The debate is raging: would Canadian oil sands exploitation be economically viable under a sustained low oil price and carbon pricing scenario? Irrespective of which side of the debate one is on, these are momentous and frightening times for anyone invested in oil sands projects. Some of the world’s largest pension funds have already decided that high-cost, high-carbon oil sands and coal represent too great a risk to members’ retirement savings and should not be in their investment portfolios. The risks associated with low oil prices, increasing competition from renewable energy, and government action on carbon pricing mean that inefficient fossil fuels are no longer a good investment for forward-thinking pension managers and their members.

Globally, Goldman Sachs identifies more than 60 new projects that are uneconomic at an oil price of US$70/barrel, and this includes tens of billions of dollars earmarked for investment in Canadian oil sands. For Canadian pension funds, which are heavily invested across the Canadian energy sector, it is time to re-evaluate their approach to the investment risks associated with high-cost oil and gas projects. Investors like Mark Wiseman at the Canada Pension Plan, or Scotiabank CEO Brian Porter, who both believe that expanding oil sands are a safe long-term bet, should re-consider the new energy and climate policy realities before gambling away savers’ money.

Rather than encouraging fossil fuel companies to invest shareholder money in ever-more expensive projects – oil sands, Arctic drilling and deep offshore – it is time for pensions to demand that companies return this money to shareholders in the form of higher current dividends or share buybacks, recognising that some of the world’s more inefficient fossil fuels will likely never be extracted at a profit.