CPPIB Watch: A quarterly update on CPPIB-owned fossil fuel companies (January – March 2025)
Shift’s latest deep dive into the incompatibility of CPPIB’s fossil fuel investments and its climate obligations
In February, Shift released the third Canadian Pension Climate Report Card, our annual analysis of eleven of Canada’s largest public pension funds. This year’s report card revealed that some Canadian pension funds are stepping up to provide much-needed leadership as the climate crisis worsens. But the Canada Pension Plan Investment Board (CPPIB) earned an overall score of C-minus, placing it toward the bottom of the pack of Canadian pension funds on its approach to the climate crisis.
CPPIB is the only pension manager to see lower scores on any indicator two years in a row. Despite having an army of smart, dedicated staff with the most sophisticated climate risk analysis tools at their fingertips, CPPIB’s climate strategy appears less credible year over year. CPPIB is undermining its net-zero commitment by refusing to set interim emissions reduction targets and by using our national retirement savings to expand and prolong the use of oil and gas. Our detailed analysis summarizes CPPIB’s extensive investments in oil, gas, coal and pipelines.
Image: CPPIB tied for second to last place in Shift’s annual climate ranking of Canadian pension funds.
A CPPIB spokesperson said last fall that 3.5% of CPPIB’s (at the time) $647-billion portfolio, or $22.6 billion, was invested in fossil fuels, but this figure is likely an underestimate that refers only to oil, gas and coal producers and omits related fossil fuel infrastructure and utilities. Without more granular disclosure from CPPIB, it is impossible to determine the true extent of our national pension manager’s fossil fuel investments. Shift estimates the figure could be nearly double the disclosed $22.6 billion.
CPPIB’s Fundamentally Flawed Decarbonization Thesis for Fossil Fuels
Shift’s detailed analysis of CPPIB from the 2024 report card includes a special section entitled CPPIB’s Fundamentally Flawed Decarbonization Thesis for Fossil Fuels. CPPIB claims to support reducing emissions in the real economy, yet finances oil and gas expansion and provides no evidence that its fossil fuel assets have profitable, science-aligned decarbonization pathways. A consistent theme emerging from Shift’s ongoing tracking and analysis of CPPIB’s approach to climate change is our national pension manager’s insistence that it can and must continue to invest in oil, gas, coal and related fossil fuel infrastructure in order to generate returns while “decarbonizing” these assets and reducing emissions in the real economy.
This fundamentally flawed approach is best articulated in a recent interview in Power Technology featuring Bill Rogers, head of CPPIB’s so-called Sustainable Energies Group. In the interview, Rogers discloses that CPPIB’s “Sustainable Energies” portfolio is about one-third composed of fossil fuels, backed by an “investment strategy (that) involves partnering with traditional energy players on their transition to lower-carbon business models.” Rogers says that “supporting traditional energy companies and helping them transition into new energy assets is an important part of our approach as a long-term investor” and that the “carbon intensity of our traditional energy portfolio has dropped over the past five to ten years.” Rogers goes on to say that:
In some cases, it can indeed be smart and profitable for Canadian pension funds to invest in high-carbon, hard-to-abate companies and industries, and use their capital, expertise and influence to accelerate decarbonization. But these assets must have credible, profitable, Paris-aligned, transition pathways.
The only credible pathways for decarbonizing fossil fuel assets in line with climate safety require a planned phase-out of oil, gas and coal production and the early retirement of related infrastructure, alongside rapid declines in fossil fuel demand. Such net-zero-aligned pathways would expose asset owners to significant investment risk. CPPIB has provided no indication that it intends to pursue such decarbonization pathways for its fossil fuel holdings, or explained how its holdings could generate risk-adjusted returns in the long-run. CPPIB has instead undermined the credibility of its own net-zero commitment by directly financing fossil fuel expansion and acquiring new fossil fuel assets, publicly claiming that its investment decisions are climate-aligned without providing any evidence in support of such claims.
Here’s what CPPIB and some of its privately-owned companies have been up to in recent months:
Investing in Trump’s “Drill, baby, drill” agenda: CPPIB’s third quarter fiscal 2025 results show US$807 million in new investment in fossil fuel expansion in the United States (U.S.) in the final quarter of 2024.
