Climate Pension Quarterly - Issue #20

Don’t fall for the sales pitch – LNG is not in our best interests

In what seems like an increasingly desperate attempt to pitch liquified natural gas (LNG) projects as an attractive investment, Canada’s federal government keeps sending out media releases and holding press conferences to create the appearance of momentum.

But the pension executives entrusted to manage our retirement savings need to recognize that the fundamentals behind the transition away from fossil fuels haven’t changed. Global energy markets are shifting, and electrification and renewables are the future.

Energy projections suggest we will see a global oversupply of LNG in the next few years. The conflict-driven closure of the Strait of Hormuz underscores the vulnerabilities posed by fossil fuel dependence, giving LNG-importing countries a strong incentive to accelerate the shift toward cheaper and more stable energy systems based on electricity and powered by renewables. Electrification is a more efficient way to use energy: as societies electrify, less primary energy is required for equivalent processes. Meanwhile, key economies are turning to renewables to meet rising electricity demand, with the share of gas in the global power mix declining for a fifth straight year in 2025.

Despite these trends, Canada’s federal government appears to be orchestrating an alignment of public finance, regulatory rollbacks and levers to drive investment toward an economic future predicated on increased fossil fuel production.

Some pension funds appear to be willing to go along for the ill-fated ride.

The Canada Pension Plan Investment Board, noted for its “steadfast” affection for oil and gas, is reported to be considering a stake in an LNG-importing German company, and named LNG as an investment possibility that could be “fruitful”. The pension manager’s fossil-fuel-loving bona fides have become even more convincing now that a quarter of its board is entangled with the oil and gas industry. The President and CEO of the Ontario Teachers’ Pension Plan declined to rule out LNG investments when pressed by members at the fund’s annual meeting. Members of Ontario’s municipal pension, OMERS, did not receive definitive answers when they asked about investments in LNG. The Healthcare of Ontario Pension Plan’s Chief Investment Officer indicated the fund is on standby for federally-driven “nation-building” projects and that a pipeline could be under consideration.

But pouring more money into LNG exports is increasingly out of step with both market signals and global energy trends. Canada is doubling down on fossil fuel export infrastructure built for decades of use, in a market that may not support it for even half that time. The Canadian public stands to lose – with our public money potentially being used to “de-risk” LNG investment so that our own retirement savings can be put up as LNG capital.

While proponents attempt to paint LNG as somehow part of the energy transition, the building of new LNG infrastructure locks in carbon-dependent pathways and would increase greenhouse gas emissions domestically and globally. And although LNG is often pitched as “helping” countries in Asia get off coal, many of those same countries are already far ahead of Canada in their rapid uptake of renewables.

In the case of LNG Canada, First Nations leaders warned pension funds on June 12 that investing in LNG Canada Phase 1 or 2 would carry moral, legal and financial consequences. Hereditary Chiefs of the Gidimt'en and Likhts'amisyu clans of the Wet'suwet'en Nation and the president of the Union of British Columbia Indian Chiefs sent a letter to nine major pension funds and Export Development Canada. In it, the leaders warn that the Supreme Court has recognized Wet’suwet’en hereditary chiefs as title holders to territory crossed by the Coastal GasLink (CGL) pipeline, which supplies LNG Canada. “We have never consented to the pipeline, which constitutes essential infrastructure for LNG Canada,” the leaders wrote. “Any investment or support for LNG Canada enables the associated CGL pipeline’s continued violations of our First Nations rights.”

Pension members are speaking out about the risks posed by potential LNG investment. Nearly two thousand Canadians have written to the Canada Pension Plan Investment Board specifically about LNG. In Pension Beneficiaries Fear Funds Will Pour Retirement Savings Into LNG, members of multiple pension funds told The Energy Mix about their concerns. 

“At the end of the day, I work for the well-being of my family, my community,” said Melissa Rosato, an Ontario Municipal Employees’ Retirement System (OMERS) beneficiary. “I’d like to look my kids in the eye and tell them we’re doing all we can to ensure a livable planet—for my retirement plans and theirs.”

Pension funds have unique obligations to invest in the best long-term interests of their members, interests which require a safe and stable climate. The current federal government is trying to present LNG pipelines and export terminals as attractive long-term investments, but pension managers should see the holes in the sales pitch and remember the underlying reality: they will not be able to meet their long-term obligations in a world torn apart by cascading climate disasters.

You can learn more about LNG projects under consideration and find tools to write to your pension manager in Shift’s April analysis, The federal government is pressuring your pension fund to invest in LNG and pipelines.

Click into the Quarterly to see a few of the stories we followed over the past three months.

Thank you,
-Laura McGrath, Senior Manager, and Kevin Philipupillai, Research Lead,Shift