Monday, March 20, 2023

So you want to be a climate-conscious investor. Here's how to avoid greenwashing

Experts recommend taking a closer look at sustainable investments

Nisha Patel · CBC News · 
Stock traders are shown at work.
Traders work on the floor at the New York Stock Exchange in New York on June 15, 2022. While a growing number of companies and funds claim climate-friendly credentials, many don't live up to their promises. (Seth Wenig/The Associated Press)

During a recent rally outside the University of Toronto, Saarthak Singh and Achint Singh joined the crowd urging the government to take action against climate change. But it's not the only way they advocate for a greener future. Both students also plan to make financial investments that will benefit the environment.

"Climate anxiety is at an all-time high," said Saarthak Singh. "How can I make sure that I'm also making a positive impact on the world?

Many Canadians are also letting their money do the talking. Assets in sustainable funds hit nearly $38 billion in Canada last year. But finding the right investments can be challenging: While a growing number of companies and funds claim climate-friendly credentials, many don't live up to their promises.

A student protester holds a sign at a climate rally at the University of Toronto on March 3. 2023.
A student protester holds a sign at a climate rally at the University of Toronto on March 3. 2023. (Nisha Patel/CBC)

More transparency needed

Achint Singh decided to take matters into his own hands and founded a sustainable investment club on campus. They wade through pages and pages of documents to make their decisions about what to support.

"The information isn't easily available. It's opaque," he said. "It's not something that everyday people can just look up…. There needs to be more transparency and more clarity."

Two students look for sustainable investment opportunities on their laptops.
Saarthak Singh, left, and Achint Singh look for sustainable investment opportunities on their laptops at the University of Toronto. (Nisha Patel/CBC)

Making it easier for people to sustainably invest will have ripple effects, he added.

"It will snowball into a bigger movement … companies will have to begin to pay attention."

A number of companies and funds now receive environmental, social and governance (ESG) ratings. They are created by various commercial and nonprofit organizations, including MSCI, Morningstar, and the Global Reporting Initiative.

But Saarthak Singh does not think many of them are stringent enough, noting some oil companies are rated relatively well. He'd like to see ESG baskets separated so that companies and funds can be judged on environmental activities alone.

"Let's not give credit to companies which are selling their carbon, right?" he said.

Greenwashing concerns

Industry watchers have also sounded the alarm over greenwashing, a phrase which describes companies or funds that advertise themselves as more climate-friendly than they really are. InfluenceMap is a climate change think-tank that examined more than 700 funds that were marketed using ESG and climate-related keywords in 2021. It found that 71 per cent had companies within their portfolios that didn't align with global climate targets.

Daan Van Acker, who wrote the report, says that while there has been a crackdown on greenwashing, more action from government regulators around language and labels is necessary.

"Right now there's very little consistency or standardization of what it does or doesn't mean to be green," he said.

The federal government has proposed some green investing guidelines that define which investments can use the green label. But they carve out room for some high-polluting activities, recommending that oilsands activities can be labelled as "transition."

Environmental groups have criticized the labels, saying to describe oil and gas as sustainable at any level makes little sense.

Looking under the hood

"When it comes to marketing of green investments, it is a little bit of a Wild West," said Tim Nash, president of Good Investing, which provides research and coaching to green investors.

"It's really important that Canadian investors look under the hood of their investments to really understand what's inside the fund that they're about to purchase."

Nash points to a fund like the Franklin Clearbridge Sustainable Global Infrastructure Income Active ETF. He says an investor might assume it's a climate-friendly fund but would be "quite shocked" to learn it includes Enbridge.

"At the end of the day, they're a pipeline company," he said. "If we could get the whole industry on board to use the same terms and expressions, I think that would go a long way."

For now, experts have some simple advice for investors to avoid greenwashing:

  • Know which companies are listed in green funds.
  • Look beyond buzzwords, such as "sustainable," for specific phrases, such as "fossil-fuel free."
  • Use screening tools like Morningstar that rate these funds on how green they are.
  • READ THIS BLOG

Are Oil Stocks Too Good For ESG 

InvestorsTo Pass Up?

By Irina Slav - Mar 18, 2023
  • Energy stocks gained a total of 135 percent over 2021 and 2022 and are on track to add another 22 percent this year, according to analysts cited by Bloomberg.

  • With such a gap between energy stock performance and the broader market, it's not surprising that ESG-minded investors are tempted by energy stocks.

  • Not everyone appears to even be sure what ESG actually is amid the heated debate about ESG investing in the U.S.

“We know that the transition will not be a straight line. Different countries and industries will move at different speeds, and oil and gas will play a vital role in meeting global energy demands through that journey.”

This is what BlackRock’s chief executive, Larry Fink, wrote in this year’s annual letter to shareholders. For such a fervent supporter of the energy transition, Fink’s admission of the vital role that oil and gas would continue to play in the world’s functioning may have been surprising at any other time.