Commonwealth LNG: This Gulf Coast liquefied natural gas (LNG) export terminal, partly backed by CPPIB, is being rammed through by the Trump administration despite concerns about LNG's impacts on the climate, domestic energy prices, and communities on the Gulf Coast.
Encino Energy: This CPPIB-owned, Houston-based oil and gas producer was celebrated by industry media outlet Marcellus Drilling News after drilling its first fracking well under a protected wildlife area in Ohio.
Quantum Capital Group: This Houston-based private equity firm received hundreds of millions of dollars in Canada Pension Plan money to buy oil and gas companies and pursue American “energy dominance”.
California Resources Corporation: California’s largest oil producer, partly owned by CPPIB, is using a legal loophole to avoid tens of millions of dollars in idle well clean-up costs.
VoltaGrid: This Houston-based, CPPIB-backed company is planning to deploy more than a gigawatt of gas-fired microgrid power to supply new data centres and is partnering with fracking companies to increase production.
Calpine: CPPIB is planning to sell its stake in America’s largest gas-fired power producer. While CPPIB claimed it helped Calpine progress toward decarbonization, the company’s co-owner admits that the investment was predicated on hopes that the U.S. will keep burning gas for decades to come.
Wolf Midstream: A new analysis shows this CPPIB-owned operator of the Alberta Carbon Trunk Line is seeing its costs significantly increase while it fails to achieve its projected rates of carbon capture.
Read on for the full details.
CPPIB invests US$807 million in Trump’s “Drill, baby drill” agenda
This winter, as the Trump administration takes a wrecking ball to U.S. climate policy and pledges to “drill, baby, drill”, CPPIB reported that it invested US$807 million in fossil fuel expansion in the U.S. in the final quarter of 2024. According to its third quarter fiscal 2025 results, released in February and covering October 1 to December 31, 2024, CPPIB:
Committed US$300 million to Boston-based Salamanca Infrastructure LLC, which owns "in-construction midstream energy assets in the U.S."
Invested US$212 million in Blackstone Credit's senior debt and equity issuance to fund its investment in U.S. pipeline assets from Pittsburgh-based EQT Corp, which is one of the largest producers and transporters of fossil gas in Pennsylvania, West Virginia and Ohio.
Completed three co-investments alongside Quantum Capital Group, a Houston-based private equity firm focused on the energy sector:
US$150 million for an approximate 29% stake in Trace Midstream, a Houston-based company with fossil gas gathering and transportation assets in the Permian Basin;
US$80 million for an approximate 11% stake in QB Energy, a private fossil gas exploration and production business based in Denver; and
US$65 million for an approximate 10% stake in Texas-based Firebird II, a private oil and gas exploration and production business focused on acquiring and developing upstream assets in the Permian Basin.
While Canadians boo the American national anthem at hockey games, boycott American products, and cling to their jobs in the face of President Trump’s tariffs, CPPIB is quietly using the Canada Pension Plan to invest in U.S. oil, gas and pipelines.
Trump administration pushes forward CPPIB-backed Commonwealth LNG terminal
In 2022, CPPIB committed US$100 million to Kimmeridge Fund VI. Kimmeridge then used this money to buy fracked gas assets in Texas and help finance the controversial proposed Commonwealth LNG project.
The Canada Pension Plan is being used to finance a proposed fossil gas export project that is being forced through by the Trump administration. In February, the Trump administration granted conditional approval to the proposed Commonwealth LNG export facility, which would ship 9.5 million tons of LNG per year from Louisiana's Gulf Coast.
The regulatory process for Commonwealth LNG was paused by the Biden administration in January 2024 due to concerns about LNG's impacts on the climate, domestic energy prices and communities on the Gulf Coast. But the Trump administration, which denies climate change and pledges to "drill, baby, drill", has revived the proposed LNG export project. By signing the conditional export approval, U.S. Energy Secretary Chris Wright said he was “unpausing the pause in action” imposed by Biden. “Exporting American LNG strengthens the U.S. economy and supports American jobs while bolstering energy security around the world, and I am proud to be working with President Trump to get American energy exports back on track,” Wright said.
