Alberta Politics
Professor Bill Carroll of the University of Victoria, co-director of the Corporate Mapping Project (Photo: David J. Climenhaga).

Highly concentrated ownership of Canadian fossil fuel sector leaves little incentive for change, study indicates

Posted on October 18, 2018, 9:01 am
6 mins

Highly concentrated corporate ownership of Canada’s energy sector and lack of government influence means there’s very little incentive for the fossil fuel industry to pay attention to the dangers of global climate change or worry about the communities and workers that depend on it.

That’s the tough message behind a new study – Who Owns Canada’s Fossil Fuel Sector? Mapping the network of ownership and control – released this morning by the Corporate Mapping Project, a six-year research initiative jointly run by the University of Victoria, the B.C. and Saskatchewan branches of the Canadian Centre for Policy Alternatives, and the University of Alberta’s Parkland Institute.

Study co-author Jouke Huijzer of Vrije University in Brussels (Photo: CCPA).

Major investors in the Canadian fossil fuel industry have sunk so much money in fossil fuel extraction their natural inclination is to ensure business continues as usual as long as possible instead of addressing the serious climate issues facing the planet or offer any confidence decisions made in the Canadian oilpatch will be made in the public interest, the study reveals.

“Ownership is too centralized,” said University of Victoria sociology professor Bill Carroll, co-author of the study and a director of the Corporate Mapping Project, in an interview. Industry decision makers, he said, “are really leaning toward maximization of their long-term investments. They want to get the full value out of their major corporate investments.”

That explains why there has been so much corporate pressure to complete the now-public-owned Trans Mountain Pipeline Expansion Project and build other pipelines, he said, despite questionable economic cases for the investment.

That’s understandable from the industry’s perspective, Dr. Carroll added, but it is an incentive to continue expanding their operations and continuing their emphasis on fossil fuels as long as possible regardless of the damage to the planet’s environment.

In the Corporate Mapping Project news release published this morning, Dr. Carroll summarized the study’s findings as showing “substantial ownership and strategic control of Canada’s fossil fuel industries are in the hands of a few major players, including all the Canadian big banks and several U.S. investment funds, governments, and some wealthy families.”

Many of those investors, the study also shows, are located outside Canada. “These entities have both an interest in the sector’s continued growth and the economic power to shape its future,” he said in the news release.

This reality is relevant to both the response to climate change and the question of democracy in Canada, where so much power is concentrated in one area, argued Dr. Carroll, who worked on the study with Jouke Huijzer of Vrije University in Brussels.

The study analyzed shareholder and revenue data from recent years to map the true ownership picture of the Canadian energy industry. The researchers found that the top 25 owners accounted for more than 40 per cent of total Canadian fossil fuel industry revenues from 2010 to 2015, the news release said. The top two investors were Exxon Mobil Corp. and the Royal Bank of Canada, the study found.

Among the other findings summarized in the report:

  • Canadian-based fossil fuel companies majority owned by foreign corporations accounted for the largest share of the sector’s revenues between 2010 and 2015, 16 per cent
  • Asset managers and investment funds accounted for about 15 per cent
  • Banks and life insurers had about 123 per cent, with the Big Five Canadian chartered banks consistently among the largest investors
  • Wealthy families such as the Desmarais clan, Alberta’s Southerns and Li K-Shing of Hong Kong controlled 8.5 per cent
  • Foreign governments and corporate entities they own accounted for 3 per cent
  • Canadian governments held 2 per cent

The study also highlights the significance of interlocking directorships in controlling the industry, placing groups of investors in a position to exert control as a “constellation of interests.”

The study also found that increasing Canadian control of the country’s energy sector has made little difference to the way the industry functions, including its reluctance to invest in sustainable alternatives to fossil fuels.

Obviously, whether the owners are Canadians or foreigners, it’s a risky strategy to count on a small group of private investors whose interests do not align with those of the pubic to make the right investments regarding transition from fossil fuel-based energy generation to renewable resources.

