Mercedes Mullins
In a bid to reduce Alberta's reliance on fossil fuels, Danielle Smith has proposed a plan to ''de-risk'' fossil fuel investments from the Alberta Heritage Savings Trust Fund. Smith intends to use the fund to support oilpatch investment ideas that lack financial support from conventional lenders. This has sparked criticism, as some argue that investing in the fossil fuel industry contradicts the fund's purpose of reducing Alberta's dependence on the volatile resource revenues rollercoaster. Alberta's premier has defended the strategy, suggesting that treating the fund more like a sovereign wealth fund could provide opportunities to assist in de-risking projects facing financing challenges. Critics have also expressed concerns about the potential impact of such investments on the environment and the economy, with University of Alberta political scientist Jared Wesley stating that those who stand to benefit from these investments are those invested in the industry.
| Characteristics | Values |
|---|---|
| Name | Danielle Smith |
| Organization | United Conservative Party |
| Fund | Alberta Heritage Savings Trust Fund |
| Objective | To "de-risk" fossil fuel investments |
| Action | Skim off investment income from the fund to support oilpatch investment ideas |
| Action | Reintroduce austerity |
| Action | Invest in the Heritage Fund annually |
| Action | Pay down maturing debt |
| Action | Wean the province's budget off volatile resource revenues |
| Quote | "If we took a different strategy with those Heritage Savings Trust Fund assets, more like a sovereign wealth fund, that might give us more opportunities to be able to assist in de-risking projects that we’re finding difficult to be able to get financing" |
| Quote | "If we had just reinvested the income earned in our Heritage Fund from the Lougheed government’s initial deposits of about $12 billion in the late ’70s and early ’80s, our Heritage Fund would be worth over $250 billion today, earning between $12 and $25 billion per year in revenue." |
| Criticism | "Find me someone who thinks ‘de-risking’ projects that the market rejects is ‘conservative’ and I’ll show you someone who stands to gain from those investments" — University of Alberta political scientist Jared Wesley |
| Criticism | "If the purpose of Heritage Fund is supposed to be to reduce Alberta’s reliance on the fossil fuel rollercoaster, using it as a pool of cash to invest in the same industry is a strange way to go about it." — Journalist Max Fawcett |
| Related | United Airlines' investment in Twelve for sustainable aviation fuel |
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What You'll Learn
Danielle Smith's plan to 'de-risk' fossil fuel investments
Alberta Premier Danielle Smith has a plan to 'de-risk' fossil fuel investments. Smith intends to use investment income from the Alberta Heritage Savings Trust Fund to support oilpatch investment ideas that cannot obtain financial backing from traditional lenders. Smith's plan has been criticised by some, who argue that if the purpose of the Heritage Fund is to reduce Alberta's dependence on the volatile fossil fuel industry, using it to invest in the same sector is counterintuitive.
Smith has stated that her government will release a long-term financial plan before the end of the year, outlining a path to a Heritage Fund of between $250 and $400 billion by 2050. She has also emphasised the importance of natural gas as a transition fuel and expressed frustration with the reluctance of bankers to invest in fossil fuels. Smith's approach to "de-risking" may involve providing public subsidies to the electricity generation industry or the natural-gas extraction industry, or both.
Some critics have connected Smith's plans for the Heritage Fund with her desire to access the Canadian Pension Plan's investment funds. They argue that Smith's true intention is to transfer as much public wealth as possible to private hands. Smith has also been criticised for her inconsistent messaging, with some suggesting that her current plans contradict her previous statements and election promises.
In response to criticism, Smith has defended her approach, stating that it is necessary to take a different strategy with the Heritage Savings Trust Fund assets to assist in de-risking projects facing financing challenges. She has also assured that austerity measures will be implemented to limit government spending and reduce reliance on volatile resource revenues.
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United Airlines invests in Twelve for sustainable aviation fuel
United Airlines has invested in Twelve, a California-based company that produces sustainable aviation fuel (SAF). This investment is a part of United's Sustainable Flight Fund, which was launched in 2023 and has raised over $200 million in investment commitments. The fund's goal is to support new ideas and technologies that can help reduce aviation emissions and make air travel cleaner.
Twelve has developed a unique process to produce jet fuel that doesn't rely on traditional sources like crops, waste oils, or fossil fuels. Instead, they use carbon dioxide (CO2) captured from the air or industrial sources and combine it with renewable electricity, such as solar or wind power. This results in a liquid fuel that functions similarly to conventional jet fuel but with significantly lower emissions.
United's investment in Twelve is a strategic move to reduce its carbon footprint and stay ahead of the competition in the aviation industry. By investing in sustainable fuel sources, United aims to cut emissions without heavily relying on carbon offsets. This approach aligns with the increasing demand for more sustainable travel options and stricter emission regulations from governments worldwide.
Twelve's patented process creates a closed-loop carbon cycle, ensuring that the CO2 used to produce the fuel is the same CO2 released during fuel combustion, preventing additional carbon from being released into the atmosphere. The company is currently constructing its first commercial facility, AirPlant™ One, in Moses Lake, Washington, which is expected to produce 50,000 gallons of sustainable aviation fuel annually.
United's investment in Twelve demonstrates its commitment to shaping the future of sustainable travel and reducing its environmental impact. This bold step towards cutting carbon emissions is expected to accelerate the aviation industry's transition to cleaner and more sustainable practices.
