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Canadian Pension Board Invests $141M in Chinese Coal Projects, Undercutting Federal Phaseout Policy

August 24, 2020
Reading time: 4 minutes
Primary Author: Mitchell Beer @mitchellbeer

Greg Goebel/Wikimedia Commons

Greg Goebel/Wikimedia Commons

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This story originally appeared in the July 29, 2020 edition of The Energy Mix. We republished it in a holiday Encore edition in August, but the time references all date back to the original post.

The Canada Pension Plan Investment Board (CPPIB) is jeopardizing Canadians’ retirement savings, undercutting federal government policy, and making a mockery of one of the country’s few points of climate leadership on the world stage by investing C$141 million in Chinese coal companies, a leading pensions and climate advocate said this week.

“It’s completely offside with Canada’s commitments to the Powering Past Coal Alliance and its domestic goal to retire coal-fired generation,” said Adam Scott, director of Toronto-based Shift Action. “It’s completely offside with all of Canada’s climate commitments. And it’s a red flag for Canadians to be worried about their pension savings.”

That last should be the biggest flag of all for the CPPIB, whose declared mission is to “help provide a foundation upon which 20 million Canadians build their financial security in retirement.”

“If you understand climate change, then you understand that coal is an incredibly high-risk investment in any form,” Scott told The Energy Mix. “It’s high-risk because it’s the leading cause of the climate crisis, and therefore a key target for elimination in climate policy. It’s ripe for disruption from new technology that is rapidly out-competing coal in electricity markets.”

And “it’s deeply unethical,” he added. “Anybody who understands the consequences of burning coal in our climate truly would never make such an investment. So it raises a big question for me about whether CPPIB actually understands the climate crisis at all.”

Yet the CPPIB was styling itself as a climate leader as recently as last month, Sun Media reported, in a story that was republished by the International Energy Agency’s Clean Coal Centre.

“We do believe climate change is happening and we do believe it is a major risk,” CEO Mark Machin told the Commons Finance Committee. “Climate change and the gradual transition to the low-carbon environment will continue to influence the world we live in. We have committed to be a leader among asset owners in understanding the risks posed and opportunities presented by climate change.”

In that light, “for the last 12 years, we’ve been focused on understanding the risk, and it’s challenging,”  he added. “It’s a very, very difficult risk to understand. Every single major investment we make must take into account climate change risks and make sure we understand those risks. What might happen to the company?”

Yet CPPIB’s 2020 Annual Report shows $141 million in coal investments in China, Sun Media said, including $1 million in coal distributor Jiangsu Guoxin Corp. Ltd., $3 million in China Coal Energy Co. Ltd., which operates a dozen mines, and $42 million in China Shenhua Energy Co. Ltd., the country’s biggest state-owned coal mining company.

The Board’s director of global media relations, Darryl Konynenbelt, wasn’t inclined to discuss the story. “It’s a decline to comment from us,” he said. Neither Konynenbelt nor Jeffrey Hodgson, CPPIB’s director of industry and stakeholder relations, responded to multiple calls and emails from The Energy Mix.

Scott said CPPIB’s dealings in China undercut “one of the few international commitments Canada made” after it signed the 2015 Paris Agreement. The Powering Past Coal Alliance “is the initiative the federal government touts to shore up its credibility,” he told The Mix. “But clearly, the arm’s length pension manager in Canada has no intention of aligning its investment strategy with Canada’s climate commitments.”

CPPIB is intended to operate independently from the federal and provincial governments it nominally reports to. “CPPIB’s mandate is to seek to achieve a maximum rate of return without undue risk of loss, taking into account the factors that affect the funding of the [Canada Pension Plan] and the ability of the CPP to meet its financial obligations,” a Department of Finance official told The Mix in an email. 

But it’s exactly those financial obligations that have Scott concerned. “It’s inevitable that Canadian pension funds will put screens on new investments in all fossil fuels, and will eventually wind down their existing fossil fuel investments, in order to protect the savings they invest,” he said. “It’s a question of whether or not CPPIB does this before those assets become worthless, or after.”

Last week, United Nations Secretary General António Guterres warned that the carbon reduction targets in the Paris Agreement will fall out of reach unless China stops funding coal projects, Climate Home News reports. “There is no such thing as clean coal, and coal should have no place in any rational recovery plan,” Guterres said. “It is deeply concerning that new coal power plants are still being planned and financed, even though renewables offer three times more jobs, and are now cheaper than coal in most countries.”



in Canada, China, Climate & Society, Climate Denial & Greenwashing, Coal, Community Climate Finance, Fossil Fuels, Jurisdictions

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Comments 16

  1. Penelope McLaren says:
    2 years ago

    Wildly inappropriate!

