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The CEO of Alberta Investment Management Corp. (AIMCO), says disinvestment from fossil fuels is the opposite of what pension funds should do if they want to help solve the climate crisis.
Evan Siddle – head of one of Canada’s largest institutional investors with $168.3 billion in assets under management as of the end of last year – said in an interview that AIMCO wants to be a leader in funding the transition to a low-carbon economy. But it will not do so by disinvesting fossil fuels as some global pension funds have done.
Instead, Siddal said AIMCO will explore opportunities to invest in oil and gas companies and other heavy industrial emitters.
“We don’t believe [divestment] Absolutely, as a strategy,” Siddle said.
“The energy sector is the sector that is investing in [emissions reduction] The most, and who has the most to lose. That’s why we feel it deserves our support and that’s where we’ll invest. And we think the return is here as well.”
The importance of the sector cannot be denied: Siddal
Siddle made the remarks at a ribbon-cutting event in Calgary on Wednesday to mark the opening of AIMCO’s new office in that city. As of now, AIMCo – which is responsible for pensions, endowments and investment of government funds in Alberta and is headquartered in Edmonton – has secondary offices in Toronto, London, UK and Luxembourg.
Siddle – who has been chief executive of AIMCO for just over a year, and was formerly CEO of Canada Mortgage and Housing Corporation – is also considering opening offices in Asia and possibly New York as the corporation grows more globally over the next couple of years. wants to focus on. of years.
But he said there is no denying the importance of the Canadian energy sector at present as global efforts to decarbonize economies and keep the trajectory of climate change below the dangerous tipping point of 1.5°C warming .
“We [AIMCo] Calgary has been absent from the Oil and Gas and Energy Center, which has given us less information than we could have been,” Siddal said.
While environmental groups have argued that one of the best ways to make progress on climate change is to urge banks, pension funds and investors to cut funding for the fossil fuel industry, Siddle said this is misguided.
He said that if Canada is to fulfill its Paris climate agreement promises it will need to invest not only in renewable, zero-emissions energy, but to help heavy emitters reduce their greenhouse gas footprints, or Will go from “gray to green”.
“And that means investing in oil and gas companies. It really means supporting them,” Siddle said.
AIMCo already has $3.2 billion in investments in no-carbon or low-carbon assets through its infrastructure and renewable resource portfolio. The corporation also completed its inaugural “Green Bond” issuance last year through its AIMCO Realty division.
But Siddle said that in the coming year, AIMCO will explore opportunities for its clients to profit from the transition to a low-carbon economy by providing capital to heavy emitters working on their own net-zero plans.
“The early sectors that we are seeing are the energy sector, the power and utility sectors, industrial emitters in general,” he said.
“We see the potential for strong financial returns. We are a long-term investor, so unlike the public markets, which operate quarter-on-quarter with very short-term horizons, we may be looking at a transition in 2030 and the way forward. See Earning Returns on Decarbonisation.”
In recent months, the Canadian oil and gas sector has made a flurry of announcements of proposed projects – from hydrogen plants to renewable diesel facilities to carbon capture and storage – that aim to reduce the industry’s emissions profile.
‘You’re funding the bad stuff’
The largest of these is the massive project proposed by the Oil and Consortium Pathway Alliance that aims to capture CO2 emissions from oil and facilities and move it to a storage facility near Cold Lake, Alta., reducing emissions by an estimated 10 million tons per year. shortage comes.
On Tuesday, Lindsey Patrick, head of ESG and strategic initiatives for RBC Capital Markets, said in an interview in Calgary that there is a growing recognition within the financial sector that tools like green bonds can be used to support not only the scale of green technology can go. But also to help clean up more traditional industries.
“The new idea is to support companies that are not 100 percent green, but have specific projects that align with the 1.5 degree landscape,” Patrick said.
However, Keith Stewart, senior energy strategist at Greenpeace, said on Tuesday that financing companies may not be prepared for the fact that the Canadian oil and gas sector still plans to increase the total amount of fossil fuels due to specific climate-friendly projects. Is. production over a long period of time.
“When you’re providing this kind of blanket finance to these companies, you’re funding the better stuff as well as the bad stuff,” Stewart said.