CPPIB-owned Encino Energy drills under protected wildlife area in Ohio
Encino Acquisition Partners, part of CPPIB’s “Sustainable Energies” portfolio, is 98% owned by CPPIB. A CPPIB managing director sits on Encino’s board.
Oil and gas media outlet Marcellus Drilling News celebrated in February after CPPIB-owned Encino Energy drilled its first fracking well under a protected wildlife area in Ohio. Following significant industry lobbying, the Ohio Oil & Gas Land Management Commission awarded a contract to Encino Energy to drill under the Valley Run Wildlife Area, as well as state parks. On Earth Day 2024, Encino Energy announced a US$300 million commitment from CPPIB in “EAP’s accelerated development of the Utica oil play.”
CPPIB-financed U.S. private equity firm is 96% allocated to oil and gas; CEO calls for American “energy dominance” and increased production
In 2024, CPPIB committed US$500 million to Quantum Capital Solutions Fund II, a private equity fund managed by Houston-based Quantum Capital Group that will invest primarily in the "conventional energy sector in the U.S."
An updated analysis by the Private Equity Stakeholder Project finds that Quantum Capital Group has 96% of its energy portfolio in fossil fuels, an increase from 94% last year. In a December interview with Bloomberg, Will VanLoh, the CEO of Quantum, said it will be very difficult to “drill, baby, drill” because most of the U.S.’s oil resources have already been developed and prices are too low. VanLoh also acknowledged that many U.S. oil basins are peaking and rolling into decline, other than the Permian, where he thinks Quantum can extract maybe another million or two million barrels per day. The Quantum CEO then praised the Trump administration’s plans to remove the Biden administration’s halt to new LNG terminals and called for regulatory and permitting reforms to allow tech companies to use more gas-fired electricity to power data centres and artificial intelligence (AI). In February, VanLoh gave a keynote speech at an oil and gas industry summit in Houston calling for American "energy dominance" and pushing for increased oil and gas production.
It is unclear from publicly-available information what Quantum Capital Group is doing with CPPIB's US$500 million investment in 2024. It is possible that the three co-investments CPPIB reported with Quantum in Trace Midstream, QB Energy and Firebird II (see above) were disbursed through CPPIB’s commitment in 2014 to Quantum Energy Partners Fund VI. Based on Quantum's track record, Canada Pension Plan dollars are likely being funneled to privately-owned oil and gas producers to continue wrecking the climate and undermining our retirement security.
CPPIB-owned California Resources Corporation using legal loophole to avoid paying for idle well clean-up
CPPIB was the 49% owner of Aera Energy until summer 2024, when Aera merged with California Resources Corporation to become California’s largest oil producer. CPPIB now holds an 11.2% stake in the combined oil and gas company. A managing director from CPPIB’s “Sustainable Energies” group sits on CRC’s board.
A consumer watchdog group found that California's largest oil and gas producer, California Resources Corporation (CRC), has used a legal loophole to post only US$30 million worth of bonds to plug and clean up its declining and idle oil and gas wells. CRC controls more than 38,000 wells, 14,000 of which are idle – making up about 40% of all idle wells in California. According to the Center for Biological Diversity, CRC should have to maintain a bond of US$2.4 billion to cover its idle and declining wells. The unplugged wells could continue to leak methane for decades and leave California taxpayers on the hook for eventual plugging and clean-up.
"CRC has been a sponge for low producing oil and gas wells in California, and the company has already undergone Chapter 11 reorganization," said Kyle Ferrar, western program director at FracTracker Alliance. "Our research shows that average daily per well production for CRC and Aera is unsustainably low, and it will be hard to generate profit from these wells to properly plug them, much less remediate the environmental contamination of Aera's oil fields. It's therefore incredibly vital that California obtains sufficient bonding for these companies."
