Tar Sands: Environmental Destruction, Soaring Carbon Emissions, Trashing the Planet

8/9/2019 Tar Sands: Environmental Destruction, Soaring Carbon Emissions, Trashing the Planet

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Cashing in on Tar Sands:RBS, UK banks and Canadas blood oil


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Acknowledgements

Report contributors: Mel Evans, Catherine Howarth, Aneaka Kellay, Billy

Joe Laboucan, Mike Mercredi, Mika Minio-Paluello, Hannah Schling, Kevin

Smith, Clayton Thomas-Muller and Alex Wood.

This report has benefted rom the comments and eedback o : James

Marriott (PLATFORM), Ben Amunwa (PLATFORM), Adam Maanit (PLATFORM),

Ian Leggett (People & Planet), Adam Ramsay (People & Planet), Julian Oram

(World Development Movement), Kate Blagojevic (World Development

Movement), Darek Urbaniak (Friends o the Earth Europe), Steven Heywood

(Friends o the Earth Europe), Duncan Mclaren (Friends o the Earth Scotland),

Jess Worth (New Internationalist), Jeni McKay (Scottish Education and Action

or Development) and Brant Olson (Rainorest Action Network).

Design by Adam Maanit.

Cover photo by David Dodge, The Pembina Institute.

Country maps by Mandavi and Adam Maanit based on world map by

Vardion/Wikimedia Commons under a Creative Commons Attribution

ShareAlike 3.0 license.

Printed by Calverts Co-op using vegetable inks on 100% recycled paper.

To contact the report authors, email: [email protected]

Available online at: www.platformlondon.org/rbstarsands


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TAR SANDS


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Cashing in on Tar Sands:RBS, UK banks and Canadas blood oil

Contents

5 Part 1 - Executive Summary11 Part 2 - The impact o tar sands extraction18 Testimony 1 - Billy Joe Laboucan, Peace River Region Trap lines and tar sands21 Part 3 - UK banks fnancing Canadian tar sands extraction24 Testimony 2 - Mike Mercredi, Fort Chipewyan - Doing time in tar sands27 Part 4 - Case studies o tar sands-related companies33 Testimony 3 - Clayton Thomas-Muller Tar sands and treaty rights37 Part 5 - The Royal Bank o Scotland, public money and tar sands42 Campaign case study: Pension funds and shareholder revolts

47 Part 6 - Conclusions and recommendations

Tar sands in other parts of the world16 The Republic o Congo (Congo Brazzaville)32 Jordan45 Madagascar

50 Appendix 1: Table o Figures53 Appendix 2: RBS and its history o ossil uel fnance

55 Appendix 3: Equator Principles and Climate Principles - The banking sectors response to climate change58 Endnotes


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Petrol companies have been aware or a century o thevast quantities o oil rich bitumen lying beneath the borealorests o Alberta. But these tar sands1 lay relativelyuntouched during the second hal o the twentieth centurywhen oil was plentiully and readily available rom more

accessible sources. In those years, it was simply tooexpensive and uncompetitive to extract oil rom the tarsands. However as the oil sources available to Westernoil majors became scarcer, the relative commercialattractiveness o tar sands improved and signifcantinvestments in their extraction began.

Over the past decade there has been growing internationalopposition to the development o the tar sands o Alberta.

These extraction ventures dubbed the most destructiveproject on earth2 have become recognised as threateningto have a devastating impact on the global climate. Theunprecedented scale o the projects and the intensity otheir energy usage means that they constitute an industrialtipping point, a step change rom one orm o hydrocarbon conventional oil into a ar more carbon intense orm unconventional oil.3

Canada is the international oil industrys test site i itbecomes acceptable to fnance the tar sands o Alberta, thenthe global fnance sector will have normalised a disastrouslyhigh-carbon development path. It is or this reason that theCanadian tar sands have become a rontline in the struggle

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against the destruction o the climate though the extractiono hydrocarbons.

All new ossil uel inrastructure is extremely capital-intensive to construct and tar sands are even more costly

due to the extra processing required to produce the oil,the pipelines to bring in gas to heat the tar sands andso on. Estimates rom industry analysts or the capitalinvestment needed over the next 20 years to expand tarsands production in the Alberta region range rom $120-220billion.4 Outside o North America, London is home to thehighest concentration o fnancial institutions investing in tarsands extraction.5

This report summarises some o the main problemswitnessed with tar sands extraction in Canada. It presentsevidence about the impacts o tar sands extraction on localpeoples health, land rights and livelihoods, as well as onthe environment. It documents which UK banks are involvedin providing fnancial backing or tar sands, how muchmoney they are providing, and to which oil companies. Itfnds that:

The three main high street banks in the UK(Barclays, HSBC and the Royal Bank o Scotland)are all involved in providing signifcant sums oproject or corporate fnance or oil extraction romCanadian tar sands.

In the three year time rame examined between2007-2009, the Royal Bank o Scotland (RBS) hasled underwriting or the largest amount in loans tocompanies operating in tar sands in Canada, to atotal o more than $7.5 billion.

Since the initial recapitalisation o UK banks tookplace in October 2008, RBS has underwrittencorporate debt and equity worth nearly $2.5 billionwith tar sands related companies.

In the same period Barclays Bank has led the mostcorporate debt and equity to tar sands-relatedcompanies, more than $14 billion.

Out o the many tar sands related companies that have

received fnance rom these banks, three are examinedas case studies to give a snapshot as to the nature o thecompanies, how they conduct their business in obtaining tarsands and the public controversies they have been involvedin.

The particular role o RBS in fnancing tar sands is urtherexamined in the context o its well known position as the UKbank most heavily associated with fnancing all ossil uelsectors, and that with 84% o RBS now owned by the UKtaxpayer there is an extra dimension o public accountabilityin how the bank invests.

All o the major banks in the UK have responded to public


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concern about climate change to some extent, throughpublic statements or through the involvement in varioussets o voluntary principles. An examination o several othese industry-led eorts like the Equator Principles, showsthat the reality o the investment decisions stand in stark

contrast to the rhetoric o the various initiatives.

While tar sands extraction has become synonymouswith Canada in the minds o most people, geologists andengineers have been able to identiy and evaluate majordeposits o unconventional oil in many other parts othe world. Although many o these deposits have beenpreviously identifed, the cost o extracting them has beenconsidered prohibitive. But as investment in technology in

Alberta brings down the price o producing synthetic crudeand as oil prices uctuate in higher ranges, companies arere-assessing the potential o operations in other countries.I extraction can be undertaken on the scale envisaged inAlberta then it opens the oodgates or unconventionaloil extraction around the world. Throughout the report,three o these countries Jordan, the Republic o Congo andMadagascar are examined in greater detail.

Tar sands developments in Canada have resulted in veryserious consequences or the local ecosystems andcommunities, despite the act that Canada is a county thathas a regulatory ramework that is relatively robust withregards to human rights and the environment. There is real

concern that extraction in many o those countries thatare not as regulated as Canada could result in even worseimpacts.

Indigenous communities in Alberta have been the most heavily

impacted by the tar sands boom. Three people rom some othose communities have written frst-hand accounts o howthey have seen the projects develop and how their communitieshave been aected, and these testimonies have been includedthroughout the report. In addition, an account has beenincluded o a UK-based campaign to support shareholderresolutions that have been tabled or the upcoming BP andShell Annual General Meetings, raising concerns about theinvolvement o the companies in tar sands.

Finally, the report makes a number o recommendationsto UK banks, the international banks that are signatoriesto the Equator Principles and to the UK Treasury, theinstitution that has the power to provide strategic directionto RBS through its majority shareholding in the bank. Theserecommendations are:

To the UK banking sector

Create a moratorium on providing fnance o anykind to companies that are actively engagedin extracting tar sands or any other orms ounconventional oil.


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Develop revised investment mandates drawing onexpertise and guidance rom independent sourcesand best practices in the fnancial sector to identiywhich activities, such as tar sands extraction,should not be unded in uture.

Make Free, Prior and Inormed Consent oIndigenous and/or local communities a condition oall orms o project fnance.

To the UK Treasury, the Chancellor of the Exchequer,Treasury Select Committee and Minister for Business,Innovation and Skills

Use the majority public ownership o RBS to

immediately impose lending standards on the bankto prevent the fnancing o companies that:o are engaging in the extraction o tar sands or

other orms o unconventional oil exploration,development or transport; and

o do not ask or the Free, Prior and InormedConsent o Indigenous and/or localcommunities.

