incentive of around $90 to $110 per ton to support carbon capture deployment,” according to OCI.

The Guardian on Thursday reported that Exxon still “chases billions in U.S. subsidies for a ‘climate solution’ that helps drill more oil,” describing how the oil giant hosted an event at the Democratic National Convention earlier this month where senior climate strategy and technology director Vijay Swarup praised the IRA for helping Exxon pursue carbon capture and said: “We need new technology and we need policy to support that technology. We need governments working with private industry.”

Exxon’s enthusiasm for carbon capture, OCI said, is an example of how “the fossil fuel industry delays climate action, distracts from real solutions that would end the fossil fuel era, and does everything in its power to squeeze the last drops of profit from a dying industry, at the expense of all of us.”

This article by Common Dreams is published here as part of the global journalism collaboration Covering Climate Now. It has been edited to conform with Corporate Knights style.

The post U.S., Norway, Canada spending most taxpayer money on funding ‘false climate solutions’: report appeared first on Corporate Knights.

The rule, which the U.S. Environmental Protection Agency (EPA) finalized on March 20, limits emissions from tailpipes on new cars, starting in 2027.

Well before the EPA finalized the new standard, powerful corporate lobbies like the American Fuel & Petrochemical Manufacturers (AFPM) had already promised to spend at least a million dollars campaigning against the rule by falsely portraying it as a “ban” on new cars. The group’s hyperbolic ads warn viewers that their freedoms and choices “will soon be taking a back seat to big government.”

The EPA predicts that the change would result in around two-thirds of new vehicle sales being hybrid or electric by 2032 — up from around eight percent today.

Beyond stopping more than 7 billion tons of carbon pollution, the agency predicts that the rule could save drivers more than $60 billion in fuel and maintenance costs, according to an EPA fact sheet that accompanied the final rule. The pollution reduction benefits would particularly benefit Black and brown communities because they are disproportionately likely to suffer from air pollution.

“These strongest-ever pollution standards for cars solidify America’s leadership in building a clean transportation future and creating good-paying American jobs,” EPA administrator Michael S. Regan said in a statement.

Compared to the EPA’s initial proposal, the final rule was scaled back to give car manufacturers more time to comply, but the New York Times still described the new standard as “one of the most significant climate regulations in the nation’s history.”

The heads of AFPM and the American Petroleum Institute (API) — the leading trade group for the oil and gas industry — declared in a joint statement that the rule “will unequivocally eliminate most new gas cars and traditional hybrids from the U.S. market in less than a decade.”

In February, AFPM had already begun portraying the rule as a “car ban” and announced a “seven-figure issue campaign” featuring TV and digital ads, as well as billboards and text messages. Some of the efforts target electoral swing states, including Michigan, Wisconsin, and Pennsylvania. The group also launched a website that warns readers, in all caps, to “keep the government’s hands off our cars!”

Despite the industry’s attempt to misleadingly brand the new standard, “this is not a ban of internal combustion engines,” Margaret Wooldridge, a professor of mechanical engineering at the University of Michigan, said in a statement.

Last year, AFPM spent nearly $7 million lobbying the federal government — more than any year in its history — according to OpenSecrets.

The top two bills the group reported lobbying for are designed to prevent the EPA from finalizing or enforcing vehicle emissions standards. Both bills passed the House last year. (Chevron, API, Koch Industries, and Marathon Petroleum are among the other industry groups and companies that lobbied for these bills last year.)

In addition to lobbying Congress and running million-dollar public influence campaigns, corporate trade groups have increasingly used lawsuits and the threat of costly, time-consuming litigation to stop or delay climate-related regulations.

Earlier this month, for instance, the U.S. Securities and Exchange Commission (SEC) finalized a long-delayed rule that requires public companies to disclose some of their emissions and climate risks that could impact their businesses. While the published rule was substantially weaker than what the SEC originally proposed, the U.S. Chamber of Commerce was among a handful of conservative interest groups that immediately challenged the measure in court.

Another recent EPA rule targeting methane emissions also met with opposition from Republican officials and oil and gas interests, according to Politico.

And on March 6, barely a month after the EPA finalized a separate rule limiting soot pollution, API, the National Association of Manufacturers, and the Chamber were among eight trade groups that sued the agency in the D.C. Circuit court.

‘Prepared to challenge it in court’

In a blog post, AFPM claims that the EPA “does not have authority to overhaul the U.S. economy or transportation system or compel — directly or otherwise — the use of EVs to address vehicle emissions.”

Similar objections to the authority of federal agencies to issue regulations have found a receptive audience among the Supreme Court’s conservative majority.

If the EPA doesn’t undo the tailpipe emissions rule, “our organizations are certainly prepared to challenge it in court,” the AFPM and API CEOs said in the joint statement that followed the announcement.

