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The Divestment Movement: Well-intentioned but misguided.

http://www.theglobeandmail.com/globe-debate/fossil-fuels-divestment-movement-good-intention-bad-idea/article22743277/

http://www.lapresse.ca/debats/votre-opinion/201501/30/01-4840013-bien-intentionne-mais-malavise.php

Martha Hall Findlay | Jean Charest

Partnership for Resource Trade

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The so-called divestment movement, encouraged by the environmental group 350 (www.350.org), calls for universities, churches, other non-profits and individuals to divest their investment holdings from major fossil fuel companies. Although based on legitimate concerns over climate change, the idea is fundamentally misguided.

Most of us agree that the burning of fossil fuels contributes to climate change. Many individuals and enterprises are responding through conservation, reducing their own energy use. Many are developing technologies that improve efficiency in the use of fossil fuels and in the processes of extraction. We are achieving much better gas mileage in cars and trucks. We are reducing GHG emissions from the production and burning of a barrel of oil, a cubic foot of natural gas, and from the production of electricity. But we also know that we still have a long way to go.

The underlying question, though, is this: Does the GHG emission problem lie with the fossil fuel producers, who are fulfilling existing demand, or with those creatingthat demand? Is it the fault of the people driving cars, or the trucking companies? (Transportation produces fully a quarter of Canada’s GHG emissions.) Should we blame the manufacturers that provide jobs? Or the consumers who create demand for the things that those manufacturers make?

The problem lies with the demand – it’s not the fault of those meeting the demand.

Besides, many of those “big bad fossil fuel” companies are also the biggest investors in renewable energy such as solar and wind power generation, and in research (including university research) for technologies to improve conservation, efficiency and overall environmental sustainability. Will divestment of these companies reduce their ability to invest in these other efforts? In any case, it will do nothing to reduce the market’s reliance on, or demand for fossil fuels.

Yet, according to a report released by the Sustainable and Education Policy Network (SEPN) (www.sepn.ca) there are now 27 active Canadian post secondary divestment campaigns. Most of these are student-led, and until recently, have not resulted in any actual changes in investment policy. However, in November 2014, Concordia University became the first university in Canada to agree to partially divest $5 million of its endowment from fossil fuels in order to consider alternatives.

Now a student-led campaign at UBC (UBCC350) has encouraged the UBC Faculty Association to hold an online referendum on the issue (voting to occur between January 26 and February 6).

If, as an individual, you choose not to invest in otherwise profitable companie because of personal ‘moral’ issues, that is your call. But investment decisions for university endowments must be based on one thing: which investments will bring the best financial returns. If fossil fuel companies are a bad financial investment, that’s reason to divest. Otherwise, divestment is inappropriate.

Donors (and potential donors) may be concerned that their donations will not go as far if invested with less than optimum return.

Canadian taxpayers (including many of those fossil fuel companies) provide by far the majority of university funding. Taxpayers do not get to choose where their taxes go, but should be concerned that the money used by universities, including endowment money, goes as far as possible to benefit the university and its operations. (Endowments are not tax-funded, but indirectly supported by taxpayers by way of tax-deductibility of donations.)

As for the students so actively campaigning for divestment, many of them also call for lower tuition, better facilities, better programs, smaller classes, better research funding – all of which require money from those taxes and those endowments (and sometimes direct funding from the very companies they are targeting). They also call for jobs when they graduate – a good number of which may be in, or reliant on, the energy sector. Many of them also drive cars, and most live in heated apartments, cook food and use mobile phones and computers. That energy needs to come from somewhere. As long as we use fossil fuels, even as we move to other sources, what purpose is served by punishing the producers?

Much good is being done by groups such as 350 and SEPN, but their promotion of the so-called divestment movement is mis-placed. Most of us are concerned about climate change and want to reduce the world’s emissions of GHGs. The answer, however, is to focus on reducing the growing worldwide demand for fossil fuels, not to target those simply meeting the demand.

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Le mouvement pour le désinvestissement ─ bien intentionné mais malavisé Partenariat pour le commerce des ressources

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Le mouvement dit du désinvestissement, soutenu par le groupe environnemental 350, demande aux universités, aux organismes sans but lucratif ainsi qu’aux particuliers de se dessaisir de leurs participations dans les grandes entreprises pétrolières. Malgré les inquiétudes légitimes qui l’animent, liées aux changements climatiques, l’idée défendue est fondamentalement erronée.

On convient généralement que l’utilisation des combustibles fossiles contribue aux changements climatiques. Bien des gens et des entreprises réagissent par la prise de mesures de conservation et une consommation moindre d’énergie. De nombreuses avancées technologiques permettent aussi de réaliser des économies d’énergie et de rendre plus efficaces les procédés d’extraction. Les automobiles et les camions consomment moins de carburant. Nous savons cependant qu’il reste encore beaucoup à faire.

De manière plus fondamentale, il faut toutefois se demander si les responsables du problème de l’émission de gaz à effet de serre sont les producteurs d’énergie fossile, qui répondent à la demande existante, ou bien ceux qui créent cette demande. Devraiton blâmer les fabricants fournisseurs d’emplois, dans cette optique, ou les consommateurs qui demandent leurs produits? Le problème vient selon nous de la demande.

Par ailleurs, les « grandes méchantes pétrolières » comptent parmi les principaux investisseurs dans les énergies renouvelables, comme l’énergie solaire ou éolienne, et dans la recherche technologique (notamment la recherche universitaire) qui vise à accroître les économies d’énergie et à assurer un environnement durable. Le retrait des investissements dans ces entreprises seraitil un frein à ces efforts?

