International Trade Minister Mary Ng says she expects transparency and accountability from a key federal Crown corporation, after a new report concluded Canada is undermining its own climate goals by allowing the agency to support fossil fuel projects such as the Coastal GasLink pipeline.
Export Development Canada (EDC) signed an agreement in April to loan potentially hundreds of millions of dollars to help Coastal GasLink, the controversial pipeline from the Dawson Creek area to Kitimat B.C. that was the subject of protests and rail blockades earlier this year after RCMP raided Wet’suwet’en Nation territory. EDC has said the loan was reviewed in line with its “environmental and social” directive.
In a report released Tuesday, sustainable development consulting firm Horizon Advisors recommended that the government legally bar EDC from supporting any fossil fuel energy projects, “including new fossil fuel infrastructure” such as pipelines, and that the agency should “stress-test its investment decisions against Canada’s climate targets.”
These and other bold measures are the only realistic way to eliminate the “clear discrepancy” between EDC’s continued approach to investments and Canada’s climate goals of cutting carbon pollution 30 per cent below 2005 levels by 2030 and reaching “net-zero” pollution by 2050, say the report’s authors.
“Our analysis found that EDC's approach to investment is out of sync with Canada's climate policy,” said Horizon Advisors executive director Amin Asadollahi, a former senior policy advisor at Natural Resources Canada and former co-chair of the Green Budget Coalition.
“Although Canada has committed to decarbonizing its economy over the next 30 years, EDC on the other hand continues to invest in fossil fuel projects. These investments not only undermine Canada's international climate efforts but also increase EDC’s exposure to carbon risks.”
Horizon Advisors calculated that EDC has provided roughly $45 billion in support for the oil and gas sector since 2016, compared to $7 billion for clean technology.
EDC must uphold ‘values that Canadians expect’
The Trudeau government should amend the Export Development Act to prohibit EDC from supporting fossil fuel projects, the report recommends.
In March, in response to the COVID-19 pandemic, the government did move to amend the Act, but its changes broaden, not restrict, the agency’s mandate. EDC also said it has increased its financial capacity to support oil and gas companies.
The agency is governed by a board of directors appointed by the government who report to Parliament through Ng. The minister also provides guidance to EDC’s chair about her expectations of what to prioritize.
National Observer asked Ng’s office whether she felt that such an amendment to the Export Development Act barring fossil fuel support was prudent or feasible at this time, and whether she supported EDC’s Coastal GasLink loan.
“We expect EDC to be fully transparent and accountable for their transactions,” said Ng’s press secretary Ryan Nearing in response to questions. He also noted that the agency is “financially self-sustaining” and “operates at arm’s length from the government.”
EDC must “meet the evolving needs of Canada’s exporters” and uphold the “values that Canadians expect,” Nearing added, “which includes corporate social responsibility, environmental sustainability, and reconciliation with Indigenous Peoples.”
In responding to this story, EDC said it has a “large and diverse portfolio” including companies in both carbon-intensive and clean technology sectors, and that “businesses throughout the spectrum are important to the Canadian economy.”
It already considers itself the “largest financier” in the clean tech sector, facilitating about $9 billion in Canadian clean tech exports over the last eight years.
“EDC is committed to evolving our portfolio in a responsible and measurable way, and companies across the spectrum will play a role in the transition to a lower carbon and climate-resilient economy,” said senior communications adviser Amy Minsky.
EDC’s Coastal GasLink standards questioned
In a project review summary posted on its website, EDC said it reviewed due diligence reports, project plans and other material about Coastal GasLink and “determined that the project has been designed in compliance with applicable host country environmental and social requirements," and with the Equator Principles, an industry benchmark.
Horizon Advisors said the Equator Principles framework was “not the most ambitious or comprehensive standards” available to EDC, and instead recommended standards from the World Bank Group’s International Finance Corporation as being the highest in the field.
That such a project meets EDC’s environmental and social standards “demonstrates just how lax they are,” argued Karen Hamilton, program officer for accountability nonprofit Above Ground, which commissioned the Horizon Advisors report alongside Oil Change International. (Horizon Advisors says its report is its own “independent perspective” based on its analysis, literature review and interviews.)
Hamilton pointed to provincial records showing the company behind the pipeline had violated conditions set by the B.C. government more than 50 times, as well as the opposition posed by some Wet’suwet’en leaders.
“Export Development Canada says it has strong procedures in place to make sure the business it supports is ‘environmentally and socially responsible.’ However, this project was sited on the ancestral territory of the Wet’suwet’en Nation without the consent of its hereditary chiefs. Those leaders argue that pipeline construction infringes their constitutionally protected rights,” Hamilton said.
Last month, hereditary chiefs said they would sign an agreement with federal and provincial governments affirming their title and rights. The memo was seen as addressing the nation’s right to its traditional territory that would provide the outline for a later discussion about the pipeline.