In attacking the rule, corporate interest groups like AFPM are following a well-trod path of fighting new climate regulations on every playing field they can find.

During the Trump administration, AFPM helped lead a successful effort to weaken previous EPA fuel efficiency standards. The group helped marshal Republican governors to advocate for the rollback, while also supporting Energy4US, a front group that encouraged Americans to flood the EPA with public comments, as DeSmog previously reported.

“One of the big advantages that oil industry lobbyists like AFPM have is money, and AFPM certainly isn’t afraid to use it,” Jesse Coleman, a senior researcher at the investigative outlet Documented, told DeSmog in an email.

“Million dollar ad campaigns are an unfortunately common way for groups like AFPM to pressure legislators and regulators by raising the political temperature on an issue. Litigation slows things further, leading to years of delays in implementation.”

The story first appeared on DeSmog. Read the original article here.

The post Fossil fuel lobby pulls out all the stops against new car emissions rules in the US appeared first on Corporate Knights.

After acquiring British Columbia-based Carbon Engineering last week, Occidental hopes to build about 100 DAC plants that strip carbon dioxide from the atmosphere to bury underground, or for use in making products like concrete and aviation fuel.

“The acquisition enables Occidental to catalyze broader development partnerships for DAC deployment in the most capital efficient and valuable way,” Hollub said.

Earlier this year, she said DAC will one day help Occidental bring its operations to net-zero, allowing it to continue investing in oil extraction.

“We believe that our direct capture technology is going to be the technology that helps to preserve our industry over time,” Hollub told an oil and gas conference in March. “This gives our industry a licence to continue to operate for the 60, 70, 80 years that I think it’s going to be very much needed.”

Unlike carbon capture and storage (CCS) systems that remove carbon at the point of emission, DAC is mean to suck up and store carbon that is already in the atmosphere. It is currently the most expensive application of carbon capture, says the International Energy Agency. It’s still in the early stages of commercialization, and multi-billion-dollar investments will be needed before its proponents can be sure it will deliver as promised.

But it is also among the technologies eligible for funding under the U.S. Inflation Reduction Act. Some of Occidental’s proposed DAC plants have already been selected as federal grant recipients, Reuters says. Canada, too, is trying to support DAC technology, and is currently working out the details to issue tax credits for its deployment, writes the Canadian Press.

Carbon Engineering CEO Daniel Friedmann said the deal with Occidental will dramatically enhance the company’s ability to continue developing its technology through to commercialization.

“It will enable us to accelerate our mission to lead the world in the large-scale removal of carbon dioxide from the air and help advance our shift to a sustainable, net zero society,” he said.

But CDR is not a replacement for deep emissions reductions, said climate scientist and IPCC author Zeke Hausfather. “Anyone who says differently is selling something.”

Other scientists have also weighed in, cautioning that Occidental has inflated the role that carbon dioxide removal can play in reducing emissions, reports Climate Home News.

Selling carbon removal credits and “net-zero oil” will initially yield the most revenue for Occidental’s DAC ventures, Richard Jackson, Occidental’s president of U.S. onshore resources and carbon management, told the Wall Street Journal.

“We can turn carbon dioxide into value,” he said.

Eventually, Hollub said she expects Occidental’s clean energy efforts to become more lucrative than its chemicals division.

But critics have repeatedly warned that carbon offsets should be treated as a last resort, never taking the place of real emissions cuts. Otherwise, heavy polluters could use them as a “get out of jail free” card.

Others have said technologies like DAC should not be a major plank in net-zero schemes, as their potential is limited compared to the scale of the climate crisis. DAC is not a “silver bullet” that can live up to the hype of fossil fuel companies, and “capturing three-quarters of present carbon dioxide emissions [with DAC] would require half of present global electricity generation, and heat equivalent to half of final energy consumption,” Greenpeace observes.

But DAC does align with Big Oil’s plans for continuing production. Oil companies will have to find ways to remove as much carbon dioxide as they emit “if they want to be the last producer standing in the world,” Hollub told the Wall Street Journal.

This story first appeared in The Energy Mix.

The post U.S. oil company buys Canadian carbon capture tech to fuel oil extraction future appeared first on Corporate Knights.

As the IESO moves ahead with plans to add 1,500 megawatts of new natural gas-fired generating capacity at four existing generating stations, independent analysts are also looking into how long the province will actually be using the gas plants, how much they’ll drive up climate pollution – and whether the procurement was needed in the first place.

The discussion about provincial power planning became that much more complex and fraught over the last week, when Energy Minister Todd Smith announced a procurement for utility-scale renewables in 2025-26 that he said would be the biggest the country has ever seen. The province is moving immediately to add 4,800 MW of new nuclear capacity at the massive Bruce complex on Lake Huron and three more small modular nuclear reactors at the Darlington nuclear generating site on Lake Ontario.

