Investing in Alberta’s energy transition

Keynote address at the Calgary Chamber of Commerce Alberta Energy and Growth Forum as published on CPP Investments.

Thank you, Deb, and the Calgary Chamber of Commerce.

Welcome honored guests to CPP Investments’ 3rd Annual Energy & Growth Forum.

It’s great to be back in Alberta. I was here in September for our CEO Global Energy Summit, where we convened senior executives from around the world and across the energy complex.

Leaders from India, Brazil, US, Canada, and Europe came together to discuss how we can collaborate to create value, explore the addition of new models in energy production, and develop profitable paths through the energy transition.

Attendees told us they left the Summit with new important connections, likely to lead to new opportunities.

These partnerships are critical as we work collectively through the challenges and opportunities of the whole economy transition.

And that’s why I am back here today. I want to speak to three areas before joining Deb for Q&A:

First, how we at CPP Investments approach investing in energy. Second, provide an update on CPP Investments’ portfolio. And finally, I want to speak to the benefits of the national pension model and the Canada Pension Plan Fund.

At CPP Investments we invest in energy. Traditional energy, renewables, technologies, all aspects of it. We’re seeking investment opportunities in companies that provide strong risk-adjusted returns and are well positioned for the energy transition ahead.

We recognize that investing in the energy sector can be complex, but we are patient, long term investors.

We believe that:

1. We’re in the early innings of the energy transition and the path forward will be complex and challenging.
2. This about adding sources of energy and traditional energy will be needed for the foreseeable future.
3. And new renewable energy players need to scale dramatically and work collaboratively with traditional energy incumbents.

Therefore, we don’t believe in backing just “one winner” in technology or energy type.

The challenge of moving the entire global economy towards lower carbon sources of energy is immense. As investors we view it as a generational investment opportunity.

This is good news for Alberta since some of the most responsibly produced conventional energy in the world is in Western Canada. This is something every Canadian should be proud of.

On the international stage, CPP Investments and I have been vocal advocates for a non-divestment approach to decarbonization.

We were one of the first global investors to state publicly that divesting of conventional energy investments is counter-productive to global decarbonization goals.

I’ve had this conversation with some of the largest investors in the world, at home and abroad.

In addition to publicly sharing our stance on important issues that impact the Alberta energy sector, we use our platform to convene companies that may not regularly interact.

With our size and reach we can help enhance the results from companies in our network

by acting as a connector of companies who may face similar challenges. Our portfolio companies benefit from access to our experts.

This could be an expert in board governance, or assessing and managing the physical risks posed by climate change on our assets, or preparing for an IPO.

We’ve been able to take the energy leadership from here in Alberta and showcase it around the world – through forums like today and our CEO Global Energy Summit held last month.

Our investors work and live in different parts of the world, but act as one, unified team designed to identify the most attractive opportunities in energy and maximize their value over time.

Alberta is uniquely positioned globally within the energy value chain. Canada has the potential to continue to be a global leader through innovation in traditional energy production with initiatives like the Pathways Alliance and significant potential to deliver LNG to global markets.

The incredible innovation occurring at Alberta-based companies, industry groups and leading universities demonstrates that we have talent and energy in Alberta focused on continuing to produce energy in a responsible manner.

Now, onto our portfolio. $6 billion of the CPP Fund is invested in the oil and gas industry (oil, gas, oilfield services providers, coal and pipelines) in Alberta.

I want to highlight a few of our portfolio companies here today.

Teine is one of them, you’ll hear from their CEO Jay Denney shortly. We’ve owned Teine for thirteen years.

Teine is an upstream company headquartered here in Calgary, last year we supported the company to acquire assets in the Chauvin play from Repsol, building on Teine’s portfolio of low-cost oil production. In the first nine months of 2023 they drilled the third most wells in Canada, behind Cenovus and CNRL. Teine has continued to work on its sustainability initiatives, and has made significant progress in reducing its scope 1 and 2 emissions.

The company continues to invest in further improvements, while maintaining some of the highest netbacks and return on capital in Western Canada.

We’ve also been seeing significant developments from another portfolio company based here, Wolf Midstream. We invested $1.6 billion in Wolf to build an integrated midstream platform in Alberta and see opportunities to continue to grow the company. NGL North is a project that Wolf developed and commercial operations began in August 2023.

The project takes advantage of the abundance of low-cost natural gas in Alberta, and recovers the liquids content (ethane plus) to support Alberta’s petrochemical industry.

In addition, by processing the natural gas prior to downstream combustion, NGL North is expected to reduce carbon dioxide (“CO2”) emissions in the Christina Lake area by over 200,000 metric tonnes per year.

We invested $600mm into the construction of the project, which created over 750 jobs during construction and approximately 50 ongoing full-time positions.

This project demonstrates Wolf’s leadership in supporting Alberta’s economy and also underscores the innovation in the energy industry to maximize the value of Alberta’s natural resources…

and our investment, while contributing to carbon reduction objectives.

We also partner with Canadian leaders like Enbridge, on energy projects around the world.

Last year we, alongside Enbridge and EDF Renewables delivered the first commercial-scale offshore wind project in France. The wind farm will produce the equivalent of the consumption of 700,000 people with electricity every year.

Through our portfolio companies such as Teine (“Tine”), Wolf and Enbridge, or new investments and JVs, we will continue to look for additional investment opportunities in Alberta, in both traditional and renewable energy.

Finally, I’d like to highlight a few of the benefits of our national pension model and the Canada Pension Plan. And why it’s something Albertans should not want to lose.

There has been a lot of noise and much said in the media recently about the CPP, but I am here today as a business leader focused on delivering strong results for all Canadians

In a world of constant uncertainty, Albertans and Canadians need to protect their financial future.

Access to the CPP is one way Canadians living in Alberta can protect themselves against an unpredictable economy.

The business and public policy case to stay with an established global investment fund with a proven track record of financial performance is indisputable.

I’ve spoken to thousands of people across the globe about the CPP…here’s what makes it a national treasure:

The CPP is widely admired around the world as a safe and stable pension plan that we can be confident will provide for us in retirement. It’s sustainable for at least the next 75 years, meaning future generations of Canadians can bank on it.

The CPP is safe, secure and strong. It’s overseen by independent, arms-length investment experts whose only focus is securing the future of your retirement.

The CPP Fund is $576 billion and over the last decade our 10-year returns are approximately 10%.

Diversification and risk pooling are benefits of being part of a large pension plan that is shielded from economic downturns and changing demographics.

Another key benefit of the CPP is portability – the ability to take your pension with you across the globe whether you choose to retire in Alberta, another province in Canada, or somewhere warmer.

Part of Alberta’s success story is how the energy industry needs and welcomes working Canadians from all parts of this country. People who seamlessly contribute to their pension plan right here, Yet collect their benefits back home…wherever they choose that to be.

I’d like to leave you with two messages I hope you’ll consider sharing with others:

• CPP Investments continues to fund and support Alberta’s conventional and renewable energy sector to maximize returns, for the benefit of all
• The CPP is a safe, non-partisan, stable pension we already have that’s delivering on its purpose for millions of Albertans.

Thank you for coming today and I look forward to your questions.