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The Heritage Foundation's ESG Hurts campaign
The Heritage Foundation and Heritage Action have launched a joint national campaign called "ESG Hurts". The campaign is against the "Environmental, Social, and Governance" movement and its radical leftist agenda. It aims to educate American families and businesses about the dangers of ESG policies and how they are destroying America's small businesses. The campaign includes a 60-second digital ad, written material, graphics, and a commercial. It also provides background information on the dangers of ESG and model state legislation for lawmakers looking to protect state pensions, investments, and contracts.
The campaign argues that ESG investing is an effort by the left to advance their political agenda and reorient modern corporations. It claims that ESG incentivizes the politicization of every aspect of a company's business and hurts retirees, small business owners, oil and gas workers, and all Americans. The campaign further emphasizes that Americans want their rights and freedoms protected and deserve policies that prioritize their interests over the woke left's agenda.
The "ESG Hurts" campaign provides a roadmap for activists to call on lawmakers to take action and push back against these policies. It aims to help states protect their pensions, investments, and contracts, as well as support executive offers. The campaign highlights the success of states like Texas, Oklahoma, West Virginia, Kentucky, and Tennessee, which have laws ensuring their contracts and investments do not support ESG policies that contradict their values and jobs.
The Heritage Foundation and Heritage Action believe that the ESG movement is a direct assault on the free-market economy, which has been successful in creating wealth, opportunities, and lifting people out of poverty. They argue that ESG investing uses other people's money to advance a leftist agenda and forces corporate management to prioritize it over their obligations to shareholders.
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University of Toronto divesting from fossil fuel investments
The University of Toronto has committed to divesting from fossil fuel investments and running a climate-positive campus by 2050. The university's president, Meric Gertler, announced a suite of sustainability measures, including divesting from all direct investments in fossil fuel companies within 12 months and from indirect investments by 2030 or sooner. The University of Toronto Asset Management Corporation (UTAM), the university's investment manager, will allocate 10% of its endowment portfolio, or approximately $400 million, to sustainable and low-carbon investments by 2025. The university aims to achieve net-zero carbon emissions associated with its endowment by 2050 and has joined the UN-convened Net-Zero Asset Owner Alliance.
This decision was made possible by the rapid progress the university has made towards its original climate goals and the changes in the investment industry since UTAM adopted its responsible investing approach, which applies an environmental, social, and governance (ESG) lens to investment decision-making. UTAM has already reduced the carbon footprint of its investment portfolios by 37% compared to 2017 levels and investments in fossil fuel companies have declined to approximately 1.62% of the value of UTAM's long-term investments.
The university believes that its decision to divest from fossil fuels will accelerate the transition to a low-carbon economy and inspire other investors and government actors to intensify their efforts to tackle climate change. President Gertler stressed that the divestment signals the university's strong commitment to the global fight against climate change.
In addition to divesting from fossil fuels, the University of Toronto is taking other steps to create a 'climate-positive' campus. This includes the construction of Canada's largest urban geoexchange system, which will curb the university's greenhouse gas emissions by an estimated 15,000 metric tons annually. The university is also implementing carbon and energy budgets for new buildings, boosting the use of renewable energy through projects such as a large off-campus solar farm, and taking steps to eliminate fossil fuels as a primary energy source for heating.
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Alberta's Heritage Savings Trust Fund
The Alberta Heritage Savings Trust Fund (HSTF) is a sovereign wealth fund established in 1976 by the Government of Alberta under Premier Peter Lougheed. The fund was created with three objectives: to save for the future, to strengthen or diversify the economy, and to improve the quality of life of Albertans.
The Heritage Savings Trust Fund used oil revenues to invest for the long term in areas such as healthcare, education, and research. This ensured that the development of non-renewable resources would benefit Alberta in the long term. The fund has been a source of criticism for Alberta governments as its value has failed to grow at the pace of provincial non-renewable natural resource revenues. Between 1980 and 2014, these revenues totalled almost $190 billion, while the value of the Heritage Fund in 2014 was only $17.3 billion.
The strategy and goals of the fund have changed through successive provincial governments, moving from direct investments in Alberta to a diversified approach that includes stocks, bonds, real estate, and other ventures. The Alberta government has developed an ambitious plan to grow the fund to at least $250 billion by 2050 to secure long-term growth and financial stability for the province.
In June 2024, Alberta's premier, Danielle Smith, stated her intention to use investment income from the Alberta Heritage Savings Trust Fund to support oilpatch investment ideas that cannot obtain financing from traditional lenders. Smith's plan has been criticised as a strange approach to reducing Alberta's reliance on the volatile fossil fuel industry.
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Frequently asked questions
United Airlines has recently invested in Twelve, a California-based company that makes Power-to-Liquid (PtL) fuels. This investment is part of United's Sustainable Flight Fund, which aims to reduce aviation emissions by 90% by 2050. Therefore, United is actively investing in sustainable alternatives to fossil fuels.
The Heritage Foundation has launched an "ESG Hurts" campaign, which aims to expose the dangers of the Environmental, Social, and Governance movement. They believe that ESG policies will hurt retirees and small businesses and result in job losses for oil and gas workers. The foundation is committed to protecting state pensions, investments, and contracts from ESG policies.
Alberta's Heritage Fund, also known as the Alberta Heritage Savings Trust Fund, has been criticized for investing in the fossil fuel industry. Danielle Smith, Alberta's premier, has expressed intentions to use the fund to support oilpatch investment ideas that conventional lenders reject. However, the purpose of the Heritage Fund should be to reduce the province's reliance on the fossil fuel industry.