Include enhanced standards or environmentaland human rights protection in the currentparliamentary discussion o the re-regulation o thebanking sector in the wake o the fnancial crisis.

Provide incentives or long-term, sustainablebehaviour by linking executive pay to the

companies long-term perormance and to thebanks environmental and social perormance.

To banks that are signatories to the Equator Principles

Include in the Principles the climate impact oproposed projects as an integral part o all riskassessments. Commit to a process o continuouslytightening the conditions or fnancing under thePrinciples, i required, to meet the challenges posedby an unolding climate crisis.

Include additional principles that categoricallyexclude the fnancing o all new projects involvingthe exploitation o tar sands and other orms o

unconventional oil. Commit to working with groups such as Carbon

Disclosure Project and BankTrack to developworkable instruments or measuring fnanced (orembedded) emissions, and adopt reduction targetsor each bank. Provide a stringent timeline or this.


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The impacts o tar sands extraction have been welldocumented in publications like Unconventional Oil Scraping the bottom of the barrel?6 by WWF and the Co-operative Bank, and Dirty Oil How the tar sands are fuellingthe global climate crisis by Greenpeace Canada.7 Such

detailed analysis o the various impacts o mining operationsis beyond the scope o this report, which does no more thanprovide a brie overview o the principal impacts.

Climate impacts

There is no dispute that the process o tar sands extractionis more emissions intensive than that o conventional oilsources, due to the extra energy involved in mining the tar

sands, or in the use o large amounts o natural gas in orderto super-heat the bituminous mass in the in situ process.

There is however disagreement as to the magnitude othe increased emissions intensity. The lower end o thespectrum o calculations (10-15% more emissions intensivethan conventional uels) made by the oil industry itsel andthe Albertan government have been challenged by Canadianclimate change academics.8 In contrast, the PembinaInstitute has calculated that 28.6 kg o CO

2is emitted in the

production o a conventional barrel o oil, while the averagebarrel o oil produced rom tar sands is responsible orpumping 85.5 kg o CO

2into the atmosphere, an increase o

just under 300%.9 These calculations do not include actors

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such as carbon released into the atmosphere throughdeorestation as a result o the mining process, or carbonleaked rom tailings ponds, so the reality is that the fgurewould be substantially higher.

Regardless o the magnitude o the increase in emissionsintensity, there still remains the sheer scale o the carbonemissions locked into the amount o tar sands in Canadathat could be extracted and burned. The province o Albertahas proven reserves o 174 billion barrels o oil, 10 whichmakes it second only to Saudi Arabia in terms o provenreserves.11 Scientists and many civil society organisationsaround the world have called or atmospheric carbon to bestabilised at below 350ppm12 in order to avoid the worst

impacts o runaway climate change.13 Current levels oatmospheric carbon are already at 387ppm and rising atabout 2ppm annually. It is estimated that the exploitationo Canadian tar sands and US tar shale reserves wouldresult in well to wheel14 emissions that would increaseatmospheric carbon in the region o 49 and 65ppm.15 Tarsands exploitation moves us even urther away rom thepossibility o stabilising at below 350ppm.

Other environmental impacts

The exacerbation o climate change is one the most seriousconsequences o tar sands extraction, but a number oother, more localised, environmental impacts have also been

documented. The extraction o bitumen and the production osyncrude are very water intensive, with each barrel requiringan estimated two to our barrels o water. The Athabasca Riverin Alberta is the primary source o water or the 539 million

How are tar sands extracted?

Tar sands are ound in the ground in the orm obitumen, which is solid at normal temperatures and

mixed in with sand, clay and water. The bitumen isound in two locations: when its closer to the suraceit is extracted using giant open pit mining techniques,and when its urther down, high pressure steaminjection (in situ) technology is required to remove it.

Open pit mining strips away the trees rom the toplayers o the earth to expose the bitumen beneathit. This process destroys the local environment and

ecosystems, leaving gaping open pit mines up to 75meters deep as scars on the landscape.

In situ mining, the technique needed to reach 80% othe bitumen, requires injecting the bitumen with high-pressure steam to separate the oil rom the sand so that itcan be piped to the surace. Heating the water to producethe steam requires large quantities o natural gas.


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cubic metres o water that mining operations are currentlylicensed to divert.16 With only 5-10% o this volume beingclean enough to return to the river, the Athabasca is alreadyshowing signs o acute ecosystem stress.17

As bitumen is extracted and separated rom unwantedmaterial, many production sites leave behind tailings, a mixo sand, water, silt, clay, hydrocarbons and toxic chemicalsthat cannot be discharged into the river and so are let toaccumulate in giant toxic lakes.18 In 2009, tailings lakescovered an area o 130km2 and contained 720 million cubiclitres o this toxic waste.19 Many o these tailings lakes aresituated next to the Athabasca River, and represent a potentialecological catastrophe should one o the walls be breached

and the toxic tailings be released into the downstreamecosystems. A report published in 2008 calculated that thetailings lakes are already leaking over 11 million litres a day ocontaminated water into the environment.20

Tar sands deposits are stretched over 138,000 squarekilometres o primary boreal orest in Canada. Hal o theworlds remaining boreal orest is ound in Canada, with11% o the global terrestrial carbon sequestered in its bogs,

peat, soil, and trees. Deorestation is not only occurring inthe large areas where tar sands are being strip-mined, it isalso creating large scars across the landscape where roads,pipelines and drills have been constructed.

Seismic exploration or tar sands also plays a huge role indeorestation. A report in 2003 showed that the clearing oboreal orest as a result o seismic exploration or all ossiluels in Canada was equal to that cleared by the orestryindustry itsel.21 Steam Assisted Gravity Drainage projects

(SAGD) do not require the same intensity o deorestation asstrip mining projects, but they still contribute to substantialorest loss and biodiversity impacts particularly throughthe ragmentation o orests.

From a conservation perspective, studies have shown thatcaribou populations, which require large areas o connectedorest to survive, have declined signifcantly in recentdecades, in part due to tar sands extraction.23 Another report

looking at the impact o tar sands on birdlie estimates thatthe habitat loss as a result o strip mining could result ina loss o 4.8 million and 36 million young birds over a 20-year period, whereas strip mining could harm as many as14.5 million breeding birds rom direct habitat loss and asmany as 76 million birds rom ragmentation and habitatdegradation over a 30 to 50 year period.24

Impacts on First Nation communities

Canadas First Nation communities are those that are bearingthe heaviest brunt o tar sands developments. Despite theact that a series o treaties were signed in the late 19thcentury covering Alberta and the surrounding area that


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guaranteed Indigenous Peoples the right to pursue theirusual vocations o hunting, trapping and fshing throughoutthe tract, many First Nation citizens have elt obliged tostop or reduce such activities or ear o toxic contaminationthrough tar sands extraction. There is increasing anecdotal

evidence o fsherolk fnding boils and lesions in fsh, andhunters fnding tumours in game.

Fort Chipewyan, which is located on the shore o LakeAthabasca and downstream rom numerous tar sands mines,has been described as ground zero or the devastationcaused by Albertas oil boom. A local doctor has raisedconcerns over alarmingly high rates o what should bevery rare bile duct cancers in the town, as well as reported

abnormal rates o immune-system related conditions.25A study commissioned by the Alberta Health Servicesconfrmed in 2009 that there were indeed elevated cancerrates in the community.26

High levels o dangerous toxins in the Athabasca Riverhave been ound in areas downstream rom tar sandsdevelopments. A study in 2007 commissioned by the localhealth authority o Fort Chipewyan revealed high levels

o arsenic, aluminium, chromium, cobalt, copper, iron,led, phosphorous, selenium, titanium, and phenols in thewater.28 It ound high levels o arsenic, cadmium, polycyclicaromatic hydrocarbons (PAHs) and resin acids in thesediment, as well as high levels o mercury in tested fsh.

O these substances, the three contaminants o mostconcern or human health are arsenic, PAHs and mercury.While PAHs and their carcinogenic levels vary, they are allconsidered toxic and linked to cancer, vascular damage,kidney damage, liver and skin damage. Arsenic is a potent

carcinogen that is also known to have a synergistic eect incontributing to cancer when combined with other elements or example, combining exposure to both arsenic andPAHs can increase the risk o cancer by 8 to 18 old. Threatsrom high levels o mercury include nerve damage, cognitiveimpairment, kidney ailure, respiratory ailure and death.

