TORONTO — Canada’s public pension funds should rethink the billions of dollars they’ve invested in natural gas infrastructure amid the global push to reduce emissions, a report out Wednesday from a climate advocacy group says.
The report by Shift Action for Pension Wealth and Planet Health says nine of Canada’s largest public pensions have invested in 22 gas-related companies that collectively operate nearly 350,000 kilometres of pipelines globally.
The investments are not the long-term safe bet that they were once thought to be, and talk by the gas companies of transitioning to the distribution of hydrogen is not going to save them, said Adam Scott, head of Shift.
“The hyped-up story that gas companies have been telling the public, regulators, and investors about their ability to switch their infrastructure to hydrogen does not stand up to scrutiny,” Scott said in a statement.
“Canadian workers should not have their retirement savings invested in these high-risk, high-carbon, soon-to-be-stranded assets.”
Hydrogen faces numerous barriers to being swapped in as an alternative to natural gas including costs, technical challenges and physics, especially as alternatives like heat pumps gain traction, the report said. Hydrogen will instead likely be limited to niche uses where emissions are particularly challenging to reduce, it said.
The critiques come as pension funds continue to invest in natural gas infrastructure companies.
The Canada Pension Plan Investment Board announced last August it was investing $1.2 billion in Tallgrass Energy that operates more than 16,000 kilometres of oil and gas pipelines in the U.S. In announcing the deal, CPP Investments noted the company was investing in initiatives like hydrogen and renewable fuels as it works towards a lower-carbon future.
The Ontario Teachers’ Pension Plan announced in December 2020 it was acquiring a 69.4 per cent stake in Società Gasdotti Italia that holds 1,700 kilometres of pipelines. It noted the potential of using the network to transport hydrogen when it made the announcement, but Shift notes it has said little about this potential since.
Not all pensions that are buying into natural gas companies are betting on hydrogen.
The Caisse de dépôt et placement du Québec, which has sold off its oil producer holdings, announced last September that it and the Fonds de solidarité FTQ were spending $575 million to boost their ownership of Énergir. They said the investment in the company that operates more than 12,000 kilometres of pipelines, mostly in Quebec, is to help it accelerate its decarbonization in part through renewable gas, without mentioning hydrogen.
Caisse spokeswoman Kate Monfette said the pension plan welcomed the report from Shift. She said the Caisse keeps a close eye on its transmission and distribution holdings and their commitment to the shifting to lower emissions.
“Pension funds have an active role to play in supporting the transition,” said Monfette.
The current limited scale and dependability of renewables means gas is needed to contribute to the transition by bridging the gap and offsetting the variability of renewables, she said.
Shift says that overall, pension funds should push the utilities they co-own to halt fossil fuel expansion and transition to sustainable energy, and if they don’t respond, they should be prepared to sell.
Pension funds including the CPPIB have pushed back against divestment calls, but have said they are following a similar strategy to what Shift is advocating.
In a December commentary, Bill Rogers, head of CPP Investments’ sustainable energies group, said the fund is working with oil and gas companies to reduce emissions while maintaining needed access to energy. He said selling off the holdings could mean the companies becoming owned by those who care less about the climate.
“We believe that blanket divestment from oil and gas is a bet against human ingenuity and could impact access to affordable, reliable energy in some markets.”
The big challenge is addressing both the surging demand for energy, and the need to reduce emissions, Rogers said.
“An undertaking of this scale requires a multiplicity of technologies, projects, and participants.”
This report by The Canadian Press was first published Jan. 15, 2025.
Ian Bickis, The Canadian Press
