Key Takeaways
- • Four Canadian pension funds, CPP Investment Board, OMERS, IMCO and PSP Investments, are joining Blackstone funds to acquire a 49.9 per cent non-controlling stake in the Mitsubishi subsidiary holding LNG Canada, valued at US$3.1 billion (C$4.3 billion).
- • The Canadian funds collectively manage over $1.4 trillion in assets, with the broader Maple 8 group at C$2.7 trillion, and the investment finances part of the C$33 billion Phase 2 expansion of the Kitimat, BC facility.
- • Climate and pension watchdogs Stand.earth and Shift Action call the investment indefensible, arguing it exposes members' savings to pollution, operational problems and a projected global gas glut.
- • CPP Investment Board's Geoffrey Souter defends the deal as a high-quality, globally strategic asset with strong long-term fundamentals and attractive return potential.
- • The expansion would double LNG Canada's capacity to 28 mtpa and account for more than a quarter of Ottawa's goal of 100 million tonnes annually by 2040.
Summary
Four of Canada's largest pension plans, the Canada Pension Plan Investment Board (CPP Investment Board), Ontario Municipal Employees Retirement System (OMERS), Investment Management Corporation of Ontario (IMCO) and Public Sector Pension Investment Board (PSP Investments), are joining Blackstone funds in acquiring a 49.9 per cent non-controlling interest in the Mitsubishi Corp. subsidiary that invests in LNG Canada. The stake is valued at US$3.1 billion (C$4.3 billion), according to the source article. Mitsubishi retains control and its original gas purchase volumes for Japanese customers.
The investment supports the C$33 billion Phase 2 expansion of the Kitimat, BC export terminal, which shipped its first cargoes last year. The project is operated by Shell alongside PetroChina, Petronas, Mitsubishi and KOGAS, and the expansion aims to double capacity to 28 million tonnes per annum, with commercial operations targeted for the early 2030s. The expanded facility, fed by TC Energy's 670-kilometre Coastal GasLink pipeline, would account for more than a quarter of Ottawa's ambition to reach 100 million tonnes of annual LNG export capacity by 2040.
CPP Investment Board's Geoffrey Souter, head of real assets credit, defended the investment, calling LNG Canada a high-quality, globally strategic asset with strong long-term fundamentals and attractive return potential. He described it as a compelling opportunity to invest at scale in Canada alongside Mitsubishi, Blackstone and Canadian peers.
Stand.earth and Shift Action criticized the move. Stand.earth's climate finance director Richard Brooks said that using workers' money to subsidize a majority foreign-owned, malfunctioning and polluting project was irresponsible, and that private sector investors should bear stranded asset risk. Shift Action director Adam Scott said the decision breached mandated capital risk thresholds and taxpayer trust. Critics cited the terminal running below half capacity in Phase 1 and significant methane burn-off. Chief Na'Moks of the Wet'suwet'en First Nation said the funds were disregarding Indigenous rights and local opposition.
The Institute for Energy Economics and Financial Analysis (IEEFA) has flagged cost and demand risks for Phase 2, and the International Institute for Sustainable Development (IISD) estimates Phase 1 adds 2.1 megatonnes of CO2 equivalent annually, with total emissions set to double after expansion.
The investment supports the C$33 billion Phase 2 expansion of the Kitimat, BC export terminal, which shipped its first cargoes last year. The project is operated by Shell alongside PetroChina, Petronas, Mitsubishi and KOGAS, and the expansion aims to double capacity to 28 million tonnes per annum, with commercial operations targeted for the early 2030s. The expanded facility, fed by TC Energy's 670-kilometre Coastal GasLink pipeline, would account for more than a quarter of Ottawa's ambition to reach 100 million tonnes of annual LNG export capacity by 2040.
CPP Investment Board's Geoffrey Souter, head of real assets credit, defended the investment, calling LNG Canada a high-quality, globally strategic asset with strong long-term fundamentals and attractive return potential. He described it as a compelling opportunity to invest at scale in Canada alongside Mitsubishi, Blackstone and Canadian peers.
Stand.earth and Shift Action criticized the move. Stand.earth's climate finance director Richard Brooks said that using workers' money to subsidize a majority foreign-owned, malfunctioning and polluting project was irresponsible, and that private sector investors should bear stranded asset risk. Shift Action director Adam Scott said the decision breached mandated capital risk thresholds and taxpayer trust. Critics cited the terminal running below half capacity in Phase 1 and significant methane burn-off. Chief Na'Moks of the Wet'suwet'en First Nation said the funds were disregarding Indigenous rights and local opposition.
The Institute for Energy Economics and Financial Analysis (IEEFA) has flagged cost and demand risks for Phase 2, and the International Institute for Sustainable Development (IISD) estimates Phase 1 adds 2.1 megatonnes of CO2 equivalent annually, with total emissions set to double after expansion.
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