Although establishing a direct causal relation betweenincreases in medical complaints and specifc pollutants

is notoriously tricky, people rom the local communitiesare adamant that tar sands are the source o their healthproblems.

The right o Indigenous Peoples to Free Prior and InormedConsent to developments that take place on their lands isone that has been recognized by the United Nations. Despitethe act that some contracts have been signed betweentribal leaders and oil companies, many communities eel

that this has oten taken place in a way that encourages adivide and conquer strategy that oers benefts to relativelyew but disregards the interests and wishes o indigenouscommunities generally. In 2008, the International IndianTreaty Council29 made a submission to the United Nations


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Human Rights Council that asserted that, the expanding tarsands development has taken place without Right to FreePrior Inormed Consent o many o the Indigenous Peopleswhose health, ecosystems, subsistence and way o lie arebeing impacted.30

A number o First Nation communities are organising toresist the expansion o tar sands on their lands, rangingrom grassroots activities, to legal challenges such as theone that the Beaver Lake Cree Nation is mounting againstthe Albertan and Canadian governments. The First Nationcommunities are asking or an injunction against any new tarsands developments on their land, citing more than 17,000inringements on their treaty rights, by every major oil

company in the world. 31

Tar Sands in other parts of the world: The Republic ofthe Congo (Congo-Brazzaville)

In July 2009, a coalition o groups, including Congolesehuman rights organisations and Campagna per laRiorma della Banca Mondiale, published a report,Energy Futures that examined Italian oil company Enisinvestment in developing tar sands (as well as palm oiland reducing gas aring as a carbon oset project) inthe Congo basin.33 Despite the act that Congo is Aricasfth largest oil producer,34 70% o the population lives

below the poverty line.35 Congo is a classic example o anArican country where oil deposits have resulted in theresource curse the paradox in which countries with anabundance o resources (oten ossil uel resources) havea tendency to have lower levels o economic growth and


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worse development outcomes than countries with lessnatural resources.

In May 2008, Paolo Scaroni, the CEO o Eni signed a deal

with Bruno Itoua, the Energy Minister or the Republico Congo, or a projected 3 billion investment overseveral years. This deal included permits or tar sandsexploration in two areas covering a total o 1,790 squarekilometres. The size o the Congo tar sands reservesare as yet unknown, but Eni estimates that at least 500million barrels are recoverable, with up to a urther2.5 billion barrels that may evade discovery, or not beeconomically or technologically easible to extract.36

The orests o the Congo Basin provide vital regionaland global ecological services as a carbon sink andwater catchment basin, as well as playing a critical roleor global biodiversity conservation.37 Questions havebeen raised on the impact that tar sands extractionwill have on orests in Congo given that large-scalearboreal devastation has been one o the moredocumented impacts o mining operations in Canada.

There have been contradictory statements rom Enias to how much orested land will be aected. In July2009, CEO Scaroni said that, our tar sands are not ina tropical orest area otherwise we wouldnt do it.38 Incontrast, a report in March 2009 rom the companys

Exploration and Production division said that, theresults [o remote sensing and mapping] show thattropical orest and other very sensitive environmentso biosphere (e.g. marshlands) represent about 50% to

70% o the [tar sands] permits.39

Congo has been categorised in the Index o AricanGovernance as one o the ten worst perormingcountries.40 There is real concern that the lack oenvironmental and human rights regulation inCongo could result in even more serious impactson communities and ecosystems than have beenwitnessed in Canada.

While Eni is still at the exploratory stage o tar sandsextraction in Congo, evidence has already suraced ocommunities being adversely impacted by bulldozersdestroying land and crops while clearing access routesto sampling sites. According to feld research carriedout by tar sands researchers in Congo in 2009, ourarmers interviewed stated that they (and others) werenot consulted prior to the destruction o their land and

crops, and that no compensation has been paid.41 Aso July 2009, Eni admitted that it had not carried outany public consultation with local communities abouttheir plans or tar sands extraction in the region.42


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Billy Joe Laboucan, Peace River Region

This year 2010, I will be 56 years old, so its about ahal century since I was small boy living with my parents,brothers, sisters, grandparents and all o the aunts, uncles

and cousins in the trapping community o Bison Lake,Alberta, approximately 800 km north o Edmonton. It waspopulated by industrious and successul trappers and urbuyers who plied the trappers with whiskey in order toget the best trades. It was accessible only to horse anddog teams and some White trappers in small tractors andbush planes, but we lived well. Our liestyle and livelihooddepended on ur-bearing animals who depended on a cleanenvironment with resh water, and it seemed like there was

no end in sight. We took this bounty or granted and wemade a good living. Oten the yearly trapping income wouldsurpass wage earners and the salaried olk alike. For us inthis region, this trend would continue into the late 1970s.

Then, the ur economy ell through, dealt a crippling blowby the European ur embargo led by actors such as BridgetBardot. For the frst time, the Cree/Metis people livingamong the communities o Bison Lake, Haig Lake, Marten

River, Cadotte Lake, Little Bualo, and Lubicon Lake had torely on the provincial and ederal government programs tosurvive. It was the beginning o hard times. But frst letsstep back fty years and work towards the present. For thenext economic engine would be driven by the extraction o

crude oil, natural gas, and later bitumen, or whats known astar sands.

Lie in Bison Lake during the winter and spring was hardbut rewarding, and it was the only time people stayed

there. Ater the spring trapping was over in mid-April, thecommunity would vacate to homes to the other communitiessouth or to continue living o the land elsewhere. My atherand the whole amily would travel there by horses andwagon.

We would spend wonderul days at our summer home atPrairie Lake (now known as Lubicon Lake). This is where weprepared or the trapping season; and sometimes we came

back to spend the Christmas holidays there. Our garden wasthere too. By wagon trails, the distance rom our summerhome to the winter place in Bison Lake was about 160kilometres. We travelled year round. In the winter, travelwas with a horse-drawn caboose heated with a small woodheater.

Then, in the all, ater amilies helped immigrant armersclear land or agriculture, we would all move back north

to our trapping homes. It was also about that same time,that the oil companies started exploring or oil and gas.Soon there were a myriad o seismic lines carved out inthe orests. Then, the oil boom struck. In Canada, the oiland gas, and now, tar sands extraction leaves behind a


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disastrous legacy especially or Aboriginal communities.The moose, ur-bearing animals, the fsh and birds aredecreasing in population. The water is contaminated and theair is polluted with people becoming sick with respiratoryillnesses and diseases such as cancer. However, now in

order to survive and earn a living to raise amilies someparticipate. There are presently almost no alternatives.

Ive tried to illustrate that Indigenous people in NorthAmerica, and indeed globally, oten participate in thedepletion and pollution o the natural environment by beingworkers on these extraction projects but ar too oten, weare the ones who are let with the consequences. Otherthan local workers receiving wages, the local communities

receive little beneft rom the extraction o natural resourcesin their territories with the majority o the revenue owingsouth or internationally. For example, the Aboriginalpeople o the Athabasca Delta suer the toxic results othe tar sands upon which their trap-lines are located. Forus in the Bison Lake area, much o the virgin orests havebeen clearcut, orcing moose and their predators to moveonto neighbouring lowlands and windbreaks within theagricultural areas. On top o that, pump jacks (or nodding

donkeys) that pump oil and gas are poisoning animals suchas moose, water owl and fsh.

Having been raised there, I still fnd solace in the bushand oten take my youngest son, twelve, hunting moose,

Billy Joe Laboucan isa Cree linguist andspecializes in Cree

language and culturalinstruction, curriculum

development,Indigenous

storytelling, and

lmmaking workshopsto protect, preserve

and promoteIndigenous languages

and culture.

rabbits or grouse. It is disturbing to fnd more and moremoose in this region in poor health bearing the brunt o acontaminated habitat. Just last year, I hunted a moose, onlyto fnd that it was beouled by tumors in its carcass. Likewisefsherman on the Athabasca River fnd deormed fsh and

have to limit their weekly consumption due to mercurylevels.

All along we as Indigenous people here on earth have tosome extent participated in the destruction o home andMother Earth, I think now is the time to seek environmentaljustice; and help in cleaning up our aquiers, air and soil.We need to resort to our stewardship ideologies that werepracticed beore immigrants settled here in North America.


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Financial data presented here are based on underwritingleague tables compiled by Bloomberg or January 1, 2007 toDecember 31, 2009. Totals are derived rom loans, corporatedebt and equity issuances involving companies withsignifcant operations in the tar sands listed in Appendix I.

