Climate Obsessed Canadian Regulator Crackdown on Oil Sands Financing

Guest essay by Eric Worrall

According to Canadian regulators demand for fossil fuel will collapse in the next few decades, raising the spectre of a resource industry loan default crisis.

Alberta oilpatch may face lending crunch as financial regulators worry about the risks of climate change

February 3, 2022 5.36am AEDT
Robert L. (Bob) Ascah
Research Fellow, The Parkland Institute, University of Alberta

The Bank of Canada and Canada’s Office of the Superintendent of Financial Institutions (OSFI) recently released a pilot study that looked at how prepared Canada’s financial institutions are in understanding and managing climate change risks. The study found that the creditworthiness of oilsands producers will fall dramatically over the next three decades.

As a political economist, I have been studying the shifts in climate change regulations for several years. The friction arising between Ottawa and Alberta is also playing out around the world.

Financial resilience

Financial regulators — including the Financial Stability Board, the international umbrella group of central banks and banking supervisors, and the newly formed Network for Greening the Financial System, which comprises 31 central banks and regulators from around the world — are becoming increasingly concerned about the creditworthiness of borrowers exposed to the risks of climate change. These regulators worry that as climate change worsens the financial system may become more unstable.

Implications for Alberta

Federal jurisdiction over banking and federally incorporated insurance companies means that federal regulators can influence how much credit flows to Canada’s oil-patch. 

The Calgary oil industry is dependent on bank loans and the sale of bonds and shares, which makes the industry reliant on Canadian banks. This fact has not been lost on environmentalists.

But Alberta has steadfastly defended its jurisdiction and the Alberta Securities Commission is expected to slow progress towards standardizing the disclosure for the oil and gas corporations it regulates. 

Read more: https://theconversation.com/alberta-oilpatch-may-face-lending-crunch-as-financial-regulators-worry-about-the-risks-of-climate-change-175988

The idea that fossil fuel demand will collapse over the next few decades is a fantasy.

Even if the world genuinely goes all in to achieve net zero, production of all the solar panels and wind turbines would themselves require staggering amounts of fossil fuel and other minerals for many decades to come.

Silicon production for solar panels consumes vast quantities of carbon, supplied as coal or natural gas. The carbon is not just for heating and melting the ore, much of it is consumed by the chemical reaction which strips oxygen from sand to produce silicon metal, the main raw ingredient for solar panels. Bonus points for figuring out what happens to all that carbon. This process is very similar to the way a traditional blast furnace chemically consumes coal or natural gas to produce iron and steel.

Wind turbines blades are even more ridiculously dependent on fossil fuel – they are made of plastic.

A sustained drop in demand for fossil fuel products just isn’t going to happen anytime soon, no matter what course the world chooses.

But so long as governments and regulatory bodies officially embrace this junk economics, climate mania poses a real and present danger to productive sectors of the Canadian economy, like oil and gas.

Canada self sabotaging their own fossil fuel sector would do nothing to reduce global consumption. Other producers would respond to price signals and step up foreign production, filling any gap by left by Canada exiting the field. As The Guardian’s George Monbiot once noted, we’re not going to run short of oil anytime soon.

The only people who would be affected by this green bureaucratic sabotage plan are Canadians themselves.

So I guess Canada has a choice. They can play the green game, tell themselves they really love all that disgusting but nutritious insect protein, live smaller, and try to stay warm in winter using solar energy. Or they can ditch the climate lunatics who are stifling their economic opportunities, and bequeath the same resource sector enriched quality of life that they enjoyed upon their children and grandchildren.

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John Garrett
February 3, 2022 2:11 pm

One can be forgiven for occasionally thinking that governments search for the dumbest and most gullible people in the universe.

Once found, they are hired to be regulators.

Christopher Simpson
Reply to  John Garrett
February 3, 2022 2:23 pm

Only the cream of the dumbest crop. The rest volunteer to be voters.

