No more coal investments for Export Development Canada, new policy says

OTTAWA — Canada's export-development bank is getting entirely out of the coal game but will continue to fund the oil-and-gas sector as the world transitions towards cleaner sources of energy.

Export Development Canada's new climate-change policy means the agency that helps Canadian companies with capital to expand their businesses internationally will no longer provide any funding for anything to do with thermal coal, such as supplying equipment to coal-fired power plants or coal mines.

Thermal coal is the type burned to create electricity and is distinct from metallurgical coal, used to make steel.

The agency reduced its support for thermal-coal projects in 2017 following advice from the Organization for Economic Co-operation and Development but continued to fund certain projects in developing countries, arguing that sometimes coal was the cheapest and most efficient means of producing electricity in countries that desperately needed it.

That all changed Monday, after a regular review of the policy completed last year.

"Coal is one of the biggest carbon emitters with regards to climate change and we wanted to embed our current policy and take it a step further," said Robert Fosco, vice-president of corporate sustainability and responsibility for EDC.

The change aligns the EDC's policy with the federal government's objective of ending the use of coal for electricity in Canada. That includes phasing out domestic coal plants by 2030 and partnering with the United Kingdom to convince the entire world to get off coal by the middle of the century.

Export Development Canada hasn't had many requests for coal-related investments in the last two years, Fosco said.

German-based Urgewald, which tracks coal plants, reported in 2018 there are still 1,380 new coal plants planned or already in development in 59 countries with China, India and Japan among the main countries backing them.

Dale Marshall, national program manager at Environmental Defence, said the coal policy is an example set for the rest of the world to follow. But he said EDC's refusal to eliminate oil and gas investments from its portfolio is disappointing.

"That continues to be where climate policy and climate initiatives in Canada fail," he said. "It's by not considering the oil-and-gas sector as a major emitter and continuing the status quo in a world that needs to fundamentally change."

He said the EDC should follow the World Bank and get out of oil and gas investments after this year. He said the transition away from fossil fuels will take 20 to 30 years but every investment made in the sector rather than clean technology and renewable energy will delay that needed transition even longer.

"It's not a climate policy if they are going to continue to invest in carbon-intensive sectors," he said.

The EDC policy says oil and gas accounted for 20 per cent of all Canadian exports in 2017 and 10 per cent of the exports and international investments to which EDC contributes. The policy says while the transition to a lower-carbon economy is underway, "responsible and efficient fossil-fuel use will continue to be part of this transition."

Fosco said the export agency will look for investments in the oil-and-gas sector for technologies that reduce emissions.

Over the next year the agency is working on developing a full assessment of the carbon emissions coming from its investments and will set targets in 2020 to reduce the carbon intensity of its entire portfolio.

In November, a report by lobby group Oil Change International found between 2012 and 2017 EDC provided $62 billion in financial backing to oil and gas companies, more than 12 times the $5 billion offered to the clean-tech sector.

The report recommended EDC get out of financing oil and gas entirely by 2020.

Mia Rabson, The Canadian Press