    Reply
  2. Eliza Olson says:
    2 years ago

    Why are pension funds being invested in Chinese coal companies? It doesn’t make sense. Who is responsible for these decisions? Who do they answer to?

    Reply
    • Kathy Gagne says:
      2 years ago

      Yep they shut down our coal mining in Alberta and now here we are. We are so screwed. Sadly I believe we don’t own Canada any more. I am a pensioner and there goes my pension. That’s all I have. GRRRRRRRRR

      Reply
  3. Mike McEwen says:
    2 years ago

    It’s called smart investing. China has no intention of reducing coal production and use. They’ll tell the IPCC and Greenies anything they want to hear, but when it comes to affordable, predictable and continuous power generation for their people, then coal is the answer. Trudeau and the Liberals may want to pretend wind and solar can ever be anything but intermittent contributors, but the Chinese are under no such illusion. So good on the CPP Investment Board for getting into a growth industry.

    Reply
    • Mitchell Beer says:
      2 years ago

      Originally posted August 30: Happy to provide a forum for an outlier opinion. I’ll just point out that the concern about intermittent supply from renewables is quickly going out the window, as prices plummet and energy storage surges. And notwithstanding their short-term actions, there’s been lots of evidence that China harbours few if any illusions about the need to rapidly decarbonize — unlike what passes for political leadership in much of North America. That’s not to say they’re moving quickly or consistently enough, but no one else is, either, and *everyone* needs to.

      Update September 29: http://theenergymix.com/2020/09/28/analysts-laud-chinas-carbon-neutrality-promise-but-point-to-new-fossil-projects-coming-up/

      Reply
      • Tracy Brason says:
        2 years ago

        storage can not supply energy needs 24×7, 1-2 hours supply and then 7-8 hours to recharge; $$$; mostly useful for emergencies and regulation needs;

        Reply
        • Mitchell Beer says:
          2 years ago

          Actually…that used to be true, but not any longer. I don’t have the number right in front of me, but if memory serves storage costs have fallen 70% in about 18 months, and batteries are about to hit a major cost reduction milestone over the next two to four years.

          Reply
    • galen says:
      2 years ago

      I do think though, that they should rather invest in Canadian economy. Funding the industry shift is unethical if anything is.

      Reply
  4. Kathy Gagne says:
    2 years ago

    What the hell. We shut down the coal production in Alberta because of the eco issue. Now our pension money is not only going toward coal but China no less. We are so screwed people. China owns us so get ready for learning a new way of life folks.

    Reply
  5. Dan Farrow says:
    2 years ago

    The Investment Board has definite need of oversight – this isn’t the only investment I’ve heard of that has shown a lack (or disregard) of knowledge.

    Reply
  6. Kimberley Kulczycki-Oliver says:
    2 years ago

    No wonder Canada is struggling. This Government is STEALING our pensions and GAMBLING on high-risk ventures. Where’s the trust? And when this investment goes bad and our pensions gone, what will be the excuse? Our government disgusts me.

    Reply
  7. Sharon Morphy says:
    2 years ago

    This is so wrong in so many ways.

    Reply
  8. Andrew Rae says:
    2 years ago

    All you have to do is read the Chinese commitment to “CO2 reduction” in the Paris Accord – and everything will make sense.

    Coles Notes: Continuous planned CO2 emission growth at least (nice wiggle room phrase that is…) 2035.

    Reply
    • Mitchell Beer says:
      2 years ago

      Yes, well, they call them Coles Notes because they’re quicker but less informative than telling the whole story, don’t they?
      China is currently increasing its coal-fired capacity, and we’ve been following but haven’t yet fully tied down some stories about new fossil investment flowing from their massive Belt and Road Initiative. The country is also leading the world in renewable energy investment, it’s experiencing real-time climate and health impacts from flooding to severe weather to severe smog, and unlike their counterparts in much of North America, political leaders know what they’re looking at. I am by no means a China expert, but I gather that they get that climate change is real, caused by human activity, and in need of immediate, accelerating action.
      This isn’t an unconditional defence of China’s climate record, or anyone else’s. You have only to set foot in any UN climate conference to know that no country or institution is pure or blameless. But it’s too cute by half to try to deflect attention from climate action in one country by invoking the climate record of another (especially with just a Coles Notes version). We need everyone leading, everyone joining in, to get this done.

      Reply
  9. Buffy says:
    2 years ago

    I work in elkford bc the coal we mine is coking coal without this coal we wouldn’t be able to make steel

    Reply
  10. Patrick Walsh says:
    2 years ago

    And of course Chinese pollution will never come to Canada or anywhere else?? ….we support this hipocracy??? Shame on us all….

    Reply

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