Bryan A
Reply to  John Garrett
February 3, 2022 2:24 pm

Only 2 things missing from that picture…
The Reich uniform and the small square mustache

Mr.
Reply to  Bryan A
February 3, 2022 2:37 pm

Nah, he’s a self-declared feminist don’t forget.
And makes serial blackface appearances.

So I’m thinking a makeover more in this vein –

comment image

Last edited 5 months ago by Mr.
Climate believer
Reply to  Mr.
February 3, 2022 10:45 pm

Let’s keep it real…

unnamed.jpg
Tom Abbott
Reply to  Climate believer
February 4, 2022 4:16 am

That’s the guy running Canada.

Is that his hand on that woman’s chest? Where’s his other hand?

Biden and True-Dope: Dumb and Dumber.

lee riffee
Reply to  Tom Abbott
February 4, 2022 7:32 am

How about Joe, Justin and Boris – the three stooges! But these three are anything but funny….

Janice Moore
Reply to  Bryan A
February 3, 2022 3:41 pm

Seriously, Bryan A.. I can’t bear to post an image of that monster, but, we all know that face….. and the jut-jawed, dull-but-cunning, conceit is exactly the same. As if he made a studied effort to imitate the expression. Ugh.

John Garrett
Reply to  Bryan A
February 3, 2022 6:05 pm

Now that you mention it, …

Philip Mulholland
February 3, 2022 2:12 pm
Janice Moore
Reply to  Philip Mulholland
February 3, 2022 3:47 pm

Excellent list. Just copying and pasting a few in the “s’s”:

Shampoo
Shaving cream
Shoe polish
Shoes/sandals
Shower curtains
Skateboards
Skis [and Snowboards! 🙂]

HOORAY FOR THE PETROLEUM INDUSTRY!

God, bless them.

Reply to  Philip Mulholland
February 3, 2022 6:52 pm

I don’t see WD-40 on the list.

John Hultquist
Reply to  JON P PETERSON
February 3, 2022 8:06 pm

 In every farm & ranch truck & every outside chore tool chest there are several petroleum-based products.

WD-40 has a companion, Duct Tape.
One is used for things that won’t move, but should.
The other is used for things that do move, but shouldn’t.

Carbon Bigfoot
Reply to  John Hultquist
February 4, 2022 5:28 am

THE RED GREEN SHOW: The handyman’s secret weapon–DUCT TAPE.
https://www.youtube.com/watch?v=pY7nx5Z6Kzo every episode a scream.

John Savage
Reply to  JON P PETERSON
February 4, 2022 5:34 pm

I thought WD-40 was made from fish oil? “WD” stands for “water displacement”.

2hotel9
February 3, 2022 2:16 pm

So, Castro Jr and the greentards have utterly failed to collapse the petroleum industry so they are going to take another bite at the apple and try to collapse the financial sector? Okely dokely. Seeing as everything they do is a failure lets us wait and see how this turns out.

AndyHce
Reply to  2hotel9
February 3, 2022 6:16 pm

regardless, there are consequences that will effect most people.

DMacKenzie
Reply to  2hotel9
February 3, 2022 7:03 pm

Trudeau really, really, hates Alberta, and the oil industry in particular, this hatred being due to parental indoctrination. Trudeau’s father was thwarted in nationalizing the oil industry in the 1970’s by a couple of Alberta premiers, who correctly pointed out that oil and gas were clearly provincial, not federal, jurisdiction under Canadian law. However he did, in 1982, run through a new “Constitution” that gave over-arching environmental powers to the federal government, having understood the government choke hold on industry that the EPA was having in the US. Fortunately, he became exceedingly unpopular in 1983 and resigned in 1984, an exhibition of how democracy gets rid of power crazed leaders before they turn into a life long dictator. However, his cannabis friendly son, Justin learned of dreadful Alberta arrogance at his father’s knee.