But the other big uncertainty is the extent to which the IESO’s battery procurement will end up depending on natural gas, a fuel whose primary component is methane, a climate super-pollutant with 85 times the warming potential of carbon dioxide over a 20-year span.

‘Clean’ Battery Storage from a Fossil Fuel

In its May 16 media release on the gas plant procurement, the IESO put most of the emphasis on the seven new battery projects totalling 739 megawatts, yet another Canadian first for the biggest storage buy ever. The concurrent decision to push ahead with new gas capacity means a large share of the electricity flowing into those batteries may be generated from a high-emitting fossil fuel. But a review of the IESO’s in-house analysis over the last two years suggests the grid operator might not be entirely sure how much or how often that will happen:

• A data table [xlsx] accompanying the IESO’s December, 2022 Annual Planning Outlook shows the percentage of the time that gas is the “marginal resource” increasing from 24% in 2023 to 54% in 2024, 81% in 2027, 89% in 2033, and 99% in 2037, then holding at 99 or 100% through 2043.

• But the equivalent table [xlsx] from the December, 2021 outlook indicated much heavier reliance on emissions-heavy gas—70% in 2023, 74% in 2024, 91% in 2027, and 100% in 2043.

Both sets of numbers bear out the note in the 2022 outlook that “the escalating trend continues quickly prior to 2028 as demand grows and other [power generating stations] come out of service, as natural gas facilities will increasingly be the marginal resource.” But the higher numbers mean more gas being burned sooner, more emissions going into the atmosphere as a result, and the IESO’s numbers shifting in the course of a single year to indicate a smaller climate impact.

An IESO spokesperson did not respond to questions about how much of the electricity destined for battery storage will be generated from gas, or how the IESO calculated that percentage prior to this week’s announcements. The IESO and the Ministry of Energy both said it’s too soon to say how the new renewable energy procurement will shift that picture. “As the 2025-26 procurement is still being designed, target quantities and commercial operation dates are yet to be determined through consultation with the IESO and other stakeholders,” said Ministry spokesperson Michael Dodsworth.

The post Will Ontario’s ‘clean’ battery storage be powered by a fossil fuel? appeared first on Corporate Knights.

That’s almost a fifth of the province’s total budget for this year.

Ruby River Capital LLC, the U.S.-based owner of GNL Québec Inc., filed a claim against Canada under the North American Free Trade Agreement (NAFTA) after its Énergie Saguenay project failed to pass a federal environmental impact assessment.

The proposed LNG terminal had already been rejected by the Québec government over concerns that it would increase greenhouse gas emissions and negatively impact First Nations and marine mammals.

Canada faces a no-win situation — a catch-22. If the government does not rapidly phase out fossil fuels, it will fail to meet its commitments under the Paris Agreement to address the climate crisis. But when it takes steps to do so, foreign investors invoke international trade and investment agreements like NAFTA and threaten to drain public coffers.

Unlike environmental treaties, trade and investment agreements have teeth. They are enforceable through a system known as Investor-State Dispute Settlement (ISDS) that allows foreign investors to bypass local courts and bring claims for monetary compensation to a panel of three arbitrators. More than 1,200 ISDS cases have been launched against governments around the world in the last 25 years.

Between 1996 and 2018, Canada was sued more than 40 times by American investors through the investment chapter in NAFTA. To date, Canada has lost or settled (with compensation) 10 claims. Canadian governments have paid out more than $263 million in damages and settlements.

When NAFTA was replaced in 2018 with the U.S.-Mexico-Canada Agreement (USMCA), it did not include an ISDS mechanism between Canada and the U.S. Chrystia Freeland, the then-deputy prime minister of Canada, noted at the time that the removal of ISDS “strengthened our government’s right to regulate in the public interest, to protect public health and the environment.”

Ruby River was only able to launch its case because USMCA allowed firms that had made investments before NAFTA’s termination – on July 1, 2020, – to continue to bring ISDS claims for three years — until June 30, 2023.

Importantly, Ruby River spent only about CDN$165 million on the Énergie Saguenay project proposal. However, the firm is permitted within the ISDS system to seek “lost future profits” based on speculation about the performance of notoriously volatile oil and gas markets.

Other jurisdictions need to follow Québec’s lead. The global carbon budget has no room for new coal, oil or gas developments.

 

Québec is a member of the global Beyond Oil and Gas Alliance and is the first jurisdiction in the world to ban all oil and gas production. The province is being sued over this ban by several fossil fuel firms — seeking more compensation than was offered — in Québec’s Superior Court.

Had these companies been foreign, and thereby qualified for the protection of an investment treaty, they likely would have chosen ISDS instead. This is because ISDS generally provides broader scope for claims — and larger awards — than domestic courts.

