One of Justin Trudeau’s first major acts upon taking office was making Canada a signatory to the Paris Agreement on climate change. According to Dermot Foley and Andrew Simpson of BC-based Vancity Investment Management, the commitment was a step in the right direction for a country that dragged its heels on the issue for far too long under the previous administration.
“Global demand for fossil fuels has to decrease, there is no doubt about that,” says Foley. “We can either make the transition rationally, or not. At one time all British Colombia was known for was forestry, but we made it through that transition when a number of mills shut down because there was a jobs strategy and a lot of political will.”
According to Foley, Canada also provides plenty of examples where the changeover process hasn’t gone so smoothly. “The opposite happened on the east coast with cod fishing. There wasn’t much planning, it collapsed, and it led to massive unemployment,” he says. “Those are the two models we can pursue when it comes to fossil fuels – we can either have a rational transition or just wait until we can no longer compete in the global market. Oil sands oil is the second most expensive to produce and it is competing with oil that is near the surface in Saudi Arabia.”
Foley and Simpson are sub-advisors for IA Clarington Inhance SRI Funds, and as such it is their business to find investment opportunities as Canada and the world makes the shift away from fossil fuels.
“Solar is one of the investments we have in our global portfolio,” said Simpson. “We focus on utility-scale power plants, solar panel producers and also the collectives that distribute the power in communities. One name we would highlight is Vestas Wind Systems out of Denmark which is the largest wind turbine manufacturer in the world.”
Simpson and Foley agree that while Canada lags behind many of the European nations on this issue, there are companies emerging here to meet the growing demand for renewable power.
“Pattern Energy Group is another interesting company that develops wind farms,” says Simpson. “They recently did an installation for Amazon, which has committed to having a majority of its power coming from renewable sources. There are companies out there trying to meet that demand from the global Fortune 500 companies that are embracing the shift to renewables.”
A report by the Renewable Energy Network released last week showed that investment in wind, hydro and solar is twice that of coal and natural gas power plants globally.
In Canada, provinces such as Alberta still rely on coal to a large extent, which Foley feels needs to change if the country can meet its obligations under the Paris Accord.
“From a global perspective we are the 8th highest greenhouse gas emitter in the world, but 37 countries have a bigger population. We are already out of balance for what our responsibility should be. There is a lot of work to do. For our Canadian funds we don’t have any oil sands or the big pipeline companies, but we do have natural gas as we see it having a vital role in this transition to a low-carbon economy.”