Before Trudeau Junior was elected in 2015, he said this:
“Canada isn’t doing well right now because it’s Albertans who control our community and socio-democratic agenda. It doesn’t work,” Trudeau told interviewer Patrick Lagacé.  From https://www.cbc.ca/news/politics/trudeau-campaign-forced-to-address-2010-comments-on-alberta-1.1241750

In his acceptance speech, he mentioned every province except Alberta…weeks after being elected, he disallowed drilling and exploration expenses as tax deductions for oil companies…effectively shutting down all drilling funds and exploration companies, nearly all based out of Alberta. The big big oil companies liked it because half their competitors were toast. No other business in Canada can’t deduct their costs as business expenses.
Then he shut down the Northern gateway pipeline construction because of its route through the “Great Bear Rain Forest” (a name thought up by activist Tzeporah Berman over a bottle of wine at a California friend’s house party for what had previously been the North Coast Economic Development zone for 70 years), and on the basis of oil tanker danger to whales on the BC Coast. Meanwhile on the East Coast oil tankers from the Middle East offload at refineries daily, and run over a couple of whales a month, but apparently the whale quota is already taken.
The National Energy Board which previously authorized trans-provincial pipelines was placed under control of new more sensitive enviro-masters because they “no longer represented Canadians’ best interest”. Most of the historically non-partisan body were asked to resign because they wouldn’t be getting paychecks after the following Friday. That succesfully stopped a pipeline from Alberta to Eastern provinces that would have displaced the Middle East crude. Trudeau claims his government saved the Trans mountain pipeline by purchasing it; however, the government finances environment and Indigenous group law firms to make sure it is continually tied up in court.

Fortunately he is becoming as unpopular as his father before him.

Tom Halla
February 3, 2022 2:26 pm

I consider one of Nixon’s more stupid decisions was setting up the EPA as a separate organization, rather than giving enforcement powers to Justice and/or Interior. A separate body will try to justify it’s existence, so the problems will never be solved.
Similarly, the Canadians wetting up a separate body to deal with financial issues and climate change guarantees that activists will exploit it.

Pat from kerbob
Reply to  Tom Halla
February 3, 2022 5:13 pm

Are you saying we’re stupid??
Ya
Probably right

DMacKenzie
Reply to  Pat from kerbob
February 4, 2022 7:27 am

Pat, not stupid, just nobody currently has enough will power to instill respect for moral correctness into the Prime Minister’s Office. Military top brass have been charged with 30 year old #meToo type infractions to keep them in line, RCMP top dogs replaced with a lady officer whose primary goal seems to be elimination of “systemic racism” in the police force. Contracts for CoVid ventilators with $100 million profit built-in were given to a party faithful who only incorporated his company 7 days prior. A couple of Billion was sent to China for CoVid vaccine and was “spent” without a successful vaxx. The military general in charge objected to sending money for zero performance and was subsequently charged with a trumped up 30 year old ex-girlfriends claim of “exposure”. These infractions, and many more, on occasion make the news in some local media outlet spilled by a whistle blower, but both big media and teams of social media influencers are on the government payroll, their “consultant’s budget” ballooning by an extra $3 Billion, to keep the populace happy with their leadership. It is now truly 1984ish in the Great White North. But what can’t continue, will stop.

Last edited 5 months ago by DMacKenzie
Frank from NoVA
Reply to  Tom Halla
February 3, 2022 9:24 pm

Nixon granted all of the Left’s wishes, including his resignation from office.

oeman 50
Reply to  Tom Halla
February 4, 2022 6:39 am

Once you give an organization the legal tools to reduce the egregious form of polluti0on and are successful, Those same tools are still at hand to go after less and less harmful emissions in a continuing process of diminishing returns.

John the Econ
February 3, 2022 2:29 pm

I wish there was an ETF that followed and invested in the firms that the leftists are targeting. It would be sweet to make money off of this folly.

Mr.
Reply to  John the Econ
February 3, 2022 2:52 pm

If anyone knows of such ETFs, please post them here because I’m looking too.