Figures are based on reporting by banks to Bloomberg, butmay be incomplete due to undisclosed proprietary bankingrelationships.

Table 1 looks at the fnance that RBS, Barclays and HSBChave made to companies that are engaged in tar sands overa three year period rom January 2007 through to December2009 and has been collated using a Bloomberg terminal.43

The data has been broken down into loans, corporate debtunderwriting44 and equity underwriting.

The totals represent underwriting to companies that (a) havean ownership stake in existing tar sands projects and projectsunder development; or (b) own, operate or are developingpipelines primarily being used to transport tar sands products.

All the fgures in the table are in millions o US dollars and

the ull listing o all the individual loans and underwritingscan be ound in Appendix I. Totals may not reect actuallending, rather they represent the ull value o loans wherethe bank acted as lead book-runner (also called managingunderwriter, lead manager, etc). Where the bank was one o

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multiple lead book-runners, value is awarded pro-rata.

The data shows that RBS led underwriting or over $7.5 billionin loans to tar sands related companies, over fve times morethan Barclays and over eleven times more than HSBC. Thisfgure or RBS represented 11.5 per cent o the total globalfgure o the 26 banks that were surveyed in this period, andis the highest fgure or any bank outside o North America.45

Barclays topped other banks in lead underwriting ocorporate debt and equity, with a total o $12.4 billion.

The combined total o underwriting loans, equity andcorporate debt or all 26 banks that were examined using

Bloomberg was $205.92 billion. The combined UK total o$35.92 billion means that the UK banks were responsibleor 17.4 percent o the global total the highest share o anycountry outside o North America.

Table 1 all gures in US$ million

Bank Loans Corporate DebtUnderwriting

EquityUnderwriting

RBS 7,543.91 5,170.62 0Barclays 1,450 12,083.34 310.18

HSBC 666.67 8,156.64 0


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Mike Mercredi, Fort Chipewyan Doing time in the tar sands

Fort McMurray is under siege by oil companies. The Provinceo Alberta is run by the corporations stationed in downtown Calgary and not in the Provinces capital o Edmontonwhere the legislation building sits. Alberta is not run by theLiberals, Conservatives/Tory, Green party or NDP, it is run byImperial oil, Suncor, Shell/Albian, CNRL, Syncrude and soon the global oil commanders o the world market. The by-products o oil/tar sands are everywhere, in everything weuse everyday.

I started working in the oil mines in the 1990s and witnessedthe tar sands boom, the inux o people rom all over the

planet and the devastating dismantling o Northern Alberta,400 tons at a time. I used to drive the biggest trucks inthe world, around the biggest earth moving equipmenton the planet, on the biggest construction projects knownto mankind. I was on top o the world with my royal bankaccount and gas tank always ull in my new Chevy truck.At the job site I was surrounded by the latest technologywith engineers and scientists rom everywhere. Everyoneand everything was there to do one thing: extract the

bitumen rom the sand under the boreal orest, using waterrom any and every source available. The boreal orest isa traditionally sacred area to First Nations in the regionbecause it holds acres o traditional medicinal plants usedor healing and prayer. It also a scientifcally crucial region

in Canada with an ecology that took tens o thousands oyears to orm. It cannot be recreated or reclaimed. Right nowthe oil companies have laws allowing them to cut down thetrees, remove the top soil, drain the water and dig out everyton o tar sands.

When I was working in the mines I started receiving phonecalls rom riends and relatives about people getting sickand dying rom back home in Fort Chipewyan. In one year itwas scary to pick the phone because I knew who was callingand that they were going to tell me that another person wasdiagnosed or sick, or had passed on. Then I hear its comingrom the water. I didnt think about my job as being a part ohealth problems happening in Fort Chipewyan. But, I had in

the back o my mind, like most First Nations people workingthere, wondering what was actually happening.

When youre raised in the region you never get taught thatwhat you are doing is destroying a way o lie and killinginnocent people. It took some time and questions rompeople I worked with to make me think about this more,ater witnessing, thinking and doing the actual destructionI decided to leave the tar sands industry. I had no plans o

becoming one o the voices rom Fort Chipewyan speakingout against the tar sands development. I went back home toFort Chipewyan better known as ground zero and thus beganmy fght against the industry. I lost amily to this atrocity this destruction o a community and continued genocide


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happening right now in a small town o 1,200 people innorthern Alberta, Canada.

The environmental eects o these projects are soastronomically high that the government and industry haveinvested millions into making it seem like little is happening,when in act, they are actually allowing the people o FortChipewyan to die they knew exactly what the eects o thisproject would do. This is a orm o war where a nation allowspeople within their country to die or the sake o proft; it iscontinued genocide o the First Nations people o Canada.

From extermination programs that wiped out the now extinctBeothucks First Nations in the province o Newoundland,

to orcing and stealing First Nations children to be raisedin residential schools to demoralize and break the spirit othe First Nations people. There is also the biological wararethats started in the 1800s with the introduction o small poxinected blankets and the war continues today by yet againthe government allowing rare cancer to kill the people o FortChipewyan.So since I moved I have become an advocate, speaking out

against the industry at every opportunity I receive. I willcontinue until I can no longer continue on, then others willtake my place and ensure the fght continues against big oiland corporotocracy.

Mike Mercredi is a member of the community ofFort Chipewyan, where he was raised. He wasborn in Fort McMurray and used to work in thetar sands industry.


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This section examines in more detail three companies withwhom nancing deals have been made with UK banks, allof which involve the Royal Bank of Scotland. The companieshave been chosen to cover a range of projects from oilmajors extraction projects to pipelines.

ConocoPhillips

RBS has underwritten $8 billion in loans and corporatefnance over the past three years, which includes sixdeals since, and two previous to, the recapitalisation.ForBarclays the fgure is more than $2.5 billion; HSBC has notfnanced the company over this period.46 In January 2010,ConocoPhillips announced plans to expand their Albertan

tar sands operations, moving rom producing 27,000 barrelso bitumen per day to 110,000.47 They are positioningthemselves to become a leading in situ producer in theAthabasca oil sands region, with more than a million netacres o leaseholdings.48

Although the company advertises a commitment tosustainable development, ethics, honesty and integrity ontheir website,49 they have in recent months been working

alongside several organisations that have sought toundermine climate legislation in the US. ConocoPhillipsis a member o the American Petroleum Institute,50 whoseimitation grassroots citizens campaign in Autumn 2009against the US climate bill was labelled devious and

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dishonest by The Guardian.51 The company is also anafliate o the Consumer Energy Alliance,52 which alongsidethe National Petrochemical & Refners Association iscurrently trying to sue the state o Caliornia over their LowCarbon Fuel Standard in part because it excludes tar sandsand tar shale oil rom the standard.53

The Beaver Lake Cree Nation is currently taking legal actionclaiming that the approval o oil and gas developments,including ConocoPhillips operations, inringes upon theBeaver Lakes Treaty rights.54 The companys controversieswith regards to Indigenous Peoples is not limited to Canada.It is currently the leading holder o exploration acreage inPeruvian Amazon with over 10.5 million acres. Many tribes-

people live within this area, including some living in voluntaryisolation. ConocoPhillips has been accused o risking utureconict by ailing to guarantee that the Free Prior andInormed Consent o these people will be respected. 55

The expansion plans o ConocoPhillips include increasingtheir refnery at their acility in Ponca, Oklahoma and twoother refneries in the US by the end o 2013 in order to beable to process the tar sands-derived crude being piped

down rom Canada. The Ponca acility has existed orthe last 50 years on the land o the Ponca Nation. CaseyCamp-Hornik, a member o the Ponca Nation who workswith the Coyote Creek Center or Environmental Justice,has expressed concern about the eects o increasing the

refnerys output when her community is already sueringrom the pollution o the acility. In an interview she saidthat, we are saturated, were beyond saturation, with thepollution rom that already. We have an extraordinarily highcancer rate, our groundwater is poisoned, the air rom therefnery has toxic qualities to it and the earth itsel, were notcapable o growing anything on it anymore.56

ConocoPhilips also part-owns Syncrude, a crude oil producerbased in Alberta, Canada. On the 28th April, 2008, a delayin the companys bird-deterring sound cannons57 lead tothe death o 1606 ducks as they landed on Syncrudes toxictailing ponds and sank under the weight o the heavy toxicwaste. 58 It is eared that these expanding tailing ponds are

placed too close to river systems.59

Enbridge

RBS underwrote a loan to Enbridge worth $166.67 millionin December 2008; Barclays underwrote a loan o $200million in April 2009; and HSBC underwrote $467 million ocorporate fnance in March 2008 and May 2007.60 Enbridgeoperates the worlds longest crude oil and petroleum

products pipeline system, transporting approximately two-thirds o Canadas crude oil, much o which is derived romtar sands.61 They are expanding rapidly with our expansionprojects, which will result in an additional 851,600 barrelsper day o crude oil and increased US access.62


