PRESS RELEASE: Security regulator agrees to review Greenpeace’s request to halt Kinder Morgan share offering

Press release - May 18, 2017
18 May 2017 (TORONTO) — Greenpeace Canada has made a formal request to security regulators to halt Kinder Morgan’s effort to raise money for the Trans Mountain Expansion pipeline until the company adequately discloses climate change-related risks to potential investors.

18 May 2017 (TORONTO) — Greenpeace Canada has made a formal request to security regulators to halt Kinder Morgan’s effort to raise money for the Trans Mountain Expansion pipeline until the company adequately discloses climate change-related risks to potential investors.

The Alberta Securities Commission, which is leading the review of the prospectus for the initial public offering (IPO) for Kinder Morgan Canada on behalf of all 13 provincial and territorial regulators, has agreed to consider Greenpeace’s challenge. The submission has also been sent to the Ontario Securities Commission and Canadian Securities Association.

“Kinder Morgan’s business plan only works if the world fails to act on climate change,” said Keith Stewart, Senior Energy Strategist for Greenpeace Canada. “They may think that’s a good bet, but they should be honest with potential investors about the risks being taken with their money.”

Failure to disclose climate-related risks could leave Kinder Morgan more vulnerable to a class-action lawsuit by shareholders if the promised oil demand doesn’t materialize.

Greenpeace’s 11-page submission argues that the prospectus’ analysis of climate policy risks is incomplete. Kinder Morgan relies only on the International Energy Agency (IEA) forecast (the New Policies Scenario) where oil demand continues to grow because policy makers don’t adopt more aggressive climate policies in the future. Yet, the company ignores the IEA scenarios that forecast decreased oil demand if governments do take actions that would bring them closer to achieving the Paris climate agreement goal of keeping warming well below 2 degrees Celsius.

The submission builds on the work of the Financial Stability Board’s Task Force on Climate-related Financial Disclosure, established by Mark Carney and led by Michael Bloomberg. The Task Force recommends that corporate financial disclosures be required to include an assessment of how their business strategy fares in the 2 degrees Celsius scenario. Canada’s security regulators announced a review of the Task Force’s recommendations in March 2017.

Disclosing climate-related risks is intended to protect the broader economy against what Carney has called “transition risks,” which are the financial risks resulting from the transition towards a lower-carbon economy. As climate-related costs and opportunities become more apparent, changes in policy, technology and physical risks will prompt a value reassessment of a large range of assets, including fossil fuels reserves and infrastructure.

Greenpeace’s submission further argues that Kinder Morgan uses overly-bullish forecasts for future oil demand growth in Asia in particular to justify the project; this assessment is based on data from Chinese and Indian energy forecasts. China wants alternative fuel vehicles to account for a fifth of the projected 35 million yearly vehicle sales by 2025, while India is considering the electrification of all vehicles by 2032. Given recent policy moves in these two markets to boost electric vehicles, the IEA is planning to revise its estimates for oil demand downward for what were once seen as rapidly growing oil markets.

“Canadian oil lobbyists have been saying we need this pipeline to get oil to India and China, but those countries are now taking aggressive measures to reduce oil consumption,” said Stewart. “We are confident that once investors see the whole picture, they’ll recognize this pipeline as a white elephant that has no place in the new energy economy.”

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For more information:

 Jesse Firempong, Communications Officer, 778-996-6549,