CPPIB Watch: A quarterly update on CPPIB-owned fossil fuel companies (October – December 2024)
This fall, the Canada Pension Plan Investment Board (CPPIB) held public meetings in eight cities across Canada. These CPPIB meetings, which are required by legislation to be held every two years, saw CPPIB executives tell Canadians that “climate change is an existential threat… the biggest investment risk that we face… one that we are extremely preoccupied with.”
CPPIB has made it clear that it understands the escalating, systemic, existential risks that climate change poses both to its portfolio and to the retirement security of Canadians. That’s why it’s so difficult to understand why CPPIB is investing in ways that expose the Canada Pension Plan to high-risk fossil fuels and make the climate crisis even worse.
CPPIB executives disclosed to Canadians at its public meetings that 3.5% of its portfolio – approximately $22.6 billion – is invested in fossil fuels. This is likely an underestimate that omits CPPIB’s significant holdings in fossil fuel private equity, gas and electric utilities and other fossil fuel infrastructure. Following CPPIB’s release of its Second Quarter Fiscal 2025 results in November, Shift calculated that CPPIB has committed at least $3.3 billion of Canadians’ retirement savings in new oil, gas, coal and pipeline assets in 2024.
CPPIB claims that it’s using its ownership and influence to encourage companies “to consider climate-related risks and opportunities in new and innovative ways” and “remove (emissions) from the global economy altogether.” But companies privately owned by CPPIB continue to operate in ways that expand and prolong the use of fossil fuels, direct capital to false solutions, and undermine stringent climate policy. Indeed, earlier this year, a CPPIB executive stated, "We don't make policy, we make returns." However, it's abundantly clear that CPPIB-owned oil and gas companies are determined to “make policy” by financing and lobbying politicians who aim to dismantle climate policies.
Here’s what some of CPPIB’s privately-owned fossil fuel companies have been up to in the last quarter:
Teine Energy: An investigative reporter raised conflict of interest concerns about a Managing Director of CPPIB’s “Sustainable Energies” group who sits on the board of Teine Energy, an oil and gas producer publicly fighting Canada’s proposed oil and gas emissions cap.
Encino Energy: This CPPIB-owned oil and gas producer wants to frack under a watershed conservancy district and extract billions of barrels of oil in Ohio – and joined an oil and gas industry lobbying effort to finance President-elect Donald Trump’s election campaign as part of a plan to dismantle landmark federal climate policies in the US.
Transportadora de Gas del Perú: As the Amazon rainforest suffered through one of its worst fire seasons on record in 2024, this CPPIB-owned pipeline company wants to extend the use of a pipeline transporting fracked gas from the Peruvian Amazon until at least 2044, and has plans to build a new gas pipeline along the Peruvian coast.
Aera Energy and California Resources Corporation: These companies, merged together in 2024 to form California’s largest oil and gas producer and partly owned by CPPIB, lobbied heavily against state climate legislation and pledged to ramp up production.
Nephin Energy: This owner of Ireland’s offshore gas field reported a post-tax loss of €17.14 million in 2023, due to plunging gas prices and the EU’s windfall energy gains tax, and is making greenwashed claims about decarbonizing the Irish gas network.
Calpine: Partly owned by CPPIB, the largest operator of gas-fired power plants in the US acquired a new gas plant in Texas and plans to add over 1,000 MW of gas-fired generation in The Lone Star State.
Quantum Capital Group: CPPIB committed US$500 million to this private equity firm that calls itself “a very large driller”. Quantum raised US$10 billion for oil and gas in the last two years.
Wolf Carbon Solutions: This CPPIB-owned company backed down on its carbon dioxide pipeline proposal following intense community opposition and health, safety, environmental and technical concerns and regulatory delays in Iowa and Illinois.
Read on for the full details.
Investigative reporter raises conflict of interest concerns about CPPIB Managing Director’s role on Teine Energy’s board
Teine Energy is 90% owned by CPPIB. A Managing Director of CPPIB’s “Sustainable Energies” group sits on Teine’s Board of Directors.
Shift has raised concerns for years about the potential conflicts between the legal obligation of a pension manager to invest in plan members' best interests and the legal obligation of a corporate director of an oil and gas company to generate profit by extracting and selling oil and gas.
In November, an investigative reporter detailed how David Chambers, a CPPIB managing director who serves as a director of Teine Energy, exemplifies this potential conflict. The reporter noted that Chambers has a legal obligation to Teine Energy – an oil and gas company that produces 46,000 barrels of oil per day, collaborates with the Saskatchewan government to produce an oil and gas curriculum for high school students, and calls for the withdrawal of Canada’s proposed oil and gas emissions cap. This could potentially conflict with fiduciary duty, which requires pension managers to manage climate risks when making investment and asset management decisions.