Yet it came amid a wave of changing sentiment in the investment world. And this change is seeing investors rush back from ESG stocks to oil and gas.

Last year, BlackRock’s peer Vanguard quit a net-zero banking alliance—the Net Zero Asset Managers initiative—claiming it needed more clarity and independence concerning its environmental, social, and governance commitments to clients.

Also last year, global lenders including JP Morgan, Bank of America, and Morgan Stanley warned they would leave a UN-backed net-zero initiative for the financial sector—the Glasgow Financial Alliance for Net Zero—because their membership in it could end up violating U.S. antitrust legislation.

In fairness, the latter warning came as a result of a political pushback against ESG investing in the US. Conservative states targeted asset managers and banks that were making loud proclamations about their ESG plans that, by definition, would include reducing their exposure to oil and gas. Since for many of these states oil and gas are vital revenue contributors, the idea of such reduced exposure did not sit well.

Yet it’s not just a political pushback. Investors themselves are beginning to be in two minds about their dedication to ESG investments. Because while Larry Fink and his peers continue to reiterate their commitment to net zero and the transition, they are seeing very well where oil and gas stocks have moved over the past two years.

Energy stocks gained a total of 135 percent over 2021 and 2022 and are on track to add another 22 percent this year, according to analysts cited by Bloomberg. This surge compares with a not-so-impressive 5-percent gain for the S&P 500 over the two-year period.

With such a gap between energy stock performance and the broader market, it is not really surprising that investors previously committed exclusively to what is being advertised pretty much as the only ethical, responsible form of investment are now changing their attitudes.

Rockefeller Capital Management, Bloomberg reported this week, has a 6-percent energy weighting despite its dedication to ESG investing. The firm’s energy weighting is larger than the S&P 500’s, where energy stocks represent 4.8 percent of the total, the report notes.

Clients at Rockefeller’s wealth management unit, meanwhile, have boosted their combined holdings in the oil and gas industry, buying stocks in Exxon, Chevron, Petrobras, Diamond Energy, and all other public oil and gas companies regardless of size.

It’s self-evident that the excellent performance of oil and gas stocks during the last two years was one big reason why investors are once again paying attention to them. Another reason is the emergence of doubts and misgivings about the profitability of ESG investments.

Returns have been called into question, as have the green credentials of companies advertising as ESG-friendly. Not everyone is convinced that ESG investing is the only true path to the future world of profits. Not everyone appears to even be sure what ESG actually is amid the heated debate about ESG investing in the U.S. And this may lead to lawsuits.

According to this report in Responsible Investor, the debate could unleash a wave of litigation as investors seek clarity about the nature of ESG or seek to get compensation for unprofitable decisions made by their financial advisers on ESG grounds.

Such a development would likely compromise ESG as a concept further—financial advisers are not fans of litigation and might begin to think twice before advertising this or that investment as both ESG and profitable when it isn’t, as pointed out by critics.

“I think that our industry is going through a time where the consumers of these products could benefit from additional clarification,” the chief marketing officer of Parnassus Investments told Bloomberg. The firm has no oil and gas holdings, but pressure on the industry to reconsider has been growing.

“ESG funds pay a higher expense ratio. If you start showing a negative tracking error because you don’t hold energy, you’re going to close down the fund at some point,” accounting and auditing professor Shivaram Rajgopal from the Columbia Business School told Bloomberg.

In other words, if you’re only delivering on half of the promise—sustainable investment—but not on the other half—profits—the most natural thing for investors would be to insist on changes that rectify the situation. Because investing is not charity. It is an activity seeking a profit.

By Irina Slav for Oilprice.com

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    Study shows social media content opens new frontiers for sustainability science researchers

    by Denise Spranger, University of Michigan

    New study shows social media content opens new frontiers for sustainability science researchers
    A virtuous cycle for social media (SM) data and sustainability through transparency, 
    inclusivity, and responsible data use. 
    Credit: One Earth (2023). DOI: 10.1016/j.oneear.2023.02.008

    With more than half of the world's population active on social media networks, user-generated data has proved to be fertile ground for social scientists who study attitudes about the environment and sustainability.

    But several challenges threaten the success of what's known as  data science. The primary concern, according to a new study from an international research team, is limited access to data resulting from restrictive terms of service, shutdown of platforms, data manipulation, censorship and regulations.

    The study, published in the journal One Earth, is the first known to evaluate the scope of environmental social media research and its potential to transform  science. The 17-member research team analyzed 415 studies, published between 2011 and 2021, that examined social media content related to the environment.

    "Ideas about climate change and our environment are increasingly coming from social media," said Derek Van Berkel, assistant professor at the University of Michigan's School for Environment and Sustainability and one of the study' three lead authors. "Online communities like Reddit, or simply  shared by your friends on Facebook, have become digital landscapes where many ideas are shaped and formed."