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Controversially, Enbridge is applying or permission or itsNorthern Gateway pipeline. This would be laid throughBritish Columbia, across more than 50 First Nationsterritories and pristine ecosystems, through to Kitimaton the coast, opening the Canadian tar sands to Asianmarkets.63 I oil rom Canadian tar sands is renderedunusable by legislation in the USA or selected states in theUSA, Asian markets will be an important impetus to continuedevelopment in the area.64 The planned port rom where theoil would be exported is expected to service 225 tankers ayear, including some Very Large Crude Carriers (VLCCs) thathave a capacity o 2 million barrels o oil or more almostdouble the capacity o the Exxon Valdez.65

There are 60 Indigenous communities living along the routeand on the coastline near the planned port and they areall opposed, including the Gitgaat o Hartley Bay, a smallsettlement o just 160 people. Haeis Clare Hill, Eagle ClanChie-in-waiting o the Gitgaat describes how Enbridge sentits President to consult with the community:

Enbridge came in with the argument that it would helpcreate jobs in Hartley Bay. We would be on call and trained

in case theres a disaster. So we would be the garbage clean-up people! O course, the people who cleaned up the ExxonValdez spill are now sick and dying as a result We had ourchies there, we had elders, and everyone who got up saidno, we dont want this.66

A major concern is the risk o leakages and spills. Followinga 3,000 barrel leak in January 2010 in North Dakota67concerns have been raised by environmental observersover the impact o spillages on wild salmon habitats68 alongthe proposed Northern Gateway pipeline. According to aNorthern Gateway spokesman, Enbridge has 50 or 60 leaksa year, well above the industry average,69 but varying romhal a barrel to, in this case, 3,000.70

A new report rom the Pembina Institute also raises concernover the upstream impacts the pipeline would bring asa result o creating extra capacity.71 They assert that thepipeline would bring approximately a 30 per cent increasein production, boosting Albertas annual greenhouse gas

emissions by 6.5 million tonnes72

as well as the associatedenvironmental and social impacts tar sands induce alreadyraised in this report.

The Wetsuweten want to protect our land, we wantto protect it from any type of pollution, any type ofindustrial development, because we need to makesure the lands are available for our children and ourunborn children.

Toghestiy (Warner Naziel), hereditary chief of theFireweed Clan for the Wetsuweten Nation who areghting the Enbridge pipeline.73


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Shell

RBS underwrote two amounts o corporate debt worth $192million each to Royal Dutch Shell in February and March2007. HSBC also underwrote the March 2007 debt, as wellas underwriting with Barclays $2.2 billion o corporate debtin May 2009. Barclays underwrote a urther $1.375 billion ocorporate debt to Shell in December 2008, as well as $1.25billion in March 2009.74

Shell owns 60%, a majority share, o the Athabasca OilSands Project. Consisting o the Muskeg River Mine locatednorth o Fort McMurray, and the Scotord Updgrader, besideShells refnery in Fort Saskatchewan, the Projects website

describes it as, currently one o the largest constructionprojects on the planet.75 The current production capacity othis project is 155,000 barrels per day o crude oil, althoughapproval has already been granted or an expansion thatwould increase production by 100,000 barrels per day.76

Although tar sands currently account or 2% o Shells totaloil and gas production, analysis o its resources show that30% o their Total Resources are tied up in the Canadian

tar sands.77 This signifcantly high percentage o reserveilluminates the extent to which the tar sands actor intoShells uture. No other oil major has staked its uture on tarsands to such an extent.78

In 2009, Shell abandoned written agreements withthe Oil Sands Environmental Coalition, to signifcantlyreduce greenhouse gas pollution o expansion projects.These agreements had helped inorm the approval o theexpansion projects in 2004 and 2006 and were supposed tohave prevented an estimated 900,000 tonnes o carbon rombeing emitted.79

Shell have a long history o environmental and humanrights controversies in their operations in the Niger Delta.In June 2009, they made an out o court settlement worth$15.5 million in was accused o having collaborated in theexecution o the writer Ken Saro-Wiwa and eight otheranti-Shell activists.80 A court case against Shell will be

resumed in Summer 2010 in the Netherlands brought byour Nigerians, in conjunction with Friends o the EarthNetherlands, who say they lost their livelihoods when oilrom leaking Shell pipelines contaminated their armlandand fshing ponds.81

Shell are currently acing shareholder questions over its tarsands operations. A number o shareholders, coordinated byFairPensions have fled a motion to Shells 2010 AGM, raising

concerns o the proftability, environmental consequences,and community impact o its activities in tar sandsextraction.82


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Tar Sands in other parts of the world: Jordan

Jordan is believed to hold over orty billion tons o tarshale,83 a orm o tar sands distinct rom those oundin Canada. Known locally as the rock that burns, tarshale reers to rocks that will give up synthetic crudewhen heated to extreme temperatures. Shell hascommitted to spend $540 million dollars exploring22,500 square kilometres84 an area covering onequarter o the country and larger than Wales and seesits Jordan venture as a long-term investment to build

up uture reserves.85 Analysts expect that extractionwould start around 2035, and continue until 2080.86

Shell has announced that it will introduce itsproprietary in situ conversion process developed in

Canada87, which boils the oil out o the ground byinjecting hot steam into deep holes. This means steam-generating plants, many oil wells and extensive gasand syncrude pipelines will have to be built.

A chronic lack o water resources in Jordan poses anobvious challenge to Shells plans. Jordan is the ourthpoorest country in the world in terms o water88, withannual per capita supply o 200 cubic metres perperson89 compared to a world average o 8,900 cubicmetres.90 Current use o non-renewable ossilizeddeep-water aquiers combined with a burgeoningpopulation means that by 2025, water supply per

person is expected to halve.91

Generating one barrel o oil rom tar sands in Canadauses between 1 and 5.7 barrels o water.92 Shells planswill need 50-500 million tonnes o water, every year water that Jordan just does not have. A possible watersource will be the controversial Red Sea-Dead SeaCanal. Heavily criticised by environmental campaignersin Amman, this proposed $10 billion project is intended

to pump seawater 200 kilometres rom the Red Seato the Dead Sea, where it will be used to cool nuclearreactors.93 Local opponents have warned o damage toprotected coral rees in the Red Sea and wider impactson the Jordan Valley.94


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tar sands industry as a means or economic developmentand jobs. The tar sands industry with the blessings o theprovincial government are expanding even urther, and FirstNations leadership and community members are eelingpressured by Alberta, the ederal government o Canada,and the industry to support it. Many o the oil companies

involved have well unded public relations campaignscoming into the First Nation communities, schools, andsenior citizen acilities campaigning on how tar sandexpansion would be good or the Dene, Cree and Mtispeople.

The First Nations and Mtis living in the tar sands regionhave been raising concerns about the impacts o tar

sands development on their treaty and aboriginal rightsor some years. More recently, Canadian, American andEuropean campaigns against tar sands development havebeen initiated by both Indigenous and non-Indigenousgroups including many environmental non-governmentalorganizations, that have shited to directly supporting theconcerns o First Nations and Mtis in the region.

Many elected tribal leaders in the tar sands are aced with

the real woes o trying to provide economic revenue streamsor their communities while at the same time protecting theirculture and ecological integrity o their traditional territories.What ends up playing out more oten than not is leadershipbeing put in position where they have to choose between

Clayton Thomas-Muller Tar sands and treaty rightsThe tar sands is the biggest and most destructive project inthe history o mankind. Never beore have the words Welive at ground zero rom rontline Indigenous Peoples livingin Fort Chipewyan rang more true. Globally Canada is being

looked at as a best practice or heavy oil development andthe technology being refned in the Athabasca Tar Sandsregion will be used as ar as the deserts o Jordan, theRepublic o Congo and Venezuela.

The situation playing out in downstream communitieslike Fort Chipewyan, Alberta, is one o the worst cases oenvironmental racism globally. Environmental racism in

this context, is the ailure o colonial government programsto adequately consult with or address environmentalprotection, natural resource conservation, environmentalhealth, and sacred/historical site issues aecting traditionalIndigenous lands and its Indigenous peoples.

