NEW REPORT: High-risk gas assets owned by Canadian pension funds can’t be saved by hydrogen
New report raises red flags for multi-billion-dollar Canadian pension investments in high-risk gas infrastructure around the world; questions credibility of gas company claims that hydrogen will extend their business model
Toronto, ON | Traditional territories of the Huron-Wendat, Anishnaabeg, Haudenosaunee, Chippewas and Mississaugas of the Credit First Nation - Today, Shift: Action for Pension Wealth and Planet Health (Shift) released a new report, Gaslighting the Energy Transition: Hydrogen cannot prevent investments in gas from putting planet and profits at risk. The report reveals the exposure of Canadian pension funds to significant financial risks and climate impacts through their multi-billion-dollar investments in gas infrastructure companies outside Canada that face terminal decline as the energy transition accelerates. The report finds that nine of Canada’s largest pension managers are co-owners of 22 private gas companies that operate nearly 350,000 kilometres (km) of pipelines around the world.
Gas companies downplay their exposure to growing transition risk by talking up plans to repurpose their infrastructure to transport hydrogen, but these flimsy claims do not stand up to due diligence. In spite of the hype, hydrogen faces intractable financial, physical, and technical barriers. Shift’s report summarizes the latest expert analysis detailing why phasing out gas is required to meet climate obligations, and why hydrogen is unable to replace it.
“We’ve come to expect the gas industry to protect its dead-end business model through greenwashing, lobbying, and public relations campaigns that pretend hydrogen is a silver bullet climate solution. That’s no surprise,” says Paul Martin, a chemical engineer and process development expert, consultant with Spitfire Research and co-founder of the Hydrogen Science Coalition. “But we should expect our pension managers to be sophisticated enough to see through this false hydrogen hype. Sadly, that doesn’t seem to be the case.”
The report cuts through gas industry spin by underlining the scientific consensus that gas is a primary cause of the climate crisis, not a “bridge” or “transition” fuel. It details the limited role of hydrogen in the energy transition based on a growing list of authoritative peer-reviewed studies. It explains why gas infrastructure can’t be re-purposed to transport and use hydrogen. And it explores six case studies of gas infrastructure assets owned by Canadian pension funds that are at risk of becoming stranded as the energy transition accelerates.
“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,” said Adam Scott, Executive Director of Shift. “Hydrogen can’t save gas companies from the climate imperatives and cost-effective technologies already disrupting energy markets and making gas assets obsolete. Canadian workers should not have their retirement savings invested in these high-risk, high-carbon, soon-to-be-stranded assets.”
Shift found that nine of Canada’s largest pension managers, including the Alberta Investment Management Corporation, British Columbia Investment Management Corporation (BCI), Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board (CPPIB), Investment Management Corporation of Ontario (IMCO), Ontario Municipal Employees Retirement System (OMERS), OPSEU Pension Trust, Ontario Teachers’ Pension Plan (OTPP) and Public Sector Pension Investment Board, have billions in pension capital invested in 22 gas distribution, transmission, power generation, processing and storage companies, collectively operating nearly 350,000 km in pipelines globally. (See this table for a summary).
As electrification technologies such as heat pumps for heating buildings, renewable energy for clean electricity generation and batteries for storage and flexibility have skyrocketed in recent years, utilities face the prospect of lower demand for gas transmission and distribution-- creating a likely “gas utility death spiral.”
Shift’s analysis features six case studies of gas utilities that are privately co-owned by Canadian pension funds, exposing major incompatibilities between the companies’ nascent hydrogen projects and credible net-zero-aligned transition plans. The analysis shows why hydrogen is not suited for use at scale in most transportation, power production, building heating or industrial uses. The case studies include:
National Gas (UK), 27.7% owned by BCI;
Scotia Gas Networks (SGN) (UK), 37.5% owned by OTPP;
Open Grid Europe (Germany), 32% owned by BCI;
Società Gasdotti Italia (Italy), 69.4% owned by OTPP;
Exolum (Spain), 24.6% owned by OMERS and 10% owned by IMCO;
Tallgrass Energy (US), 24.5% owned (estimate) by CPPIB.
The report concludes with recommendations for how gas utilities, pension stakeholders and fund managers can ensure the climate integrity of their investments, helping to protect both financial returns and a healthy planet on which to enjoy them.
“I expect my pension managers and trustees to exercise due diligence and effectively manage climate-related transition risks when it comes to my hard-earned retirement savings,” says Lisa Jeffery, a high school science teacher in Leamington, Ontario and member of the Ontario Teachers’ Pension Plan. “I was shocked to learn how much my pension managers have bought into hydrogen propaganda spread by the gas industry and exposed my savings to gas assets that need to be decommissioned in order to protect my retirement security in a safe climate future.”
Read the full report and analysis here.
For interview requests:
Adam Scott - Executive Director, Shift Action for Pension Wealth & Planet Health
adamscott@shiftaction.ca
416-347-3858
Paul Martin - Chemical Engineer and Process Development Expert; Consultant, Spitfire Research; Co-founder of the Hydrogen Science Coalition
spitfireresearchinc@gmail.com
647 833 2057
Shift: Action for Pension Wealth and Planet Health is a charitable initiative that works to protect pensions and the climate by bringing together beneficiaries and their pension funds to engage on the climate crisis. Shift is a project of MakeWay Canada.
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