Other jurisdictions need to follow Québec’s lead. The global carbon budget has no room for new coal, oil or gas developments. Construction of new fossil fuel infrastructure also needs to be limited, as it would lock in continued extraction long into the future.

Despite clear messages to this effect from the Intergovernmental Panel on Climate Change and the International Energy Agency, investors continue to propose new fossil fuel projects. They do so in full knowledge that governments need to act to curb emissions in line with their international commitments and that future climate policies may negatively impact their investments.

Allowing these companies to demand billions in compensation creates moral hazard and could dampen necessary policy action.

Governments are increasingly aware of this risk and many are taking action. The European Union is seeking to withdraw from the Energy Charter Treaty, the largest investment treaty in the world, because it “is not aligned with the Paris Agreement, the EU Climate Law or the objectives of the European Green Deal.”

The Biden administration is committed to not signing up to new agreements with ISDS and a number of Democrats are calling for the removal of the mechanism from existing deals. Other countries such as Australia and New Zealand have worked to exclude ISDS from some of their trade agreements.

It is communities impacted by climate change that should be compensated by fossil fuel firms, not the other way around.

 

Canada will soon escape from the legacy of NAFTA. However, the government remains exposed to the threat of ISDS through other trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), as well as dozens of bilateral investment treaties.

When the U.K. officially joins the CPTPP, the risk of ISDS claims from fossil fuel firms will increase dramatically.

The idea that public finance, desperately needed for the energy transition and climate adaptation, will be redirected to compensate fossil fuel firms currently making record profits is offensive.

In light of the increasing body of evidence that documents how the industry has actively obstructed climate action and helped to spread disinformation about climate science, it is communities impacted by climate change that should be compensated by fossil fuel firms, not the other way around.

The Canadian government should adopt a consistent approach to ISDS. The exclusion of ISDS from USMCA should be emulated in any future agreements, and Canada should work with treaty partners to remove access to the system in all current ones.

Kyla Tienhaara is the Canada Research Chair in Economy and Environment at Queen’s University.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The post How Canada gets sued for billions when fossil fuel companies don’t get their way appeared first on Corporate Knights.

Yet both have a contradiction at the heart of their business model. They are also two of Canada’s largest investors in fossil fuels, including dirty coal, investments that adversely affect the health of the clients they’re insuring.  

The German NGO Urgewald just published a global database of fossil fuel investors, companies that own the most stocks and bonds in oil and gas and coal companies. The top five for Canada are Sun Life, RBC, Power Corporation, Manulife and TD, each with billions invested.  

It’s not a surprise to see the big banks on this list, but this represents a particular contradiction for Sun Life and Manulife, whose core business centres on the health of their clients.  

As the climate crisis accelerates, more attention has been focused on the role of the property and casualty insurance industry on the front lines of impacts such as floods, fires and storms. This is already driving increases to Canadians’ home insurance rates.  

But less attention has been focused so far on the role of the health and life insurance industry in the climate crisis, even though it’s not just property that’s negatively affected by climate impacts – it’s people too.  

Last year the Canadian government completed a major assessment of climate and health that concluded that climate change is already negatively affecting the health of Canadians through disease, injury and death, and that health risks will increase with warming.  

It also found that impacts disproportionately fall on vulnerable populations. Perhaps the most dramatic example was the 2021 heat dome, which killed 619 people in B.C., but health impacts are also showing up more quietly, worsening the mental health of young people. A Lakehead University study found that 40% of those aged 18 to 25 say climate anxiety already affects their daily functioning.  

As well, we also know that burning fossil fuels has direct health impacts via air pollution, such as respiratory disorders, strokes and heart attacks. The federal government estimates that coal burning results in hundreds of thousands of premature deaths globally each year.  

Why, then, do life and health insurance companies continue to foster these negative health impacts via their investments? And what are the implications for the insurance policies they issue, and potential claim payouts?  

Sun Life and Manulife grew in part by adding asset management to their business and invested in everything, including fossil fuels. Today, both companies have promised to reach net-zero by 2050 in emissions resulting from their investments but are yet to follow that up with any meaningful policy on fossil fuels. Both are at the early stage of evaluating how the climate crisis will affect their life and health policies and whether they will see a rise in claims, or a shift in qualification criteria. Without more work and more disclosure, this is a concerning risk for investors. 

Our organization, Investors for Paris Compliance, filed a shareholder proposal at Sun Life asking for this disclosure, to be voted on at its annual general meeting on May 11. With Manulife, we are hoping to see progress on these issues in its ESG report that will be released around the same time.  

The insurance industry is on the front lines of the climate crisis. Insurance companies should be leading the charge in fossil-free investment. Their business depends on it.  