For many years the leadership in Fort Chipewyan have beencalling or a government-unded baseline health study toconfrm or disprove the communities concern about tar

sands encroachment nearer to their lands and the eect thisdevelopment is having on their health.

Decades ago, the Alberta government enticed First Nationscouncil leadership to lease their treaty reserve lands to the


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jobs or the people or the destruction o their lands, water,air and way o lie.

First Nation/Indigenous communities must lead all work thatis challenging the Alberta tar sands, as well as the broaderossil uel regime in Canada. The rationale behind this is that

their Aboriginal title and treaty rights to large areas o landthroughout Canada supercedes the rights o the provinceo Alberta and the corporations operating in the region. Itis a legal term that recognizes Aboriginal interest in theland. It is based on Aboriginal peoples long-standing useand occupancy o the land as descendants o the originalinhabitants o Canada.

First Nations and Mtis are not mere stakeholders orthe public, but are political and legal entities that haveAboriginal and treaty rights with Canada. The governmento Canada and the courts understand treaties betweenthe Crown and Aboriginal peoples. These treaty rights arespecial rights to lands and entitlements that First Nationpeople legally have as a result o these treaties.

Dene, Cree and Mtis communities and their leadership

must look beyond a dependence on a ossil uel regime andbe visionaries and doers on supporting the development oclean production and clean renewable energy within theirlands. There needs to be a clear strategy to motivate FirstNations leadership and their grassroots communities to get

active in energy and climate change policy, at the provincial,ederal and international levels.

There is a need or Indigenous-led advocacy and trainingor First Nations on media strategies to be more visible andlead locally, nationally and internationally in anti tar sands

campaigns.

There is a great need or organizations to prioritize bottom-up organizing and create spaces or First Nations to speakor themselves on this issue on a local, regional, nationaland international level.

Accountability is a major issue as we move orward in terms

o ensuring that messaging in the US, Canada, and globallyare in sync and accountable to the local First Nationsposition so that solutions being proposed do not urthermagniy social and cultural inequities aced by rontline andenceline communities.

Many First Nations and Mtis in the regions are demandingthe Alberta government halt tar sands expansion, addressenvironmental damages, initiate remediation, and address

human health issues.

There are also demands that the Canadian governmentrecognize Aboriginal Treaties 8 and 6, legally binding andconstitutionally protected agreements between the ederal


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government and First Nations that defne the unique land,water and cultural rights o First Nations including the rightto hunt, fsh and trap.

There is an emerging political will o First Nations toexercise their sovereign rights by implementing their own

environmental and health inrastructure to regulate andenorce their own laws within their land and territory. Thishas been best expressed by the multitude o First Nationslitigations being brought orward against the governmento Alberta and the Federal government o Canada orailure to uphold their obligation to consult First Nationsover potential impacts o the tar sands operation. We willcontinue to see First Nations engage networks in North

America and abroad to join them in the fght or Energy andClimate Justice.

Clayton Thomas-Muller, of the Mathais ColombCree Nation, also known as Pukatawagan inNorthern Manitoba, Canada, is an activist forIndigenous rights and environmental justiceand tar sands campaign organizer for theIndigenous Environmental Network. He works

across Canada, Alaska and the lower 48 stateswith grassroots indigenous communities todefend against the sprawling infrastructure thatincludes pipelines, reneries and extractionassociated with the tar sands.

Ph

oto:MikeRussell


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RBS is the UK bank that has received the biggest injectiono public money in order to keep it aoat in the wake o thebanking crisis in late 2008. Following two separate roundso recapitalisations and the launch o the Asset ProtectionScheme in November 2009, the UK government owns 84% othe banks shares.95

Civil society groups have argued that the public ownershipo the bank means that there should be accountability orthe way that the public money is being used by the bank.An investigation by The Guardian showed that in the frstsix months ollowing the banks initial recapitalisation inOctober 2008, RBS had been involved in loans worth nearly10 billion to oil, coal and gas companies a quarter o thetotal amount o public unds put into RBS at that point. 96

On the frst year anniversary o RBS becoming majority-owned by the public, 30 public fgures, including MPs, aith-leaders and members o the business community, wrotean open letter to the Chancellor, Alastair Darling, callingon the Treasury to take a more active role in managing thebank. The letter said that, we believe that the Treasury hasailed to push RBS and the other bailed-out banks towards

supporting the investments our country needs. In doingso, the government has eectively written a blank chequeor the rescued banks to fnance anything rom destructiveossil uel companies driving climate change to hostile take-overs that threaten UK jobs.97

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This perspective has also been echoed in reports thatcome rom Parliament itsel. In its pre-budget report o2009, the Parliamentary Environmental Audit Committeerecommended that, the Treasury examine and report onhow some orm o environmental criteria or the investmentstrategies pursued by these banks might be imposed,

and what impacts this might have on UK sustainabledevelopment objectives.98 The fnancial services companyPricewaterhouseCoopers echoes this recommendation thatthe governments majority shareholding o RBS presentsa good opportunity or reorm and thus management othese shares should take an approach broader than a narrowfnancial goal. There should be ocus on the wider social andeconomic objectives.99 Despite this, the Treasury is adamantthat the shares will be managed on a commercial basis onbehal o the HM Treasury and UK taxpayers at arms-lengthby UK Financial Investments (UKFI), a wholly governmentowned company set up or this purpose.100

In February 2010, UKFI fnally published a sustainabilitypolicy.101 Although acknowledging the need or such apolicy is a welcome frst step, the policy itsel alls shorto standard industry best practice. In particular, it ails to

describe any monitoring processes, does not put in placeany positive strategic vision or RBS, and ails to recognisethat the main shareholders in the bank UK taxpayers have interests other than their fnancial stake in the recoveryo RBS share value.

The Treasury maintains that any sort o intervention wouldjeopardize the share price o RBS and would diminishthe shareholder return o the UK taxpayer. There are twoarguments that expose how this reasoning does not standup beyond the most short-termist perspective. The frstis that by continuing to pour money into new ossil uelinvestments, we are committing the world, not just theUK, to inrastructure that will be responsible or decadeso commensurate carbon emission increases. As The SternReview convincingly showed, the longer that we delay the

necessary changes we need to make to our societies andour economies in the low-carbon transition, the higherthe annual percentage o GDP that will end up being paidin order to adapt to the consequences o a destabilisedclimate. The interests o the taxpayer are better served by

As RBS is an important provider of nance to fossil-fuel and carbon-intensive industries, it, together withthe businesses in which it invests, is attempting toexternalise the risks of climate change which, sooneror later, will fall on taxpayers. Those are the sametaxpayers who now own RBS, so those external costs

are no longer carried by a third party. We can cutthe long-term cost to the taxpayer by acting now onsustainability. That is the important message.

Andrew Smith MP, during a Parliamentarydebate on banking reform.102


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trying to avoid the longer-term consequences o ailure torein in the worst excesses o runaway climate change ratherthan by simply going or a quick buck by trying to boostthe share price by investing in projects and companies thatmight yield short-term profts.

The second argument against the Treasurys non-interventionist position is that while banks like RBS canappear to be institutionally locked into maintaining aninvestment portolio o ongoing ossil uel fnance, thereis a growing body o analysis that maintains that these

carbon-intensive investments could turn out to be a sourceo fnancial risk rather than return to the taxpayer. Sincereceiving public unds, RBS has entered a new period inwhich the risks and objectives associated with its investmentdecisions must be calculated dierently.

In a report published in 2009, insurance company SwissRe has predicted that we will see a sharp rise in instanceso litigation resulting rom climate change, a phenomenonthat caused many companies in the asbestos industry tofle or bankruptcy when aced with similar legal challenges.The report predicts that, climate change-related liability

will develop more quickly than asbestos-related claims andbelieve the requency and sustainability o climate change-related litigation could become a signifcant issue within thenext couple o years.104

The fnancial risks o tar sands investments have beensingled out as being o particular concern. Reports likeShifting sands: How a changing economy could bury thetar sands industryhave outlined how: International OilCompanies ace signifcant challenges to their currentbusiness plans or oil production. While risk is nothingnew to the oil industry, the kind o structural change beingsignalled today is unprecedented.105

One o the challenges to tar sands is that there is a trendinternationally to develop low carbon uel standards (suchas the Fuel Quality Directive in the EU and the Low Carbon

Fuel Standard in Caliornia106

), which would prohibit uelswith liecycle CO2

emissions well to wheel greater thanthose rom conventional uels. The successul developmento these standards could have an enormous impact inrestricting the access o companies engaged in tar sands

In the long term, any oil company that believes itcan continue to externalise environmental costs,especially carbon, to society at large will havesignicant difculty. Carbon caps are going to be areality and at the moment carbon capture andstorage does not look cost effective or even

technically feasible at the scale necessary.