“You can’t have a director that has those legal obligations to different entities: one that is lighting the world on fire and the other that is supposed to be protecting our retirement security 30, 40, 50 years down the road from now,” commented Shift’s Patrick DeRochie in response to the reporter’s inquiry.
Encino Energy wants to drill under conservation areas, ramp up fracking production, and bankroll Republicans to dismantle US climate policy
Encino Acquisition Partners, part of CPPIB’s “Sustainable Energies” portfolio, is 98% owned by CPPIB. A CPPIB Managing Director sits on Encino’s board.
Following CPPIB’s US$300 million commitment in April to Encino Energy for its “accelerated development of the Utica oil play”, the company is planning to establish new oil and gas wells in Ohio's Muskingum Watershed Conservancy District, including the public Leesville Lake area that's home to iconic muskie fishing, two marinas and a campground that hosts multiple youth camps. Ohio resident and earth scientist Julie Weatherington-Rice said it is no surprise that Encino Energy plans to venture onto public Leesville Lake lands because oil and gas companies have run out of other places to expand, leaving just state parks and public lands. "Everything else that could be fracked has been fracked," Weatherington-Rice said, adding that Encino Energy is industrializing what should be untouched nature for public recreation.
Since CPPIB’s acquisition of Encino in 2018, the oil and gas company has increased producing wells from 700 to over 1,000 and tripled its oil production. The company expects to increase oil and gas production to 50% of its total output in 2025. Encino’s Chief Technology Officer bragged that he initially told the company’s board that the company was going to “get more than a billion barrels (of oil) here”. But the CTO says he was wrong, and the company is actually planning to produce “several times that”.
Meanwhile, management consulting firm KPMG profiled Encino Energy as a client success story that “tapped the awesome power of modern analytics” to “operate their expanded production operations”, “optimize production”, “ingest more data from new wells and potential future acquisitions” and ensure “Encino is well-positioned for continued expansion.”
According to the Washington Post investigation, AXPC has drafted detailed plans to scrap a new fee on methane emissions and reverse a half-dozen executive orders that lie at the centre of the Biden administration's efforts to combat climate change. The lobbying group is working to block efforts that would make the US power grid emissions-free by 2035, eliminate subsidies for fossil fuels, limit drilling on federal land and pause LNG export terminals. AXPC is also targeting proposed climate risk disclosure rules that are publicly supported by CPPIB.
“They want to take climate out of the policy process entirely,” says Paasha Mahdavi, director of the Energy Governance and Political Economy Lab at the University of California at Santa Barbara, who reviewed AXPC's roadmap. “They want government to stop regulating climate issues and stop thinking about climate risks... They talk a lot about climate ambitions while doing something different inside their companies. If you are aligned with the Paris agreement, you cannot be part of a trade association trying to roll back these emissions regulations. Those two things are inconsistent.”
The Washington Post investigation raises troubling questions about the oil and gas companies in CPPIB’s portfolio, and the role they play in public policy. Earlier this year, a CPPIB executive claimed that "we are not prepared to sell assets for public policy reasons. We don't make policy, we make returns." But it's clear that CPPIB-owned oil and gas producers are indeed very interested in making public policy, and are actively financing political candidates that will take a wrecking ball to climate policy.
Transportadora de Gas del Perú (TgP) is prolonging and expanding the transportation of fracked gas from the Peruvian Amazon
TgP is 49.9% owned by CPPIB. Three senior CPPIB staff sit on TgP’s Board of Directors.
In September, TgP requested a ten-year extension to its contract that would see the gas pipeline operator continue its transportation of fracked gas from the Amazon rainforest to the Peruvian coast until at least 2044. TgP is also proposing to build a new fossil gas pipeline that would cost around US$2 billion and stretch 923 km along the Peruvian coast. TgP's CEO highlights that the project would be a “self-financed private investment” with no state subsidies and would take around two years to build.
Meanwhile, the Amazon rainforest, which is critical to stabilizing the global climate, experienced one of its worst fire seasons on record in 2024. In Peru, 16 of the country’s 25 regions were affected by fires, with 70% of those blazes occurring in the Peruvian Amazon, affecting more than 87 Indigenous territories. At CPPIB’s public meetings this fall, CPPIB spokespeople claimed that they recognize the important of Indigenous rights and title, but CPPIB has no formal Indigenous rights policy. CPPIB may want to consider the climate impacts and Indigenous rights considerations of transporting fracked gas from the Amazon for another twenty years before pouring more of Canadians’ hard-earned retirement savings into TgP’s risky pipeline plans.