Rud Istvan
Reply to  John the Econ
February 3, 2022 3:59 pm

You are better off investing directly. A portfolio of such 10 stocks evenly value weighted suffices for diversification; 20 if you are very risk adverse.
BTW,ok to through in a few shorts that the alarmists love.

Ken Irwin
February 3, 2022 2:32 pm

I find it alarming that such financial experts seem incapable of mathematics (that involves taking their socks off to count past 10) cannot discern why net zero is nothing more than a green fantasy.
The worst this alarmism will accomplish is to push the interest a point or two where more intelligent (and numerate) fund managers will profit at the margins.
You can always borrow money.
Idiots !

Joseph Zorzin
Reply to  Ken Irwin
February 3, 2022 4:26 pm

nyet zero

February 3, 2022 2:57 pm

The revolution of truckers made him flee out of the city, is he still in his job ?
😀

Mr.
Reply to  Krishna Gans
February 3, 2022 5:30 pm

Turned out it wasn’t just truckers, but thousands of ordinary folk who’ve also had enough of Trudeau’s “unacceptable views”.

MarkW
February 3, 2022 3:23 pm

A sustained drop in demand for fossil fuel products just isn’t going to happen anytime soon, no matter what course the world chooses.

The problem is that it isn’t “the world” doing the choosing. It’s activists and politicians forcing their decisions on the rest of us.

Sommer
Reply to  MarkW
February 4, 2022 6:06 pm

Take a look at this video of Klaus Schwab talking about Justin Trudeau and members of his cabinet.


Trudeau: World Economic Forum Klaus Schwab at Harvard’s John F. Kennedy School of Government

February 3, 2022 3:31 pm

This is not the risk of climate change. It is the risk of insane climate policy, a very real risk.

Mr.
Reply to  David Wojick
February 3, 2022 5:40 pm

And isn’t this where this whole topic has gotten completely screwed up –

atmospheric studies nerds who bestowed upon themselves extraordinary knowledge & expertise in advanced energy production, storage & distribution disciplines.

Academics way outside their areas of competence, yet the media and politicians sucked up their every pronouncement, shoveled $billions of taxpayers’ $$$ to them, and all together screwed us over royally.

The “madness of crowds” indeed!

Janice Moore
February 3, 2022 3:37 pm

borrowers exposed to the risks of climate change [CO2 hustlers’ market distortion.]

billtoo
February 3, 2022 3:48 pm

demand for energy will drop someday. right after demand for food drops.

Rud Istvan
February 3, 2022 3:49 pm

Carney (a Canadian) tried the same ‘stranded future asset’ trick as head of BOE. Didn’t work in the UK. Won’t work in Canada either. Especially not with oil hitting $90/bbl today.

BTW in ebooks The Arts of Truth (late 2012) and Blowing Smoke (late 2014) I did a deep dive factual analysis suggesting oil would be permanently over $100/bbl by about 2023-2025. The low crude price driven by ‘use it or lose it fracked shale leases was never sustainable given depletion of the about 700 biggest oil fields that supply about 85% of conventional crude production. This was known from a IEA study back in 2008.

Mohatdebos
Reply to  Rud Istvan
February 3, 2022 7:33 pm

Carney has the global (UN) lead on coercing financial institutions to curtail lending to fossil fuel companies.

Andy Wilkins
Reply to  Rud Istvan
February 4, 2022 12:06 am

I was once sat in a small pizza parlour in London and Carney was on the next table. He had a couple of kids with him, maybe his own offspring. I could hear his conversation – he was perhaps the most boring man I have ever had the misfortune to listen to.
It’s horrific that this humourless robot has anything to do with global finances.

Graeme G. Strathdee
February 3, 2022 4:43 pm

The Climate Change Comedy here in Canada is that the province of Ontario that typically runs on about 10 GW of baseload nuclear power has in recent winter months required up to 5 GW of Alberta natural gas-fired electric turbine power to compensate for wind power that has been close to zero MW.