Matt Price is the executive director at Investors for Paris Compliance. Kyra Bell-Pasht is the director of research and policy at Investors for Paris Compliance. Investors for Paris Compliance is a shareholder advocacy organization that holds publicly traded Canadian companies accountable to their net-zero commitments. 

The post Canada’s life insurers have a fossil fuel problem appeared first on Corporate Knights.

Last month, the Canada Pension Plan Investment Board (CPPIB) released its 2022 Report on Sustainable Investing, highlighting its commitment to be net-zero by 2050 and its engagement strategy to pressure companies to manage climate risks. Our $523-billion national pension manager is making big promises to decarbonize its portfolio by making large investments in climate solutions, pledging to report its absolute emissions, and using its influence and capital to help transition high-carbon industries. 

It’s potentially a smart approach, but it stands in stark contrast to public commitments CPPIB officials have made to continue investing in fossil fuels.  

At the end of September, Richard Manley, the head of sustainable investing at CPPIB, told The Globe and Mail that we could see “Big Oil become Big Energy, but also no-carbon oil over time.”  

This comment should be a red flag for Canadians concerned about the security of their pensions and the stability of our climate.  

It’s part of a broader argument that financial institutions should continue to flow capital into the oil and gas industry indefinitely, in spite of pension funds’ fiduciary duty to invest in members’ best long-term interest and climate commitments to reach net-zero emissions by 2050. For example, CPPIB said earlier this month that it will “support conventional energy companies that are committed to reducing their emissions and are well positioned for the energy evolution.”  

Many emissions-intensive industries – like cement, agriculture, buildings, transport and utilities – have credible, profitable pathways through the energy transition, but the oil and gas sector does not. 

Manley also said that “we’re already seeing Big Oil become Big Energy,” but this belief is mistaken. Five of the global supermajors are spending around US$750 million annually on greenwashing while allocating just 12% of capital expenditures to “low-carbon” activities, according to think tank InfluenceMap. Canada’s six largest oil and gas producers are making record profits but failing to invest significantly in emissions reductions while lobbying to undermine ambitious government climate policies.   

The notion of “no-carbon oil” is absurd – a marketing attempt to obscure reality. Crude oil is composed of long chains of carbon strung together. It’s consumed primarily via combustion to extract energy, releasing that carbon into the atmosphere in the process. Global production and the use of 100 million barrels of oil per day is a leading cause of the climate crisis. 

The underlying argument that institutional investors like CPPIB should continue to flow capital into oil and gas companies to finance carbon-cutting innovations sounds reasonable – until you consider reality. The technologies available to reduce oil and gas emissions have to date proven ineffective, unreliable, expensive and unavailable at the required scale.  

The leading proposed solution, carbon capture utilization and storage (CCUS), has not measured up to hype, with oil companies unwilling to invest profits into this expensive technology that increases production costs. CCUS may eventually prove important for hard-to-abate sectors like cement or fertilizer, but better, cheaper, zero-carbon substitutes for oil and gas already exist. 

Even if CCUS somehow became inexpensive, scalable and effective, it cannot address oil and gas life-cycle emissions. There’s no taking the carbon out of the barrel. The overwhelming majority of emissions are the result of using oil and gas products as designed – for combustion. Depending on the blend, between 70 and 80% of the carbon pollution from a barrel of crude comes from the tailpipe.  

Disruptive technologies and new policies are already destroying oil demand, with an estimated six million electric vehicles expected to be sold in China alone this year. There is little reason to believe that a market for non-combustion uses of crude might arrive at scale in time to stop the industry’s decline. Optimistic marketing around “bitumen beyond combustion” that could drive future demand growth for oil-sands production lacks credibility, considering that only 7% of crude oil consumed in the United States is for non-combustion use. 

CPPIB reported this summer that it has $21.72 billion invested in fossil fuel producers. It is deeply entangled with the fossil fuel industry through its board and staff. A long-time member of CPPIB’s global leadership team is now CEO of the Canadian Association of Petroleum Producers. 

As the Intergovernmental Panel on Climate Change and the International Energy Agency have made clear, limiting global heating to 1.5℃ requires an immediate end to fossil fuel expansion and a rapid phase-out of production. The Glasgow Financial Alliance for Net Zero and the Investor Leadership Network already provide investor guidance for the responsible phase-out of high-emitting assets. 

CPPIB’s mandate, to invest the CPP funds to achieve a maximum rate of return without undue risk of loss, does not involve assuming extraordinary climate-related financial risks to prop up an industry facing structural decline. Fossil fuel companies are desperate to preserve their business model and prolong the use of oil and gas, but our pension capital cannot be their lifeboat. 

The post Memo to CPPIB: There’s no such thing as ‘no-carbon oil’ appeared first on Corporate Knights.

