• About
    • Which Energy Mix is this?
  • Climate News Network Archive
  • Contact
Celebrating our 1,000th edition. The climate news you need
No Result
View All Result
The Energy Mix
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities
SUBSCRIBE
DONATE
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities
SUBSCRIBE
DONATE
No Result
View All Result
The Energy Mix
No Result
View All Result
  FEATURED
Soaring Fertilizer Prices Could Deliver ‘Silver Lining’ For Emissions, But Farmers Struggle to Limit Use June 26, 2022
BREAKING: UN Nature Summit, the ‘Paris Conference for Biodiversity’, Moves to Montreal in December June 19, 2022
‘LET’S SUE BIG OIL’: Legal Team Launches Class Action Campaign for B.C. Municipalities June 17, 2022
‘It Could Have Been Any of Us’, Colleague Says, After Brazil Confirms Murders of Bruno Pereira, Dom Phillips June 17, 2022
Infrastructure Gap a ‘Life and Death’ Matter as Northern Canada Warms June 17, 2022
Next
Prev
Home Climate & Society Finance & Investment

Federal Backing Made Bankers’ $10B Pipeline Loan an Easy Decision, Analyst Says

June 1, 2022
Reading time: 5 minutes
Primary Author: Mitchell Beer @mitchellbeer

Frank Gruber/flickr

Frank Gruber/flickr

29
SHARES
 

The decision by Canada’s six biggest banks to sink another $10 billion into the troubled Trans Mountain pipeline expansion is no surprise after a federal loan guarantee made it a straightforward business decision to back the project, says the financial analyst who accurately predicted the decision 2½ months ago.

Yesterday, Stand.earth revealed that the Royal Bank of Canada, TD Bank, Scotiabank, CIBC, the Bank of Montreal, and the National Bank of Canada are putting up the funds to help the taxpayer-owned Trans Mountain Corporation continue work on the pipeline. The deal only recently showed up on the Bloomberg Terminal financial reporting database, but it was dated April 29, the same date the federal cabinet approved a loan guarantee for the project.

“Once again, we see that Canadian banks are leading the world in financing climate-destructive, Indigenous rights-violating projects like the Trans Mountain pipeline and tanker project,” said Stand Climate Finance Director Richard Brooks said in a release. “It’s time for them to choose sides—are you going to help us reach our national climate goals, or do everything possible to hold us back?”

Omar Mawji, energy finance analyst for Canada at the Institute for Energy Economics and Financial Analysis (IEEFA), traced the banks’ decision back to the federal backstop that made it possible.

They’re a bank. Their job is to lend,” said Mawji, who predicted the loan guarantee in a mid-March release and says he even pegged the value of the deal at $10 billion.

“I don’t think they would fund the project if there was no guarantee. If this was a corporation that was not government backed, I don’t think any bank would even touch it,” he told The Energy Mix yesterday.

But “they just look at this, and for them, it’s free money. [The government is saying] ‘we lend it to you. We guarantee the return. We guarantee that it will be paid back. There’s not a lot of operational risk.” Even if the pipeline failed, Ottawa “would just repay the loan if the project never reached operation.”

At that point, the project’s legitimacy or even its business case wouldn’t have figured very prominently in the bankers’ decision.

“I think the banks know this is not the best project, which is why they would only invest if there was a government guarantee,” Mawji said. “So it’s not predatory, but they are definitely taking advantage. And the Canadian government has no other way to fund this because they came out publicly and said they wouldn’t use taxpayers’ dollars” to complete construction.

“So they’ve painted themselves into [lining up] one source of funding and stretching the truth in terms of it not being government funded.”’

In February, when the company admitted the cost of the “out of control” construction project had ballooned from $12.6 to $21.4 billion, Finance Minister Chrystia Freeland said she wanted to “assure Canadians that there will be no additional public money invested in TMC.”

So it didn’t land well just a couple of months later when Freeland announced the loan guarantee through Export Development Canada.

“This is a huge new subsidy from a government that promised voters last fall that it would eliminate fossil fuel subsidies,” said Julia Levin, national climate program manager at Environmental Defence Canada.

“This is just more evidence that this pipeline is not viable, and that is way past time that the Liberal government allowed this project to be cancelled,” added Sven Biggs, Stand’s Canadian oil and gas program director. “In a world that is already reeling from forest fires, floods, and the other very real impacts of climate change, Canada needs leadership that is fully committed to taking on the greatest challenge we have ever faced.”

But “it was clear from the get-go they’re going to pay whatever it costs to get TMX through,” said NDP MP Charlie Angus.

