
Scramble the Alberta government’s “energy war room,” another European financial company is “attacking” the provincial oil industry! Zurich Insurance Group announced Tuesday it will no longer finance oil sands production or pipelines and rail transport that carry bitumen. The move is similar to HSBC’s policy change of a year ago that now Premier Jason Kenney promised to counter by boycotting the British banking giant.

Zurich is the 23rd largest insurance company in the world with $41.1 billion of net premiums written, according to Insurance Business Canada. The Switzerland-based company said in a release that it has signed up “as the first insurer to the Business Ambition for 1.5°C Pledge aimed at limiting average global temperature increases to 1.5°C above pre-industrial levels by 2030.”
“As one of the world’s leading insurers we see first-hand the devastation natural disasters inflict on people and communities,” said CEO Mario Greco. “This is why we are accelerating action to reduce climate risks by driving changes in how companies and people behave and support those most impacted. It is simply the right thing to do.”
Zurich says it will no longer underwrite or invest in companies that “generate at least 30% of their revenue directly from the extraction of oil from oil sands” or operate pipelines and railway transport that ships oil sands products.
For an insurer like Zurich, the move is intended to better manage risk from climate change and extreme weather. For a bank like HSBC, the new approach is designed to manage “carbon risk,” the likelihood that the transition from fossil fuels to electricity generated by low-carbon technology like wind and solar power will erode demand, destroy business models, and result in stranded assets and huge losses for investors.
In other words, a perfectly rational response to changing market and business conditions.
Alberta’s response? Not so rational.
“Alberta has elected a government that will stand up to the campaign of slander and defamation against our energy,” Kenney tweeted after winning the April 16 Alberta election. “We will defend ourselves against hypocrites. If HSBC wants to boycott Alberta, Alberta will boycott HSBC!”
Tim McMillan, CEO of the Canadian Association of Petroleum Producers (CAPP), wrote in a 2018 op-ed that HSBC was “effectively joining forces with countries like Russia, Saudi Arabia and Iran, producers of oil that operate in areas with lower regulatory standards, more concerned with weathering economic sanctions than developing energy responsibly.”
Even an oil sands CEO like Suncor’s Steve Williams, usually a progressive voice favouring carbon pricing and other climate policies, harshly criticized HSBC and pulled his company’s business from the bank.
The responses from Kenney, McMillan, and Williams are irrational because HSBC and Zurich represent the future Alberta oil and gas companies increasingly must navigate to secure the capital they need for a capital-intensive industry.
How should they have responded? Former environment and climate change deputy minister Eric Denhoff explained in an Energi Media op-ed how the Notley government handled the issue.

Denhoff led an Alberta delegation to New York, where they met with a major investment house. The Wall St. financiers were anxious about investing in the oil sands because of an aggressive lobby by their own shareholders to stop supporting the “tar sands.” The Albertans laid out the Climate Leadership Plan – carbon pricing for large industrial emitters, for instance – and explained how the provincial government and industry were managing carbon risk.
Denhoff recalls the investment bankers saying, “this is a fantastic story, nobody knows about this, you have to get out there and tell the story.”
The lesson from that meeting – and others Denhoff says the group attended during its trip – is that the Alberta oil and gas sector’s access capital will be increasingly tied to a convincing narrative around climate policy and carbon risk strategies.
The Climate Leadership Plan is such a narrative. The Kenney government’s climate and energy policies are not.
The UCP has already axed the province-wide carbon tax and plans to replace the highly regarded Carbon Competitive Incentive Regulation with a watered down large emitters scheme called the Technology Innovation and Emissions Reductions (TIER) that will be far less effective, according to energy economist Andrew Leach.
The CCIR was an important part of the oil sands producers’ decarbonization narrative and replacing it with an inferior program may hinder raising capital in the future.

Government isn’t the only culprit in this scenario. CAPP’s climate policy studies and public statements have become increasing muddled and incoherent over the past two years. Industry’s biggest lobby has never explicitly endorsed carbon pricing and insists Canada and Alberta should not get ahead of their biggest competitors, which is code for Donald Trump’s United States.
Royal Dutch Shell called CAPP on this nonsense when it included the Canadian lobby group on its list of international trade associations that were not “aligned” with the super-major’s energy transition and climate policy standards.
This much has become abundantly clear: industry-leading energy companies, banks, insurers, and investors are pivoting toward the rapidly approaching low-carbon future and Kenney, McMillan, and the Alberta old guard are headed in the opposite direction.
The magnitude of Alberta’s mistake is abundantly clear to those paying attention to global energy trends. Soon enough, the trickle of financial institutions penalizing high-carbon oil production and its related infrastructure will turn into a tsunami.
When that happens, there is no amount of money Kenney can spend on his energy war room to save Alberta from the consequences of its foolishness.
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