In March, Jim Hourdequin, the CEO of Lyme Timber – one of the world’s largest suppliers of carbon offsets to companies like Chevron – admitted that lax standards have allowed his forestry company to earn US$53 million over the past two years without making significant changes to business as usual. The company received offset payments from polluting industries on projects that, as Bloomberg put it, “don’t actually change the way forests are managed, and therefore do little to help the climate.”

Carbon offsets have a bad name for a good reason. Some of the biggest polluters exploit offsets purely to avoid making cuts to their emissions. And some of the biggest offset sellers rake in profits while failing to achieve equitable or even tangible climate benefits. With a fifth of the world’s biggest companies already committed to United Nations net-zero targets, and virtually all relying on offsets to reach that goal, the growing climate accountability across the private sector is now driving growth of a carbon-offset industry that has its own climate accountability problems.

At the same time, offsets are one of the only opportunities for financing the critical work of ecosystem care and climate repair today. In Atlantic Canada, for example, which receives less than 3% of environmental funding nationally and experiences low rural incomes coupled with high rates of clearcut forestry, the non-profit I work for has used carbon partnerships with sustainable architecture and film companies to protect some of the region’s last carbon-rich and biodiverse forests.

This mix of failures and redeeming opportunities reflects the broader complexity of transitioning to a low-carbon economy, as well as society’s relatively novice response to the climate crisis. We’re still learning and adapting. It also, however, reflects the depth of exploitation that companies are capable of when market-based mechanisms are deployed in absence of strong policy and regulatory oversight.

Almost 20 years since the first carbon-offset mechanisms emerged, it is becoming increasingly difficult to forgive these ongoing failures. Carbon offsetting can hope to remain reputable today only if its two most harmful pitfalls are addressed: the failure to ensure significant reductions in overall emissions in first priority, and the failure to achieve genuine carbon-storage outcomes in an equitable way. In a bid to help solve these challenges and promote even greater investment in carbon offsetting, Mark Carney – the former governor of the Bank of Canada and the Bank of England – made bold promises at the COP26 climate conference to grow the voluntary market to US$100 billion per year by the end of this decade. Less than two years later, the Taskforce on Scaling Voluntary Carbon Markets is being scaled back. Now rebranded as the Integrity Council for the Voluntary Carbon Market, the initiative is grappling with the same regulatory shortfalls that have plagued offsets since their invention.

In the meantime, carbon markets are growing in Canada and around the world. According to Refinitiv, a subsidiary of the London Stock Exchange, the voluntary market reached a record high US$1 billion last year, while more established compliance markets surpassed US$850 billion.

Pioneering Papua New Guinea bans new carbon deals

Offsetting was popularized by the Kyoto Protocol, which came into force in 2005. The treaty recognized that wealthier countries are historically responsible for climate change, while nations throughout the Majority World – a term that replaces the expressions “developing world” or “Global South” to better recognize that this is where 80% of humanity lives – suffer the majority of negative impacts. All signatories set equalized emission reduction targets, recognizing their differentiated climate responsibilities, and a mechanism was created – offsetting – where those states failing to meet their climate goals could make up for it by transferring a proportionate amount of wealth to countries that were beating their own national targets and picking up the slack in the fight against climate change.

Papua New Guinea, an island state home to some of Earth’s largest remaining tropical forests cared for generatively by Indigenous communities for over 50,000 years, was positioned to be one of those countries that could exceed national targets. At the same 2005 UN climate summit in which offsetting was enacted, the government of Papua New Guinea put forward the first-ever proposal to store additional carbon by protecting exceptionally biodiverse and carbon-rich forests. They invited high-polluting states to pay for tropical forest protection to not only help meet global emission reduction targets but also replace the financial losses their country would face by deferring timber harvests – revenues that the country needed to take care of its people.

This April, Papua New Guinea’s minister of environment enacted a moratorium on new voluntary carbon-offset projects in the country. Civil society watchdogs identified major weaknesses and loopholes in projects being developed there and raised concerns that the exploitative history of logging interests infringing on the rights of Indigenous people was now simply being perpetuated by carbon project developers. The government has banned all new voluntary carbon projects until laws can be enacted that properly safeguard the rights of the people who have lived and worked with forests forever.

Carbon offsets have a bad name for a good reason.

Should we throw out all carbon offsets? Not quite yet. Transitioning millions of hectares of land and millions of jobs toward the protection and restoration of Earth’s natural life-support systems is fundamental to halting the climate crisis. Carbon-offset frameworks can aid in that transition, by channelling wealth into carbon-storage livelihoods like climate-focused forestry, farming and conservation. But we need fair carbon-storage payments that directly compensate the people who live and work most closely with the land, enabling them to make decisions optimized for carbon drawdown, and we need to decouple the source of those payments from the continued emissions of the highest-polluting industries.