Marc Brammer, the Head of Business Developmentfor Europe at Risk Metrics Group.103

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Banks and their response to climate change

While all banks have publicly acknowledged theimportance o addressing climate change, there is awide disparity in the eectiveness o their responses.

While The Co-operative Bank has long had a policy notto fnance any ossil uel project,110 other banks havelimited their engagement to taking part in signing up tovoluntary, industry-led initiatives.

Over the past seven years, a number o these initiativeshave been established by groups o banks. Theyostensibly seek to monitor, inuence and lessen theharmul social and environmental impacts o theoperations o companies which the banks fnance.These standards include the Equator Principles, towhich all three major UK banks with investmentsin tar sands projects (RBS, HSBC and Barclays) aresignatories, and the Climate Principles, which all threecommented on, and to which HSBC signed up. Thecase o tar sands fnancing oers a lens to consider theeectiveness o guiding principles which are voluntary

and unenorceable in the breach.

A more detailed examination of the shortcomings ofboth the Equator Principles and the Climate Principlescan be found in Appendix III.

to their primary markets. The potential threat o this is sogreat to the oil companies concerned that the NationalPetrochemical & Refners Association are currently suing theState o Caliornia over the potential exclusion o tar sandsderived uels.107

RBS should now be exiting its investments in tar sands and re-channelling them into projects that are in line with the widerpublic interest, such as renewable energy. There exists aunique opportunity or government to utilise its shareholdingstowards tackling climate change, an issue frmly in the publicinterest. Investing public unds into projects such as tar sandsis antithetical to this end. As Andrew Smith MP has argued,we need to question very seriously whether, at a time whenwe rightly voice the priority that must be given to combatingclimate change, those are the investment priorities that publicunds should be underwriting.108

Since the initial recapitalisation took place in October2008, RBS has underwritten corporate debt and equityworth nearly $2.5 billion with tar sands related companies.This use o public money is counter to growing publicexpectations and political demands that RBS operate to a

dierent standard than simply the pursuit o a bottom lineagenda.

Case study: Pension funds & shareholder revolts h i t t i j tif ti th i ll ti


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Case study: Pension funds & shareholder revolts

Oil companies with operations in the Canadian tar sands orma cornerstone o the portolios o UK pension unds. In 2009,BP and Shell alone provided pension unds with a quarter o UKcorporate dividends, oering a vital income-generating lieline

to these large investors.120 According to Paul Taylor, CapitaRegistrars head o dividends: Oil has uelled the engine o UKdividends in the last two years. The increasing dominance ooil companies has let investors highly dependent on a ew bigstocks to provide them with an income.121

In essence the long-term health o UK pension unds and oShell and BP are, currently, inextricably bound up together.Senior executives at the two oil majors may come and go butthe pension und members o Britain are in or the long haul.This means that ailed investment decisions made by BP andShell will have a big impact on working people in the UK whoare saving or their retirement through a pension plan. Aterthe hit sustained by pension unds as a result o the collapseand near collapse in 2008 o prominent banks and fnancialcompanies which, like BP and Shell, were key stocks in theirportolios, pension unds are today in ar too delicate a position

to be careless about risk management at the oil majors.

It was partly with this delicate situation in mind that investorscame together in late 2009 to fle resolutions at BP and Shellwhich call upon the boards o both companies to present a

comprehensive strategic justifcation o their allocation ocapital to Canadian tar sands projects. Tar sands not only posean almost unparalleled environmental risk to the world but,an increasing number o institutional investors are concernedat the risk they pose to investor assets. Even within the oilindustry some prominent fgures have doubted the good

sense o tar sands investment. Lord Browne, CEO o BP rom1995 to 2007, was one o those. In 1999 the company soldalmost all its Canadian tar sands interests and as recentlyas 2004 he declared that there were tons o opportunitiesbeyond the sector.122 His successor Tony Hayward reversedthis decision on his appointment as CEO in 2007.123 Oil in2007 was hovering at the $100 dollar per barrel level, aprice that appeared to make tar sands a logical investment.Nevertheless since 2007 the world has moved on again, andin ways which once more cast real doubt on the fnancialprudence o heavy capital expenditure in the oil sands.What has changed?

Its very clear that in the mature markets o the West, thepeak or gasoline consumption was in 2007. The industrywill not sell more gasoline in either the US or Europe thanit did in 2007. Ever. As government regulation and policy

drives efciency into the transport eet its a challengeor companies like BP. Its why our refning and marketingbusinesses are so challenged right now because theres alot o surplus capacity which is not going to go away TonyHayward, Today Programme, 4th February 2010.

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As Hayward himsel put it so clearly in early 2010, theextraordinary market conditions which oil companiesenjoyed in 2007 when BP decided to move back into theCanadian tar sands, no longer exist and look unlikely everto return. Shells new CEO, Peter Voser, appears to havecome to a similar conclusion since being appointed CEO

in mid 2009. In an interview with the Financial Times inearly 2010, Mr Voser pronounced that Shell, which is in thepotentially uncomortable position o having a third o itsglobal oil resources sitting in the tar sands o Alberta, wouldbe slowing down planned expansion in Canada. The reasongiven was that other global opportunities now seemedattractive in comparison.124

What is becoming increasingly clear is that the oil majorsace a situation o great strategic uncertainty, reectingthe disarray and indecision o the UN climate negotiationsin Copenhagen at the end o 2009. The world has nolegally binding international agreement to reduce carbonemissions, and yet ostensibly, the international will to movedecisively towards a lower carbon model o global economicactivity remains strong. This poses an uncomortabledilemma or oil companies and in turn a signifcant risk

or any pension unds dependent or dividends on BP andShell. Investors in both companies have an opportunity atthe Spring 2010 Annual General Meetings (AGMs) o BP andShell to demand clearer answers on this risk. FairPensions,working with a coalition o investors and NGOs, has

succeeded in coordinating shareholder resolutions to bediscussed at BP and Shells 2010 shareholder meetings.125Members o pension unds, including working people inevery sector o the UK economy, should be watching thissituation with interest. Indeed, they can do more than watch;they can now also actively engage by expressing support

or the tar sands resolutions, by contacting their pensionprovider (most easily via www.countingthecost.org.uk) tourge votes in avour o the resolutions.

In recent years, many people in the UK have written lettersto RBS and the Treasury, or taken part in actions anddemonstrations at local branches at their headquarters todemand an end to the fnance o projects that exacerbateclimate change or disregard human rights. These actionsrepresent an attempt by civil society to make it possible orordinary people to have their voices heard in boardroomswhere key decisions are made. The 2010 UK corporate AGMseason represents a similar attempt or citizens who areconcerned about tar sands to engage the fnance sectorin demanding fnancially and environmentally responsiblevoting decisions at the BP and Shell AGMs. This is a uniqueopportunity or people who care about tar sands to exercise

inuence in decisions being made that will impact us all.

For further info about the tar sands resolutions andFairPensions plans to mobilise pension fund membersnationwide contact: [email protected]


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We are seeing a terriyingly high rate o cancer inFort Chipewyan where I live. We are convinced thatthese cancers are linked to the tar sandsdevelopment on our doorstep. It is shortening ourlives. Thats why we no longer call it dirty oil butbloody oil. The blood o Fort Chipewyan peopleis on these companies hands.27

George Poitras, a ormer chie oMikisew Cree First Nation


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Tar Sands in other parts of the world: Madagascar

In 2004, Madagascar Oil was created specifcallyto develop the heavy and ultra-heavy oil resources(including tar sands) on the western side o Madagascar.The heavy oil felds are located in two felds, Bemolangaand Tsimiroro and are both approximately 70km2 insize.111

It is estimated that the felds possibly contain acombined 26,385 million barrels. Madagascar Oilbelieves these two felds could produce more then

280,000 barrels a day or over 20 years112

and at leasta urther 180,000 barrels or 10 years ater that.113 InSeptember 2008, Total paid $100 million or the 60%ownership o the Bemolanga feld.114

Near the Tsimiroro feld is the 1,520km2 Tsingy deBemaraha nature reserve. This was inscribed as aUNESCO World Heritage site in 1990, due to its limestonekarst landscapes, undisturbed orests and mangroveswamps.115

The Tsimiroro site is also very close to the source o theimportant Manambolo River. Almost 120,000 peoplelive in a large number o villages that make up theMoraenobe commune within the Bemolanga feld. OnMarch 17, 2009, democratically elected President MarcRavalomanana transerred power to the High TransitionalAuthority (HTA). The US state Department considered thismove tantamount to a military coup dtat and thereoredoes not recognize the HTA.116

The World Bank placed Madagascar 91st on its 2008Control o Corruption Indicator, and 134th on its 2009Doing Business Ranking.117 Madagascar Oil admit that theoil contracts contain attractive terms and conditions.118Under the current contracts, even ater thirty years ocommercial production, the government o Madagascar

will only be receiving 4% o the oil revenues.119


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C

O

N

C

L

U

S

I

O

N

S

In light o the climate crisis, as well as the devastatingC


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g , gimpacts that tar sands are having on communities andecosystems in Canada, and their potential to wreak havocin other parts o the world, this report calls or all partiesinvolved to act responsibly and fnd ways to stop fnancialinstitutions providing the fnance to companies to expand

such operations.