That makes it extremely difficult to plan for the energy future in a rational way. As Dr. Carroll observed, “we can’t sunset the industry and ramp up renewables under this structure.”

Formally known as Mapping the Power of the Carbon-Extractive Corporate Resource Sector, the Corporate Mapping Project is financed by a $2.5-million partnership grant awarded by the Social Sciences and Humanities Research Council of Canada, plus $2 million in matching funds from partner organizations. SSHRC Partnership Grants support formal partnerships between universities and others to improve understanding of critical issues facing Canadians.

6 Comments to: Highly concentrated ownership of Canadian fossil fuel sector leaves little incentive for change, study indicates

  1. Geoffrey Pounder

    October 18th, 2018

    “Lack of govt influence?”
    Canadians now own a pipeline.

    Provincial and federal govts spends tens of millions of dollars on industry advertising to sway public opinion, at home and abroad, in favor of the oilsands industry.
    Politicians, top bureaucrats, oil execs, lobbyists, public relations managers, and speech writers walk back and forth through a revolving door.
    AB’s NDP Govt has been throwing billions of dollars in subsidies at the oil & gas industry. Notley spurned the opportunity to raise royalties and give Albertans their “fair share”.
    Govt failure to put the full price on pollution allow producers and consumers to externalize environmental and health costs. A massive invisible subsidy. Leading to the greatest market failure in history: climate change.
    All in the name of propping up an industry that would otherwise be on life support.
    Rachel Notley, John Horgan, and Justin Trudeau are just the latest in a long line of politicians who grease the wheels of the petro-state juggernaut.
    Progressives who vote for pseudo-progressive parties enable the enablers.

    Lack of influence?
    The lines between govt and the oil industry are hopelessly blurred. It is impossible to tell where one ends and the other starts.

    Typo Alert: “Banks and life insurers had about 123 per cent”
    12%.

    Reply
    • Scotty on Denman

      October 18th, 2018

      I think progressives who voted for Horgan, Notley and Trudeau are sorry they did, precisely for the reason you suggest. I know in BC, where the primary effort last election was to disconnect the BC Liberals from the public enterprise they’d so badly corrupted with cronyism and breaches of public trust—a task just barely done, and only with the help of the ascendant Greens, many, many Dippers like me have been sorely disappointed; many federal Liberal supporters in BC—many of whom were new voters—are also disappointed, including most First Nations which thought they had some love happening with JT (that’s substantially soured by now).

      I’ve spent the last several elections asking Greens to refrain from splitting the vote and perversely electing parties antithetical to their professed environmental ethos. I was never anti-Green—I’m just an old Dipper dog who has a hard time learning new tricks.

      Nevertheless, I find myself asking, more and more these last couple of years, why I’m supporting what I thought was a fairly decent Dipper environmental platform—that looks dubious to me now. It’s impossible to dismiss the Greens anymore: I betcha they’ll keep ascending—regardless electoral system (yes, we’re doing another referendum in BC…)— and, if they keep their ethos and integrity, they’ll benefit both from the usual overt environmentalists and the political wildebeests I see wandering about as the politcal right keeps tacking further toward the rapturous horizon (I’m not counting on them sailing off the edge of the earth, though, as much as I’d like them to).

      Why do I waver? I’m an old dog, like I said, but I also see the Greens showing signs of compromise with the forces of petro-evil, too. Perhaps these are tactics in a longer strategy to gain numerical legitimacy but, excuse me, the BC Greens have sat on their balance of power whilst the Dipper minority ramps up LNG (only with a bit more feasibility than Christy Clark)—not that LNG bothers me that much, nor even shipping dilbit to China (so long’s it’s through Prince Rupert, not inside waters). It’s just that I’m afraid the Greens will start looking more blue in their quest for legitimacy. I’ve never regarded them as socialists, but they do—and, I think, will—attract socialist voters on environmental principles alone.