Oil and gas companies, for example, shouldn’t be allowed to participate in offset programs; they should just be required to reduce their emissions. Analysis from Oxfam found that it would take a forest the size of Ghana to offset just 15% of BP’s ongoing emissions by 2050. That’s a single company and doesn’t take into account BP’s historical emissions, which also require reparations. There is literally not enough planet for the highest-polluting industries to offset their way out of the climate crisis.

Hope in first-ever citizen forest carbon program in Canada

Over the past decade, our small team at Community Forests International has worked on the forest and people side of the climate equation. We’ve developed new approaches to forestry that maximize carbon storage and climate resilience, we’ve informed policy improvements at the provincial and national scale, and we’ve developed novel forest carbon projects.

This summer, with collaborators across a community of more than 80,000 rural small forest owners in the Maritime provinces and partners at the Natural Capital Exchange (NCX) – a leading carbon marketplace dedicated to democratizing forest carbon markets – we will be enrolling tens of thousands of acres into the first-ever citizen forest carbon program in Canada.

In a region with some of the most intense forest cutting and lowest incomes nationally, this reflects the potential in transition pathways that centre the people most affected – in this case rural, forest-dependent communities and economies. It is creating entirely new climate-focused forest occupations and incomes for people who can now go to work storing more carbon in the forests they care for.

It would take a forest the size of Ghana to offset just 15% of BP’s ongoing emissions by 2050. There is literally not enough forest for polluting industries to offset their way out of the crisis.

There are countless opportunities like this, and carbon offsets are a relatively small part of the story. But the work of nature-based carbon storage, like virtually all climate solutions, requires far greater investment than it is currently afforded – and investment that is unconflicted by the ongoing climate damages of the most polluting industries. Otherwise, these solutions will fail to produce their promised results on a scale and timeline that is meaningful in the global climate crisis. Or the positive measures that society takes to remunerate ecosystem care in one sector will be cancelled out by damages in another – the worst possible outcome of carbon offsetting.

UN Secretary-General António Guterres described the Intergovernmental Panel on Climate Change report, published in February, as “an atlas of human suffering and a damning indictment of failed climate leadership.” The window is closing on limiting planetary heating to 1.5°C. Global emissions must peak by 2025 and then plummet, while at the same time forests and other ecosystems must be protected and restored to their full carbon-sequestration capacity by 2030.

What type of world will we face toward the end of this decade? A brighter one, if we make full use of all possible climate solutions today, including carbon offsetting. But it requires us to remember that tools like carbon offsets were only ever invented to enable a transition – not to delay it. In the words of Jonathan Foley, the executive director of Project Drawdown, “the best offset is the one you do not need.”

The post How to fix the broken carbon-offset system appeared first on Corporate Knights.

The good news is that most of Canada’s big oil companies have pledged to achieve net-zero emissions by 2050. The bad news is that those pledges fall apart as soon as you look past their initial rhetoric.

On May 4, investors will have an opportunity to ask at least one of the major actors – Enbridge – to adopt a credible net-zero plan in place of the weak one now in place by voting in favour of a shareholder proposal that Investors for Paris Compliance filed.

What constitutes a credible net-zero plan in the energy sector, and how are Canada’s companies falling short? There are several global initiatives, some led by major investors, that dig into the details of such plans to provide guidance, including the Science Based Targets Initiative (SBTi), the Institutional Investors Group on Climate Change (IIGCC) and the Climate Action 100+ (CA 100+).

There’s some variation across these initiatives, but they have in common some fundamental elements that Canadian oil and gas companies are resisting.

This starts with 2030 emission reduction targets. Climate science tells us that these need to be in the ballpark of halving emissions, and on an absolute basis. But Canadian oil and gas companies have set weak “intensity” targets – reductions per unit of production – that let absolute emissions grow if production grows.

Related to this is another element: what gets measured and included in these targets. Emissions can be categorized into three scopes. Scope 1 are direct emissions from operations, Scope 2 are indirect emissions from suppliers, and Scope 3 are the downstream emissions resulting from your products. Credible plans measure all three and include them in reduction targets, but again Canadian oil and gas companies generally refuse to take responsibility for their Scope 3 emissions, which is the lion’s share.

As always, the most important element is probably “follow the money.” A company can measure its Scope 3 emissions and have robust targets, but if it isn’t aligning its capital expenditures to reach those targets, then they aren’t worth the paper they are written on. Again, look at the planned expenditures of Canada’s major oil and gas companies and you’ll instead find most of the capital headed for new spending on fossil fuel projects, putting the lie to their climate promises.