CPPIB-owned oil companies lobby against climate and environmental policy in California, lay out plans to increase production
CPPIB was the 49% owner of Aera Energy until this summer, 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 of directors.
An October analysis of California's lobbyist registry shows that oil and gas companies co-owned by CPPIB lobbied to thwart state climate bills and other environmental legislation. Aera Energy and California Resources Corporation (CRC) collectively spent nearly US$1 million on lobbyists in the second quarter of 2024, in particular to stave off legislative momentum around a bill that would compel oil and gas drillers to plug all oil and gas wells statewide within a decade. Their industry group, the Western States Petroleum Association (WSPA), also lobbied against the legislation. CRC recently reported that the projected cost to clean up its idle wells was more than US$1billion, and energy experts suggest that CRC is using its questionable carbon capture and storage plans as a strategy to avoid cleaning up its wells.
A subsequent analysis of California’s lobbyist registry in November, covering the first nine months of 2024, showed record spending on lobbying and influence campaigns by oil and gas producers to fend off state environmental regulations and climate policies. Third on the list of Big Oil expenditures on lobbying and influence campaigns in 2024 was Aera Energy. The WSPA also spent over US$10 million on lobbyists and influence campaigns in the first nine months of 2024. The California oil and gas industry’s lobbying and influence campaigns focused on legislative and regulatory measures that required companies to clean up idle wells, re-affirm local authority to regulate or ban oil and gas drilling, and increase transparency and curb price gouging in the refining sector. These bills were ultimately signed into law.
“The fossil fuel industry is panicking,” said Allie Rosenbluth, US Program Manager at Oil Change United States. “It’s spending tens of millions to counter the power of the Californians who are standing up against its deadly pollution, as well as the politicians who are taking notice of the climate, health, and safety impacts of fossil fuels. But regardless of the industry’s desperate attempts to manipulate our political system with its dirty dollars, a clean energy future is on its way, thanks to the collective power of communities across California. Fossil fuel money in politics is bad for us, bad for the planet, bad for frontline communities, and bad for democracy. To ensure a liveable future, we need a healthy democracy where our elected officials are free from the destructive fossil fuel industry’s dirty money. Nearly 700 California politicians have already pledged not to take fossil fuel money – it’s time for the rest to follow.”
Upon acquiring its stake in CRC, CPPIB claimed that the company is an "independent energy and carbon management company committed to the energy transition" that "is set to play a leading role in California's energy transition." But CRC's president and CEO seemed to suggest otherwise in October, saying that he envisions expanding the company’s current one-rig drilling program to an eight-rig drilling program. With CRC's output declining by 6% per year, he wants to grow California's oil and gas production and thinks CRC will "overcome regulatory challenges" – proposed rules by county and state regulators that require stringent environmental impact reviews and could prohibit permits for new oil and gas drilling. CRC’s CEO makes clear that his business plan is contingent on oil demand not coming down.
Nephin Energy posts 2023 loss of €17.14 million due to plunging gas prices and EU’s windfall energy gains tax
Nephin Energy, 100% owned by CPPIB and part of its “Sustainable Energies” portfolio, holds a 43.5% stake in Ireland’s Corrib offshore gas field. Two senior CPPIB staff sit on Nephin Energy's Board of Directors.
In October, the Irish Independent reported that Nephin Energy recorded a post-tax loss of €17.14 million in 2023, due to plunging gas prices and a €46.49-million tax bill arising from the EU windfall energy gains tax, which was introduced in October 2022 to address high gas prices resulting from the war in Ukraine. All of Nephin's revenue came from fossil gas sales last year, with the Corrib gas field supplying about 40% of Ireland's gas consumption. Nephin's partner in the Corrib gas field, Vermilion Energy, is challenging the EU's windfall energy gains tax in court.
Despite its primary role as an offshore gas producer, Nephin is trying to diversify its revenue streams and re-brand itself as a “renewable energy company.” In November, subsidiary Nephin Renewable Gas signed a memorandum of understanding with Gas Networks Ireland to connect Nephin's biomethane plants to Ireland's gas pipelines and inject biomethane into the country's gas grid.
The Chief Executive of Nephin Energy said that “Injecting biomethane directly into the gas grid is the fastest and most efficient way to decarbonise Ireland’s gas network and help Ireland achieve its climate action targets.” Gas Networks Ireland claimed that "by gradually replacing natural gas with renewable gases, such as biomethane and hydrogen, (it) aims to deliver a net-zero carbon gas network by 2050."
This is greenwashing, plain and simple. Nephin is clearly not a "renewable energy company." Biomethane, also known as "renewable natural gas,” or RNG, is primarily composed of methane, which upon combustion enters the atmosphere and contributes to global heating. There is no such thing as "net-zero carbon gas", and it is not possible to "decarbonise" a gas network using biomethane. Biomethane may be a short-term solution that offsets a limited amount of gas production and use, but it prolongs the use of gas pipelines, delays the transition to zero-carbon alternatives like electric heating, and does nothing to prevent the emissions caused from RNG's end-use.
