Ontario Pension Fund Invests in Abu Dhabi Pipeline Megaproject, Puts Teachers’ Retirement Savings at Risk

Thousands of working and retired teachers may soon have to worry about the safety of their retirement savings, after the Ontario Teachers’ Pension Plan (OTPP) announced it was investing in a fossil gas pipeline network under development by the state-owned Abu Dhabi National Oil Company, expected to be the world’s largest fossil fuel infrastructure transaction this year.

“I am appalled that the OTPP is investing my retirement savings in fossil gas pipelines,” said Marathon, Ontario grade 8 teacher Teri Burgess, in a release issued yesterday by Toronto-based Shift Action. “This is a risky financial move. It’s also morally egregious that the pension savings from my teacher’s salary are being used to lock in carbon pollution and extreme weather that may harm the young people I educate and support.”

But OTPP was apparently unbowed by the criticism. “This strategic transaction is attractive to Ontario Teachers’ as it provides us with a stake in a high-quality infrastructure asset with stable, long-term cash flows, which will help us deliver on our pension promise,” said Chief Investment Officer Ziad Hindo.

Shift says the pension plan is taking a stake in a $10.1-billion investment that represents a 49% share of the pipeline  network. The decision “exposes the pension savings of thousands of Ontario teachers to climate-related financial risk,” the organization states. “It undermines global action to address the climate crisis by locking in polluting infrastructure for decades to come. And it contradicts the OTPP’s own commitments to align its portfolio with a safe climate.”

And it’s a risky investment, with fossils facing a short-term drop in demand during the COVID-19 pandemic and “terminal decline as a result of a global energy transition in response to the climate crisis” over the longer haul. “Stabilizing global temperatures at safe levels requires gas extraction and combustion to be wound down rapidly, along with coal and oil,” Shift notes. So “investments like the OTPP’s in fossil fuel infrastructure are betting the hard-earned retirement savings of thousands of Ontario teachers against the long-term safety of our climate.”

The Globe and Mail identifies Toronto-based Brookfield Asset Management, New York-based Global Infrastructure Partners (GIP), and investors from Singapore, South Korea, and Italy as financial partners alongside OTPP. “Neither Brookfield nor Teachers’ disclosed the size or details of their investments, and both declined to comment on the transaction,” the paper states. But a news release from Italian energy company Snam S.p.A. “says GIP is taking a large lead order and the remaining investment is split evenly among the other five consortium participants.”

The deal will give the Abu Dhabi state fossil “a 20-year lease on 38 natural gas pipelines totalling 982 kilometres,” the Globe adds. “It will generate revenue transporting gas from rigs and refineries across the energy-rich UAE to export terminals,” with payments based on the volume of gas the system carries. But “the deal comes at a moment of uncertainty in global energy markets, with oil and gas prices pummelled by a quarantine-induced demand shock as well as a price war between Saudi Arabia and Russia,” the paper states. Both Brookfield and Teachers, however, said they see the investment as a long-term play.”

Shift says Ontario Teachers’ “has made only modest progress in aligning its portfolio with a safe climate, and it continues to invest in climate breakdown.” Get the details here.