"We commend the Newsom Administration for dwindling permit approvals," said Consumer Watchdog’s Liza Tucker. "But now that oil drilling is sunsetting, the state is exposing Californians to grave fiscal risk instead of making sure the money is there for oil companies to plug wells and clean up their messes. Exhibit A is the Administration's coddling of CRC and Aera Energy that now make up the biggest onshore oil producer in California. The Newsom Administration reduced the amount of their bonding of wells instead of increasing it."
CPPIB-owned VoltaGrid expanding data centre power generation with fossil gas; partnering with fracking companies to optimize production
VoltaGrid is part of CPPIB’s “Sustainable Energies” portfolio. A CPPIB managing director sits on VoltaGrid’s board.
Backed by CPPIB, Houston-based energy management and power generation company VoltaGrid announced in February that it’s planning to deploy more than a gigawatt of gas-fired microgrid power generation capacity at new data centres across North America. VoltaGrid is set to become the main supplier of gas-fired power for Vantage Data Centers to accelerate its roll-out of AI training facilities.
VoltaGrid claims that its plans provide an "environmentally conscious approach to powering critical digital infrastructure." It also says the gas-powered microgrids are "environmentally responsible" and "can take advantage of 100% hydrogen-based or renewable natural gas (RNG) fuel sources when viable and offers carbon offsets for advanced net zero solutions."
VoltaGrid is already planning to supply several data centers with mobile gas turbines, locking in long-term emissions growth. In August 2024, it agreed to supply the Elon Musk-owned xAI Memphis data center with 14 mobile generators, each of which is capable of providing 2.5 megawatts (MW), giving it an additional 35 MW of power capacity. The non-profit environmental advocacy group Southern Environmental Law Center said the AI facility would siphon 5% of Memphis’ electric utility’s daily load to power its operations, potentially leaving residents without power during peak demand periods of increasingly severe hot and cold weather.
Meanwhile, in December, VoltaGrid entered into an agreement with Diamondback Energy and Halliburton Energy Services to deploy four “advanced electric simul-frac fleets” across the Permian Basin, calling it a “significant investment in clean and efficient energy solutions” that will deliver 200 MW of electric power to support Diamondback’s exploration and production operations. Under the agreement, VoltaGrid will deploy its next-generation simul-frac generators and expand its compressed natural gas infrastructure at Diamondback’s micro-grid facility to ensure a “reliable natural gas feedstock”. The companies claim the agreement will achieve superior performance while reducing environmental impact, but the reality is that the agreement is meant to increase fracked gas production.
CPPIB to sell 15.75% stake in Calpine, US’s largest fossil gas power producer
Calpine is 15.75% owned by CPPIB and part of its “Sustainable Energies” portfolio. A CPPIB managing director sits on Calpine’s board.
In January, CPPIB announced that it's selling its 15.75% stake in Calpine Corp., a Texas-based power producer, to Constellation Energy. The deal is expected to close in late 2025, following various federal and state regulatory approvals.
While Calpine made some efforts to diversify into solar energy, battery storage and geothermal assets under CPPIB ownership, it also significantly expanded gas-fired power production in recent years. Calpine is currently the largest producer of power from fossil gas in the U.S. CPPIB claimed that "Calpine serves as a good example of (its) approach to invest in companies that play a critical role in delivering affordable, reliable power while helping them progress towards the decarbonization of their portfolios." There is no credible evidence that Calpine is working towards decarbonization in alignment with Paris Agreement goals. Calpine plans to develop new gas plants in Texas and California.
The transaction will remove Calpine’s assets from CPPIB’s portfolio and make Constellation the largest producer of gas-fired power in the U.S. But it is unclear what CPPIB’s ownership of Calpine or the company’s sale to Constellation has to do with “decarbonization.” The president of Energy Capital Partners (ECP), which co-owned Calpine with CPPIB since 2018, emphasized that its acquisition of Calpine was about prolonging the use of gas, contradicting CPPIB’s claims about decarbonization: “We knew that gas-fired assets were going to be around for the next four or five decades,” ECP president Tyler Reeder says. “It was by far the largest investment we did, but we were confident natural gas wasn’t going anywhere. Now, it almost seems obvious in retrospect.” It’s clear that Reeder is either unwilling or unable to acknowledge the consensus science that fossil gas must be rapidly phased out in order to limit global heating to 1.5℃ and provide catastrophic climate change.
