Canada’s long road ahead to a cleaner energy mix

Financial Times

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Welcome back. Canada can seem to have an oddly low profile in the energy transition debate considering it’s one of the world’s 10 biggest economies, and the fourth-biggest crude oil producer behind only the US, Saudi Arabia and Russia. During a trip to Toronto last week, I got a window into a national conversation that will have important implications for the global energy picture. And as you’ll read below, I picked an interesting time to visit.

Energy transitionCanadian politicians fan the fire over fossil fuels

The heads of Canada’s big five banks faced an unusually uncomfortable day last Thursday as lawmakers grilled them over their fulsome financial support for the country’s booming oil and gas industry.

The unprecedented parliamentary summons for the bank chief executives reflects the growing political heat around fossil fuels and clean energy in the world’s fourth-biggest crude oil producer.

In last month’s Banking on Climate Chaos report, which assessed fossil fuel financing by major global banks, Royal Bank of Canada, Scotiabank and Toronto-Dominion Bank all ranked among the top 12 by financing commitments in 2023. In terms of fossil fuel financing as a proportion of total assets, four Canadian banks were in the global top 10.

At Thursday’s hearing, the bank heads defended their record. “It’s a complex transition. We are not getting off fossil-based fuels immediately. To just stop is not an option for us,” said David McKay of RBC, the country’s biggest lender.

All of Canada’s biggest five banks signed up to the Net Zero Banking Alliance and have pledged to reduce their financed emissions to net zero by 2050. But a study by the non-profit FinanceMap found that their fossil fuel financing exposure rose between 2020 and 2022, reflecting a wave of new investment by Canada’s oil and gas industry on rising hydrocarbon prices.

Jennifer Livingstone, RBC’s vice-president for climate, told me in Toronto that the bank believed it could do most good by staying engaged with its clients. “If we stepped out of this financing, someone else would step in. That would necessarily happen in this environment,” she said. “These are profitable companies

The full article is available here. This article was published at FT Markets.