Recommendations to the UK banking sector

Create a moratorium on providing fnance o any kindto companies that are actively engaged in extractingtar sands or any other orms o unconventional oil.

Develop revised investment mandates drawing onexpertise and guidance rom independent sources

and best practices in the fnancial sector to identiywhich activities, such as tar sands extraction,should not be unded in uture.

Make Free, Prior and Inormed Consent oIndigenous and/or local communities a condition oall orms o project fnance.

Recommendations to the Chancellor of the Exchequer and

the UK Treasury, the Treasury Select Committee, and theMinister for Business, Innovation and Skills

Use the majority public ownership o RBS toimmediately impose lending standards on the bank

O

N

C

L

US

I

O

N

S

to prevent the fnancing o companies that: Commit to working with groups such as Carbon


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p g po are engaging in the extraction o tar sands or

other orms o unconventional oil exploration,development or transport;

o do not ask or the Free, Prior and InormedConsent o Indigenous and/or local communities.

Include enhanced standards or environmentaland human rights protection in the currentparliamentary discussion o the re-regulation o thebanking sector in the wake o the fnancial crisis.

Provide incentives or long-term, sustainablebehaviour by linking executive pay to thecompanies long-term perormance and to thebanks environmental and social perormance.

Recommendations to the Equator Principles SteeringCommittee and all Equator Principles signatories

Include in the Principles the climate impact oproposed projects as an integral part o all riskassessments. Commit to a process o continuouslytightening the conditions or fnancing under thePrinciples, i required, to meet the challenges posed

by an unolding climate crisis. Include additional principles that categoricallyexclude the fnancing o all new projects involvingthe exploitation o tar sands and other orms ounconventional oil.

g g pDisclosure Project and BankTrack to developworkable instruments or measuring fnanced (orembedded) emissions, and adopt reduction targetsor each bank. Provide a stringent timeline or this.

Access or Western oil companies to conventional ormso oil production has been increasingly difcult to secure.Meanwhile governments, the banking sector and oilcompanies have collaborated to cash in on tar sands byensuring that this dirty and devastating orm o energy isguided into the global energy market. The grave threat oclimate change to peoples lives and livelihoods across theglobe remains unparalleled, yet investments in tar sandsexpansion ensure the energy model responsible or the crisis

is urther entrenched. We need to seize the opportunity totake steps towards considerable investment in renewablesand energy efciency whilst reducing consumption in orderto prevent the worst impacts o climate change.

The ailure by governments and businesses to trulyrecognise the enormity o the threat means that the rightsand lives o Indigenous Peoples and the most cash-poor

people in the world are being ignored, ruined in the rushto obtain profts rom tar sands cloaked in the rhetoric oenergy security. Legal action in the UK and Canada, BP andShell shareholder concern, civil society campaigns andgrassroots activism are coalescing to redress this wrong.

duct

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

quity

quity

quity

Loan

Loan

million


50/72

IssuerName

Date

Amount(US$million)

Prod

ConocoPhillips

5.5.2008

200

C

ShellInternationalFin

anceBV

8.12.2008

1375

C

KinderMorganEnergyPartnersLP

16.12.2008

166.67

C

ConocoPhillips

29.1.2009

250

C

ConocoPhillips

29.1.2009

375

C

ConocoPhillips

29.1.2009

375

C

ChevronCorp

26.2.2009

750

C

ChevronCorp

26.2.2009

750

C

ChevronCorp

26.2.2009

1000

C

StatoilHydroASA

4.3.2009

378.52

C

StatoilHydroASA

4.3.2009

379.83

C

StatoilHydroASA

4.3.2009

41

1.48

C


anceBV

18.3.2009

1250

C


anceBV

6.5.2009

1111.21

C


anceBV

6.5.2009

1111.21

C

OccidentalPetroleum

Corp

12.5.2009

1

87.5

C

ConocoPhillips

18.5.2009

7

1.43

C

ConocoPhillips

18.5.2009

214.29

C

ConocoPhillips

18.5.2009

142.8

6

C

KoreaNationalOilCorp

23.7.2009

166.67

C


11.9.2009

100

C


11.9.2009

150

C

CenovusEnergyInc

15.9.2009

266.67

C

CenovusEnergyInc

15.9.2009

43

3.33

C

CenovusEnergyInc

15.9.2009

466.67

C


27.2.2008

165.89

Eq


9.6.2009

8

5.14

Eq


1.12.2009

5

9.15

Eq

ConocoPhillips

4.4.2007

1250

L

EnbridgeEnergyPartnersLP

9.4.2009

200

L

TotalTarSandsFinancing=$

13,843.52

Totalfeesearnedfromt

arsandsissuances=$38.5

AppendixI:FinancialData

AllfguresinUS$

duct

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Loan

million


51/72

IssuerName

Date

Amount(US$million)

Prod

TotalCapitalSA

22.1.2007

19

7.5

6

EnCanaCorp

7.3.2007

21

2.07


anceBV

8.3.2007

192.83

EnbridgeInc

31.5.2007

200

TotalCapitalSA

24.7.2007

1

03.1

HuskyEnergyInc

6.9.2007

100

HuskyEnergyInc

6.9.2007

150

TransCanadaPipeline

sLtd

2.10.2007

500

TotalCapitalSA

8.10.2007

1

01.8


31.3.2008

13

3.33


31.3.2008

13

3.33

Petro-Canada

12.5.2008

200

Petro-Canada

12.5.2008

300

TotalCapitalSA

3.7.2008

9

9.17

TransCanadaPipeline

sLtd

6.1.2009

375

TransCanadaPipeline

sLtd

6.1.2009

625

TotalCapitalSA

13.3.2009

3

87.5

TotalCapitalSA

19.3.2009

23

9.1

6

CanadianOilSandsLtd

6.5.2009

250

HuskyEnergyInc

6.5.2009

250

HuskyEnergyInc

6.5.2009

250


anceBV

6.5.2009

1111.21


anceBV

6.5.2009

1111.21

TotalCapitalSA

7.5.2009

368.22

TotalCapitalSA

2.6.2009

165.8

NexenInc

27.7.2009

75

NexenInc

27.7.2009

175

TotalCapitalSA

17.11.2009

150

HuskyEnergyInc

3.7.2007

66

6.67

TotalTarSandsFinancing=$

8,823.32

Totalfeesearnedfromt

arsan

dsissuances=$31.12

AppendixI:FinancialData

AllfguresinUS$m

oduct

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Corp

Loan

Loan

Loan

Loan

23S$

million


52/72

IssuerName

Date

Amount(US$million)

Pro

TotalCapitalSA

11.1.2007

320.1

ShellInternationalFinanceBV

9.2.2007

195.12

ShellInternationalFinanceBV

8.3.2007

19

2.83

TotalCapitalSA

23.05.2007

40

3.78


18.6.2007

18

3.33

TotalCapitalSA

26.9.2007

10

0.79


5.2.2008

300


5.2.2008

150

TotalCapitalSA

19.3.2008

100.18

TotalCapitalSA

25.4.2008

9

6.69

ConocoPhillips

5.5.2008

13

3.33

ConocoPhillips

5.5.2008

16

6.67

ConocoPhillips

5.5.2008

200

TotalCapitalSA

10.6.2008

15

4.67


16.1

Tar Sands: Environmental Destruction, Soaring Carbon Emissions, Trashing the Planet

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