Enbridge is considered one of the more progressive Canadian energy companies but suffers from all of these deficiencies (see chart with CA 100+ assessment from the past two years). It has intensity-based emission reduction targets because it continues to expand its fossil fuel business, meaning that it cannot meet absolute reduction targets so long as it keeps investing in new fossil fuel infrastructure.

Furthermore, Enbridge targets reductions only for its Scope 1 and Scope 2 emissions, leaving out Scope 3 emissions. It does some work to reduce Scope 3 emissions (utility demand-side management or renewable electricity to power its pipelines) but fails to include the other side of the ledger for these emissions. For example, the recent completion of the controversial Line 3 oil sands pipeline expansion resulted in an equivalent Scope 3 emissions impact of 50 new coal-fired power plants.

Finally, looking at Enbridge’s planned capital expenditures, over 80% of its spending is going toward new fossil fuel infrastructure that will lock the company – and the rest of us – into ever greater emissions over several decades.

In some ways, Enbridge is a victim of being a midstream company in an industry where the producers are calling the shots, so we need to deal with the silver bullet that the industry is putting forward to validate its claims to net-zero: carbon capture and storage (CCS).

Again, the claims being made about CCS stretch credibility. It’s an incredibly expensive endeavour that has never been successfully scaled in the way the Canadian oil industry is assuming is possible. The engineering challenges alone are enough to make this a high-risk play, even if the industry is successful in getting the rest of us to fork out tens of billions in subsidies and gets a long-term oil price that makes it economical – again, both doubtful.

But even if all these challenges are solved and CCS is wildly successful, the problem is that it doesn’t deal with Scope 3 emissions – about three-quarters of fossil fuel’s climate impact – that result when the product is burned. Perhaps there are end uses that preclude burning, but that demand for their products isn’t enough to meet the sector’s growth plans.

Add this up and we see why the science behind a true transition to net-zero means starting to take the steps to reduce fossil fuel production. Canadian oil and gas companies must become Canadian energy companies with low- or zero-carbon business lines if they are to successfully adapt to a net-zero world. On May 4, Enbridge shareholders will have an opportunity to send that message to one of the companies we hope makes that transition.

The post It’s time for investors to demand real net-zero plans from Canada’s energy sector appeared first on Corporate Knights.

The #MeToo movement has shone a welcome spotlight on gender inequality (while highlighting how much work remains to be done). In Cape Town, the drought and resulting restrictions on water use provided a stark illustration of the growing scarcity of water and its consequences, while the surge in battery production has shone a spotlight on child labour and working conditions in the Democratic Republic of Congo.

A plethora of climate rules and regulations has been introduced over the last year, most successfully in California, which mandated that 100 per cent of its electricity will come from renewable sources by 2045 along with a raft of other measures. But linking a law with climate change doesn’t automatically make it good policy – France’s Emmanuel Macron had to back down on plans to pay for new renewable energy with a carbon tax on fuel.

As Joss Garman of the European Climate Foundation wrote: “Macron’s policy didn’t fail because it taxed carbon. It failed because it was a bad, regressive policy that hit the poorest hardest.”

In the corporate world, there have been some significant breakthroughs, too: Royal Dutch Shell became the first oil and gas company to commit to binding emissions reduction targets; the world’s largest shipping company, Maersk, announced it would be zero-emission by 2050 even as it admitted it did not know how it would get there; one of the biggest carmakers, Volkswagen, announced that its last internal combustion engine car would be launched in 2026.

Meanwhile, the costs of renewable energy and batteries continue to plummet and a growing number of companies have committed to move to 100 per cent renewable electricity or to cut their emissions in line with a 2°C future through initiatives such as RE100 and the Science-Based Targets. For the first time, developing countries installed more renewable energy capacity than fossil fuel power plants this past year, according to Bloomberg New Energy Finance.

The corporate world is increasingly aware of the consequences of failing to deal with environmental, social and governance issues – from the ever-more obvious impacts of climate change, to issues ranging from Facebook’s travails over the use of data and Goldman Sachs’ involvement in the 1MDB scandal in Malaysia, to the sudden need of retailers, food and beverage producers, apparel makers and others to tackle plastic pollution.

In an age of greater transparency, consumers, employees, civil society but especially investors are pressuring companies to act. Shareholders are better informed, better organized and more outspoken than ever before.

In part, this is because they have more data, and new technology such as artificial intelligence, machine learning and big data techniques is enabling them to use it more effectively. But they are working together more, as well, through initiatives such as the Task Force on Climate-related Disclosures and Climate Action 100+, which targets the world’s biggest emitters of greenhouse gases.

It is increasingly clear that performing well on sustainability issues goes hand in hand with financial outperformance, which is why investors and corporations are embracing it more than ever.

Click here to return to the 2019 Global 100 landing page.

The post Global 100 progress report appeared first on Corporate Knights.