Yesterday, Stand’s Richard Brooks said it took a non-profit research team with access to a specialized database to unearth financial data on a taxpayer-funded pipeline that should already have been in the public domain.

“Everybody is being extremely tight-lipped,” he told The Mix. “It’s extremely secretive. Which speaks volumes to what the problem is here. This is an over-budget, delayed, boondoggled pipeline that presents enormous risks to our planet, it’s violating Indigenous rights, it’s the elephant in the room that nobody wants to talk about, and nobody wants to admit that they’re part of the project.”

But “it’s no surprise that it’s only Canadian banks that are on this loan,” Brooks added, given the number of international financial institutions now restricting investments in tar sands/oil sands projects. “It really speaks to how isolated the tar sands industry has become in their access to credit, and how the Canadian banks are the last banks for the oil and gas sector in Canada.”

A Finance Canada spokesperson acknowledged receipt of an email querying the public visibility around the bank loans, and asking how Ottawa could justify the loan guarantee when G7 countries—including Canada—are being urged to “shift the trillions” from fossil fuels to clean energy and international climate finance. The department had not replied by the time The Mix went to virtual press last night. But in mid-May, the department issued a statement saying the federal government had not spent any money to put the new loan guarantee in place.

“This is a common practice which puts in place an insurance policy for the institutions that have invested in the project,” the statement said. “It does not reflect any new public spending.”



in Canada, Climate News Network, Energy Politics, Energy Subsidies, Finance & Investment, First Peoples, Pipelines / Rail Transport

The latest climate news and analysis, direct to your inbox

Subscribe

Related Posts

David/flickr
United States

U.S. Supreme Court Expected to Gut Emission Controls as Climate Scientists Petition for Plan B

June 26, 2022
580
pxhere
Environmental Justice

Environmental Racism Bill Passes Second Reading in House of Commons

June 26, 2022
138
Graco/Facebook
Food Security

Soaring Fertilizer Prices Could Deliver ‘Silver Lining’ For Emissions, But Farmers Struggle to Limit Use

June 27, 2022
116

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms & Conditions and Privacy Policy.

Trending Stories

David/flickr

U.S. Supreme Court Expected to Gut Emission Controls as Climate Scientists Petition for Plan B

June 26, 2022
580
Graco/Facebook

Soaring Fertilizer Prices Could Deliver ‘Silver Lining’ For Emissions, But Farmers Struggle to Limit Use

June 27, 2022
116
Konrad Summers/Kern West Oil Museum via Wikimedia Commons

Imperial Oil Backs Lithium Recovery Project in Alberta’s Leduc Oilfield

June 26, 2022
97
pxhere

Environmental Racism Bill Passes Second Reading in House of Commons

June 26, 2022
138
stockvault

Animal Agriculture Could Reduce Future Pandemic Risk, UK Researchers Say

June 26, 2022
73
Gustavo Petro Urrego/flickr

Colombia’s President-Elect Has ‘Ambitious’ Plans to Halt Amazon Deforestation

June 26, 2022
67

Recent Posts

Adam E. Moreira/wikimedia commons

Suspend Transit Fares, Not Gas Tax, Climate Advocates Urge Biden

June 26, 2022
55
moerschy / Pixabay

Pandemic Drives Up Support for Climate Action, Pessimism About Elected Leaders

June 26, 2022
27
hellomike/flickr

No Public Input as Canada Finalizes Climate Plan for Airlines

June 27, 2022
37
Heinrich-Böll-Stiftung Southeast Asia/wikimedia commons

Japan, Korea Sell Vietnam on Gas Amid Crackdown on Climate Activists

June 26, 2022
22
https://en.wikipedia.org/wiki/Wikipedia:Featured_picture_candidates/Barrow_Offshore_Wind_Farm

Global Offshore Wind Pipeline Doubles to 846 Gigawatts

June 26, 2022
38
TAFE SA TONSLEY/Flickr

U.S. Renewables Industries Scramble to Reuse, Recycle Before Waste Volumes Skyrocket

June 26, 2022
63
Next Post
Antalexion/Wikimedia Commons

Sheep Grazed Under Solar Panels Produce Better Fleece in Australian Pilot

The Energy Mix

Copyright 2022 © Smarter Shift Inc. and Energy Mix Productions Inc. All rights reserved.

Navigate Site

  • About
  • Contact
  • Privacy Policy and Copyright
  • Cookie Policy

Follow Us

No Result
View All Result
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities

Copyright 2022 © Smarter Shift Inc. and Energy Mix Productions Inc. All rights reserved.

Manage Cookie Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behaviour or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage vendors Read more about these purposes
View preferences
{title} {title} {title}