When the fleet of aging CANDU reactors starts going off line for major maintenance or decommissioning Ontario consumers can kiss goodbye to increments of about 700 MW of power. Utility solar power in winter is close to zero. Follow all the drama here https://live.gridwatch.ca/todays-trends.html

Here in Hydrocarbon-Central Alberta, we are laughing at the preposterous claims of the political poseurs in Ottawa who think they can pull plug on fossil fuels. Go ahead boys and girls…..make our day.

If that is really the end game, we can help with an early experiment. We can control Ontario GHG emissions easlly by turning down the pipeline valves to see what happens when 5 GW of natural gas stays in the ground.

That energy poverty joke will be on Minister of Environment and Climate Change Guilbeault and Prime Minister Justin Trudeau.

Pat from kerbob
Reply to  Graeme G. Strathdee
February 3, 2022 7:12 pm

Wish I was joking, but for those not in on the joke, this is our federal environment minister
Wish I was making this up

Edit
PS; wish this arrest was happening today instead of years ago after a greenpeace stunt

19359C32-9B68-410E-A224-4A212160B7C5.jpeg
Last edited 5 months ago by Pat from kerbob
Pat from kerbob
February 3, 2022 5:11 pm

All such analysis’s begin from the fallacy that the only use for the oilsands is burning it as gasoline or diesel in an engine.

We will always need heavy oil For the 1000 other uses we have for it

Foolish but what can be expected from parkland

Rud Istvan
Reply to  Pat from kerbob
February 3, 2022 5:20 pm

Yup.kind of hard on asphalt roads and roofs, just as a couple of simple samples.

Mr.
Reply to  Rud Istvan
February 3, 2022 5:43 pm

Well, instead of high CO2 emitting asphalt for roads we could always use concrete instead.

Oh wait .. . . .

Pat from kerbob
Reply to  Rud Istvan
February 3, 2022 7:09 pm

Exactly
1001 uses, ICE fuel is only one

We will always need the oilsands and will always mine it until such time as we invent new molecules to build everything from
It’s there, it’s stable, we have hundreds of years worth “at present extraction technology” meaning at least a thousand years
And most of it is within 100m of the surface

Rud Istvan
Reply to  Pat from kerbob
February 4, 2022 5:23 pm

Residue of the world’s largest ‘oil spill’. So the volatile fractions are long gone. Fortunately, so long as we have nat gas to steam reform for H2, we can restore those lost lighter fractions by hydrogenation. Hence the great value of the Biden cancelled Keystone XL, because Gulf Coast refineries are already hydrogenating heavy US crude using abundant local US nat gas.

Pat from kerbob
Reply to  Rud Istvan
February 6, 2022 6:37 pm

Nice wonderful synthetic oil
The best use of the hydrogen economy, such as will ever exist

Bob Hunter
February 3, 2022 5:18 pm

It would not be the first time the CDN banks, with Head Offices on Bay Street(Canada’s Wall Street) in Toronto not only abandoned the oil industry but abandoned AB. I was a new CFO, in 1986 my predecessor had arranged additional financing with one of our lenders, one of the 5 major CDN banks, in Nov 1985. The financing was over Western Canada’s limit, so officially needed Bay Street to approve. He was told it was only a technicality, Bay Street Head office never said no. Except oil started to crash approx Dec 1st and Bay Street said NO. Flash forward, I am now the CFO, and one of the juniors on our account is transferring to Toronto, take her for lunch her last week of August 1986 and in tears she says “I am so sorry, I know what we put you through but we got a memo from Toronto, ‘no new money in AB'”

Bob Hunter
February 3, 2022 5:24 pm

Lets not forget, Prime Minister Trudeau got a standing ovation at the 2017 World Petroleum Conference in Houston saying: “No country would find 173 billion barrels of oil and leave them in the ground” However, his govt won’t approve new oil sands projects and said in the last election “no more oil sands development” Albeit, the spineless one said it in his home province of Quebec and not in Alberta where 90% of Canada’s oil is located.