      We get scolded for driving gas guzzlers, we’ve heard all about solar, wind, electric cars and geothermal, but they come off as sops if the deeper aspects of our rubber-tired-petro-fueled metastructure are allowed to fester as normal. I dare say, even old fashioned Tories are likely to be shocked at the real extent that Big Bitumen (Big Pharma, Big Big, et cetera) plays our governments, even if only for sovereignty principles.

      I think the Greens are on the cusp of bigger things; soon they’ll have to decide whether they want to appear grasping or a different party voters seem to be looking for. Otherwise the status quo will probably be cowed into doing things like countervailing cheap, Asian-made electric car imports. (Ford Motor Company is probably prescient in discontinuing its passenger vehicle production, realizing it won’t be able to compete with cheap electric cars from China—but it stuck with trucks, none electric.)

      Meanwhile, plenty of Dippers are ready to bolt after devoting years to advancing their party—only to be disappointed when they finally do achieve government (the NDP’s perceived flip-flop on the Site-C dam is a big one in BC). I’m not sure the BC Greens wouldn’t do just as well with FPtP as with pro-rep because of this reality: imagine the tables turned with the BC NDP holding the balance of power in a Green minority government. I don’t discount anything politcal anymore.

      Reply
  2. Geoffrey Pounder

    October 18th, 2018

    Nobel-Prize winning economist Paul Krugman on “predatory delay”:

    “Earth, Wind and Liars”
    “In the long run, these tactics probably won’t stop the transition to renewable energy, and even the villains of this story probably realize that. Their goal is, instead, to slow things down, so they can extract as much profit as possible from their existing investments.
    “… Every year that we delay the clean-energy transition will sicken or kill thousands while increasing the risk of climate catastrophe.
    “The point is that Trump and company aren’t just trying to move us backward on social issues; they’re also trying to block technological progress. And the price of their obstructionism will be high.”
    http://www.nytimes.com/2018/04/16/opinion/trump-energy-environment.html

    Reply
  3. Political Ranger

    October 18th, 2018

    Used to be that we had a social contract; businesses would run business, for their benefit and people would elect governments to manage their interests. Seems so quaint and idealistic now. But if everybody is working on behalf of corporations how does the concern of a person or a community get a hearing.

    I’m not sure I want businesses to do anything else but “are really leaning toward maximization of their long-term investments. They want to get the full value out of their major corporate investments.” This is fundamental to capitalism; this is how we get modern medicine, the cornucopia of technical gadgetry today, fresh food year round.

    Our governments, on the other hand, are really letting us down. It’s a mistake to think that corporations are going to become socially responsible. It’s a bigger mistake to allow governments to sell off our common heritage and resources.

    Reply
    • Scotty on Denman

      October 19th, 2018

      Adam Smith’s Weath of Nations, the ‘capitalists’ Bible’, concludes on the final page (which is easily torn out without being much missed) that the state must intervene in market capitalism’s excesses for its own, sovereign sake.

      What we got going here, now, is instead the Neo-right movement (neo-liberalism that usurped nominal conservative parties in the post-Soviet era) which seeks to diminish sovereign, democratic governments so they cannot do what Smith concluded they should. The Neo-rightists must have torn out the back page so Gecko could make his infamous decree: “Greed is good.”

      Thence the anti-sovereignty juggernaut has instructed proxy governments to cut taxes to below maintenance levels, to bankrupt, then privatize (sell to crony insiders for pennies on the dollar) public enterprises, smash public sector unions and undermine national sovereignty by way of investor-protection ‘trade deals’ in the name of stateless corporatism, or ‘globalization.’ In the process (which is advanced but incomplete as the discredited Neo-right begins to gutter in the abject poverty and environmental degradation it has abetted these past 40 years), many of what should be regarded as massive breaches of public trust have been perpetrated with impunity. Cronyism and blatant conflicts-of-interest are ubiquitous as what used to be Third World scourges increasingly inflict First World nations like Canada.

      This impunity has to stop.

      As Adam Smith would have agreed, destroying sovereign democracy simply to increase private profitability should not happen, not even within the rubric of the Invisible Hand of the Market.

      Reply

Leave a Reply

  • (not be published)