Reeder also ignored climate risks entirely when he highlighted the “importance of adding that natural gas component” to Constellation’s portfolio amid the huge demand for energy to power the boom in AI: “you’re going to see a wave of data center deals more tied to gas-fired plants.” Reeder articulates that ECP’s co-purchase, ownership and sale of Calpine was a bet on the prolonged use of gas. “To tell the story of value creation, you have to go back to the beginning, pre-2017, when the IPP sector was trading poorly,” Reeder recalls. At that time (independent power production) was “a sector we didn’t follow too much and many people ignored. For the value of buying gas-fired power at its low point and with a fear of obsolescence, we ran with the opposite view.”
IEEFA report shows CPPIB-owned carbon capture pipeline is underperforming and facing increasing costs
Wolf Midstream is 99% owned by CPPIB and part of its “Sustainable Energies” portfolio. Two CPPIB managing directors sit on Wolf’s board.
In January, the Institute for Energy Economics and Financial Analysis (IEEFA) released a report arguing that the profitability and sustainability of carbon capture and storage (CCS) facilities in Alberta is threatened by cost increases and failure to live up to projected emissions reductions. The IEEFA report includes an analysis of the Alberta Carbon Trunk Line (ACTL), a CCS project owned and operated by Wolf Midstream.
The ACTL consists of a 240-km pipeline that transports captured carbon dioxide (CO2) from a fertilizer plant and refinery near Edmonton and transports it to the Clive oil field to stimulate fossil fuel extraction via enhanced oil recovery operations. The ACTL commenced commercial operations in June 2020 following a $305 million investment from CPPIB and significant subsidies from the Alberta and federal governments.
CPPIB regularly touts the ACTL as a profitable climate solution that's essential to decarbonization. But the IEEFA analysis finds that:
the ACTL has seen operating costs increase from $30.44 per tonne of net CO2 captured in 2020 to $49.25 per tonne in 2023 – a more than 60% increase in three years that's far higher than Wolf's projections;
the ACTL has fallen short of its projected rates of CO2 capture by nearly 33%;
by supplying captured CO2 to the Clive oil field for enhanced oil recovery operations, the ACTL paradoxically increases overall emissions, as the captured CO2 is used to produce more oil, causing more CO2 to be released into the atmosphere.
IEEFA concludes that CCS projects like the ACTL will struggle to bring lasting economic benefits and are dependent on public subsidies to maintain operations. The ACTL's demonstrated lack of success and heightened financial risks indicate public investments in CCS are unlikely to yield desired environmental or economic benefits.
CPPIB’s fundamentally flawed decarbonization thesis for fossil fuels
CPPIB can play a role in accelerating the required phase-out of fossil fuels, but it’s not saying so, and its investment decisions and portfolio companies are doing the opposite. CPPIB’s significant fossil fuel investments will either become stranded assets in a net-zero world, or they’ll prolong and expand the use of oil and gas in ways that accelerate the climate crisis, threaten the sustainability of the CPP and undermine the retirement security of Canadians. Either option is a bad outcome for CPPIB and the 22 million Canadians on whose behalf it invests.
By failing to acknowledge that fossil fuel combustion must be rapidly phased out, CPPIB is essentially making up its own definition of net-zero and ignoring science. This demonstrates a fundamentally flawed understanding of what constitutes a credible climate plan. The investment manager is either failing to comprehend the imperatives of climate science, or dressing up its fossil fuel investments in “decarbonization” language while continuing to invest in business-as-usual climate failure.
CPPIB’s own Decarbonization Investment Approach recognizes “abandonment/closure” as an option for emissions abatement, yet CPPIB has not acknowledged that this is the only credible decarbonization pathway for fossil fuel assets. Nor has CPPIB explained to Canadians how the fund can generate returns by buying up such assets and then abandoning or phasing them out in line with safe emissions pathways.
There is no retirement security without a safe climate future to retire into. By continuing to invest in fossil fuel expansion, CPPIB continues to put our pensions and our planet at risk.