Last edited 5 months ago by Bob Hunter
Mr.
Reply to  Bob Hunter
February 3, 2022 5:46 pm

I suspect he cynically then whispered to himself –
“but now watch me do just that”

Bob
February 3, 2022 8:50 pm

These regulators/prognosticators turn my stomach with their circular arguments and doom and gloom news. Regulators are afraid oil and gas producers may find it difficult to find financing in the future. Why? Because radical environmentalists are afraid of global warming. They want to tie the hands of the power producers which would make it risky to finance producers. Why? Because we are going to tie their hands. Why because we are afraid of climate change. Oh that makes sense, we better not finance the producers if you are going to tie their hands. The hypocrisy, lying and cheating is so clear and evident I don’t understand why we even talk about it. It is infuriating.

Independent
February 3, 2022 9:44 pm

Fitting picture. Let’s go, Brandeau!

BCBill
Reply to  Independent
February 4, 2022 12:07 am

Truck Fudeau

Andy Wilkins
February 4, 2022 12:09 am

Has anyone asked Trudeau when he’ll be giving up any products made of plastic?
Let’s go Blackface!

Rod Evans
February 4, 2022 12:10 am

When the federal authority of the coldest western nation on Earth mandate policies designed to destroy energy security, you know we have moved into a very dark cold era of human evolution.
If we can not rely on government that we have elected, to do the things necessary to sustain our existence through the harshest of winter conditions, what exactly, is the point of electing these authorities?.

Alexander Vissers
February 4, 2022 12:13 am

Maybe it is not so much demand as extraction cost. If e.g. the Venezuela reserves are properly exploited oil could become cheap, too cheap to invest in tar sands.

Pat from kerbob
Reply to  Alexander Vissers
February 6, 2022 6:35 pm

Venezuela will always a banana republic and so the AB oilsands will always be in production, we’ll have thriving colonies on mars before we end oilsands extraction

Besides all the good PDVSA engineers are here in calgary, I work with many

We need a few more hundred thousand in edmonton and calgary because they are rabidly anti socialist
Because experience
Need to drown out the muddled voting patterns of people coming from the east, the equivalent of Californians infecting Texas like a metastasizing cancer

very old white guy
February 4, 2022 4:11 am

Until fossil fuels run out there will be no collapse. You want to see a die of of the human species, that will be when it really happens.

ResourceGuy
February 4, 2022 6:41 am

That could only be crafted by economic illiterates using climate communication talking points.

StevenF
February 4, 2022 2:20 pm

What the heck is a political economist?

It truly is a dismal science.

Gord in Calgary
February 4, 2022 5:34 pm

The Parkland Institue is a left wing “wishful thinking” tank. Eric would do better by getting a second opinion or keeping up on current events. At $90 WTI Canadian O&G companies are making a fortune and don’t need bank loans.

“Major oil sands players such as Canadian Natural and Suncor now generate so much cash that they are self-financing. After raising billions of dollars over five decades to develop massive Alberta projects, these companies are in the fortunate position of no longer needing to tap equity markets or lenders for the capital to expand.

A generation back, news that a major bank such as HSBC or influential pension plan like the Caisse de dépôt et placement du Québec was turning off the tap for oil sands projects would have rocked Calgary. Today, it’s a non-event. The likes of Canadian Natural no longer need anyone else’s money, or approval, to prosper.”

https://www.theglobeandmail.com/business/commentary/article-oil-sands-companies-have-financial-muscle-to-go-their-own-way-on/

John Savage
February 4, 2022 7:22 pm

Anyone who follows Canadian oil sands companies knows that they are paying down debt at a record pace, and they are some of the largest tax remitters in the country. But connecting the dots is not a strong suit in the climate crowd.

tom
February 5, 2022 4:47 pm

that picture must caught smell of his own bullshit

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