It is bizarre that CPPIB is allowing a portfolio company to engage in this level of greenwashing, and raises concerning questions about our national pension managers' understanding of the climate crisis and what is required to transition away from fossil fuels.
Calpine acquires gas plant in Texas, brings new gas plants online in Pennsylvania and Ohio
Calpine is 13.4% owned by CPPIB and part of its “Sustainable Energies” portfolio. A CPPIB Managing Director sits on Calpine’s board.
In October, Calpine, the largest operator of gas-fired power plants in the United States, announced its acquisition of the 550-MW Quail Run Energy Center in Odessa, Texas. The acquisition is part of Calpine's plan to add over 1,000 MW of gas-fired generation in Texas over the next few years. Calpine has also brought online 1,600 MW of new gas-fired generation in Ohio and Pennsylvania over the last decade.
As the climate crisis worsens and the energy transition accelerates, why is our national pension manager risking our retirement savings on companies that are expanding and prolonging the use of high-carbon fossil gas?
CPPIB commits US$500 million to a “very large driller” that struggled to raise money for oil and gas private equity fund
Earlier this year, CPPIB committed US$500 million to Quantum Capital Solutions Fund II, a private equity fund that will invest primarily in the "conventional energy sector in the U.S."
In October, Quantum Capital Group, the private equity manager overseeing the fund, announced that it had raised US$10 billion for its "energy platform", including US$2.8 billion for Quantum Capital Solutions Fund II. Quantum's CEO told Bloomberg News that "we are a very large driller" and "the vast majority of our capital does go to oil and gas."
The oil and gas industry is admitting it's getting harder to attract capital, but CPPIB seems determined to use the Canada Pension Plan to continue financing these high-risk climate-wrecking companies.
Wolf Carbon Solutions forced to withdraw CO2 pipeline proposal in Iowa
Wolf Carbon Solutions is a subsidiary of Wolf Midstream, which is 99% owned by CPPIB. Two CPPIB Managing Directors sit on Wolf’s board.
Wolf Carbon Solutions, which CPPIB describes as an "energy infrastructure company", has been forced to withdraw its proposal to build a carbon dioxide (CO2) pipeline in eastern Iowa. Wolf Carbon Solutions had planned to capture CO2 emissions at ethanol plants in Iowa, liquefy the CO2 under pressure and transport the CO2 by pipeline and sequester it underground in Illinois. However, the proposal faced regulatory and legislative delays, health, safety and environmental concerns, technical problems with CO2 sequestration at the pipeline's endpoint, and fierce opposition from local governments, landowners, farmers and community groups. Wolf's withdrawal of its CO2 pipeline application in Iowa follows a similar retreat a year earlier in Illinois.
In response to Wolf’s withdrawal, Jessica Wiskus, a landowner in Linn County, Iowa, said: "(Carbon capture and sequestration) is not a safe technology, and the scale of the potential hazards posed by CO2 capture and sequestration make it impossible from a liability standpoint… Wolf admitted, by their withdrawal, that the proposed CO2 pipeline project was not viable.”
Similarly, Emma Schmit of the Bold Alliance said: “It’s no surprise that Wolf has joined the 70% of all ethanol-based carbon capture projects that are cancelled before construction. Wolf’s withdrawal should serve as a signal to all corporations looking to profit at the expense of our communities, our safety, and our property rights. We will stand in opposition to exploitative carbon capture pipelines, and as we’ve proven once again, we will win.”
The abandonment of Wolf Carbon Solutions' CO2 pipeline proposal raises fundamental questions about the risky bets being made by CPPIB and its portfolio companies. Why is CPPIB gambling our national retirement fund on expensive, unproven, dangerous distractions like CCS and CO2 pipelines instead of investing in proven, cost-effective, scalable climate solutions?
CPPIB should listen to the thousands of Canadians telling them that fossil fuel expansion is fundamentally incompatible with their retirement security
This fall, Canadians showed up at CPPIB’s public meetings in droves to tell CPPIB that they are deeply concerned about climate change and CPPIB’s ongoing use of our collective retirement savings to invest in the oil, gas, coal and pipelines that are fueling the climate crisis. It’s time for CPPIB to listen, and start treating climate change with the urgent action it requires.
As the climate crisis worsens and the energy transition accelerates, it is not credible for CPPIB to claim that it’s committed to net-zero emissions at the same time that its portfolio companies build new pipelines and gas plants, increase oil and gas production and lobby against government climate policies.