Selon un rapport publié par le Sustainability and Education Policy Network (SEPN) (www.sepn.ca), malgré tout, 27 campagnes de désinvestissement sont menées en ce moment même au Canada. La plupart sont organisées par des étudiants. Jusqu’à récemment, il n’en était résulté aucune modification véritable des politiques d’investissement. Toutefois en novembre 2014, à titre d’exemple, l’Université Concordia est devenue la première université canadienne à retirer des investissements dans les pétrolières, de 5 M$, de son fonds de dotation.

C’est votre affaire si, à titre individuel, vous choisissez pour des raisons « morales » de ne pas investir dans des entreprises par ailleurs rentables. Les décisions de placement des fonds de dotation universitaires doivent par contre s’appuyer sur un critère : quels investissements sontils les plus profitables? Si les pétrolières sont un mauvais placement, il est judicieux d’en retirer ses investissements. Sinon, ce n’est pas opportun.

Les contribuables canadiens (y compris les entreprises pétrolières) sont de loin la principale source de financement universitaire. Ils ne décident pas là où vont leurs impôts, mais ils se soucient de savoir si l’argent versé aux universités, y compris aux fonds de dotation, est investi de la meilleure manière possible. Quant aux étudiants militant si énergiquement en faveur du désinvestissement, bon nombre demandent également des frais de scolarité moins élevés, de meilleurs programmes et un financement accru de la recherche – or, tout cela est financé par ces impôts et fonds de dotation.

Les groupes tels que le 350 et le SEPN sont bénéfiques, mais ils font fausse route en appuyant le mouvement dit du désinvestissement. Tous, nous nous inquiétons des changements climatiques et souhaitons la réduction des émissions de GES. La solution consiste à réduire la demande en pétrole, toutefois, et non à punir ceux qui répondent tout simplement à la demande.

Martha Hall Findlay, a former Member of Parliament, is an Executive Fellow at the School of Public Policy of the University of Calgary and is Chair of the Advisory Council of The Partnership for Resource Trade (www.powerofcanada.ca).

Jean Charest, Partner at McCarthy Tétrault and former Premier of Québec, chairs the Partnership’s Steering Committee.

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Martha Hall Findlay, ancienne députée, est fellow cadre supérieur à la School of Public Policy de l’Université de Calgary et présidente du conseil consultatif du Partenariat pour le commerce des ressources (www.forceducanada.ca)

Jean Charest, associé chez McCarthy Tétrault et ancien premier ministre du Québec, préside le Comité directeur du Partenariat pour le commerce des ressources.

Blog, The Economy, The Environment

Nation-building requires balance and compromise – Northern Gateway is no exception.

As published in the Globe and Mail, June 18, 2013.

The federal government’s decision to give Northern Gateway the green light is conditional on the project meeting all 209 environmental and social conditions set out by the joint review panel of National Energy Board and Canadian Environmental Assessment Agency. The proponents must also engage in more consultations with affected aboriginal communities, and there are BC’s 5 conditions to be met.

Many environmentalists are now willing to accept the project, provided those conditions are satisfied. Many aboriginal groups also support the project, based on economic participation in the project and associated benefits to their communities. There remain, however, certain environmental and aboriginal groups who still threaten to do all they can to stop it. There are those who will just keep saying “No”.

These challenges are nothing new. Other major nation-building projects in Canada’s history were plenty controversial in their time. The CPR, the St. Lawrence Seaway, the TransCanada Pipeline, Churchill Falls and the James Bay Project each had its risks, its detractors, and hurdles to overcome. Given what we now know about animal migration crossings and the contribution of cars and trucks to greenhouse gas emissions, some would say “No” to the TransCanada Highway today – but there is no denying its importance.

Every nation-building project done in Canada has required negotiation, balance and compromise, and Northern Gateway is no exception.

You don’t build a nation by saying “No”. You need to ask “How”.

For our oil, access to the West Coast, and thus to global markets, has major economic implications for Canadians across the country. The United States is our only customer for oil, which causes a significant price discount, and they are approaching energy self-sufficiency more quickly than anticipated. We must diversify our customer base, and the opportunities that resource-hungry Asia presents are huge – and not just for Alberta. Manufacturers in Ontario and Quebec supplying the oil sands and pipelines with all manner of equipment and services – and the people they employ—will benefit. So too will scientists and technicians across the country developing more efficient (and environmentally-friendly) extraction processes. And the whole country benefits from social and other programs that are supported with the taxes that oil-related business activity sends to Ottawa.

In the late 1860s and early 1870s, John A. Macdonald saw the prairies as the (potential) breadbasket to the British Empire, with economic benefits for the whole country – but only if the grain could get to the sea. The government sponsored the construction of three transcontinental railways, including the CPR. People were needed, too, so Macdonald encouraged prairie farm settlement with the Dominion Lands Act of 1872. These efforts had their own controversies, and plenty of opponents and hurdles to overcome – but there can be no denying the importance and long-term value of such nation-building. It has ensured prosperity for many, and for generations.

Now, once again, we need access to the sea.

And we have learned a great deal from our mistakes. We have far better labour protection and workplace safety laws now than when the railway was being built. We understand the need for environmental sustainability – indeed, this is a huge opportunity. We can, and should, become the world leader in the technologies for spill prevention, spill containment and remediation, both land and sea. Although it has taken far too long, we now appreciate the importance of economic and social partnership with aboriginal groups. The irony is that the required social licence should now be easier, not harder to achieve, because Northern Gateway, with the conditions met, will be more environmentally sound, more socially responsible and far better for the aboriginal groups involved than any other major nation-building project before it.

Northern Gateway offers an extraordinary, historical, nation-building opportunity to provide economic benefits for the whole country. Done well environmentally, with the engagement and support of the aboriginal groups involved, it can also be something of which we can all be proud.

Martha Hall Findlay, an MP from 2008 to 2011, is an Executive Fellow at the School of Public Policy at the University of Calgary.