    Understanding how those ideas are shaped aids science communicators in honing environmental messaging and prompts them to fill gaps where information is lacking or misrepresented.

    Despite the potential public benefits of social media data science, the authors argue, current business models of social media platforms have generated a vicious cycle in which  is treated as a private asset that can be purchased or sold for profit. This has raised  and mistrust of social media companies, leading to a greater demand for more regulation.

    The study supports the idea of replacing this  with a "virtuous cycle."

    "A virtuous cycle requires the collaboration of SM companies, researchers, and the public," said co-lead study author Johannes Langemeyer from the Institute of Environmental Science and Technology at the Autonomous University of Barcelona.

    "For their part, sustainability researchers can foster more trust and cooperation by embracing high ethical standards. Inclusivity, transparency, privacy protection, and responsible use of the data are key requirements—and will lead to an improved standardization of research practices moving forward," Langemeyer said.

    A promising example of cooperation from a social media platform was initiated in January 2021 when Twitter set a new standard for broader access to researchers by introducing a new academic research product track, which for the first time allowed free full-archive searches for approved researchers.

    Such an approach could have served as a model for wider open access across social media platforms. But confirming the fears of researchers, Twitter recently announced that as of Feb. 9, 2023, the company will no longer support free access.

    "SM data has the potential to usher in a revolution in the current practices of sustainability research, especially in the social sciences, with an impact on par with that of Earth observation in the environmental sciences," said co-lead study author Andrea Ghermandi from the Department of Natural Resources and Environmental Management at the University of Haifa in Israel.

    The study concludes that social media data assessments can support the 2015 U.N. Sustainable Development Goals that serve as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity.

    "Achieving the U.N. Sustainable Development Goals will require large-scale, multi-country efforts as well as granular data for tailoring sustainability efforts," the study authors wrote.

    "The shared values and goals of working for a  may provide common ground for the cooperation needed to fully realize the contribution that SM data offers."

    More information: Andrea Ghermandi et al, Social media data for environmental sustainability: A critical review of opportunities, threats, and ethical use, One Earth (2023). DOI: 10.1016/j.oneear.2023.02.008


    Journal information: One Earth 


    Provided by University of Michigan Should you pay for Meta's and Twitter's verified identity subscriptions? A social media researcher explains


    Are Influencers the Key to Fighting Climate Change?

    Kristin Snyder

    Evan Xie

    From makeup to books, people are increasingly basing their purchasing habits on what social media stars recommend. It shouldn’t come as a surprise, then, that influencers are swaying people to make more sustainable choices. A study released last week that was conducted by Unilever and the Behavioural Insights Team (BIT), which surveyed 6,000 people across the US, UK and Canada, found that 78% of consumers found influencers had the most impact on why people switch to sustainable choices. Traditional information outlets, on the other hand, lagged far behind—48% turned to TV documentaries, 37% turned to news articles and 20% turned to government campaigns.

    On the surface, these statistics are sobering. Influencers, who lack any oversight or ethical requirements, are the ones responsible for shifting consumer behavior toward more sustainable options.

    But this aligns with trends people have noted across the board. Gen Z has largely swapped TV time with social media usage, with one study finding that TV and film came behind video games, music, the internet and social media as young people’s favorite entertainment activities. Not only do 42% of Americans actively avoid reading the news, but 91% of young people get their news from social media. And overall trust in government institutions has reached a low of 27%, with many members of Gen Z believing the government hasn’t done enough to fight climate change.

    Meanwhile, influencers are reaching people where they are. That’s not to say that some influencers don’t encourage overconsumption. After all, the so-called, “haul video” featuring heaps of cheap fast-fashion clothes, dominates fashion and beauty influencer spaces.

    But there are an increasing number of creators carving out their niche with sustainability-centric content. On Instagram, people like @zerowastecutie and @DiandraMarizet share infographics focused on sustainable living tips and cutting out plastic. On TikTok, sustainability influencers are fighting against the overconsumption that runs rampant on the app. Some, like @climatediva, haul thrifted clothes, while creators like @tarabellerose make educational videos about environmental issues.

    None of this suggests that influencer culture writ large has entirely shifted towards eco-friendly practices. It does, however, indicate that influencers have been more successful than any other institution in convincing young people to move beyond just worrying about climate change and instead make specific life changes.

    The new paradigm makes sense, considering most influencers are between the ages of 18 and 34. And when coupled with the fact that young people are turning to TikTok rather than Google as their search engine of choice—just searching “zero waste” results in videos detailing budget-friendly ways to reduce waste and starter guides—short clips can go a long way in helping viewers get easy, actionable advice on simple lifestyle changes. A proposal that might not come across as effectively in a long documentary on TV or a news article.

    This is all to say that it would be easy to look at Unilever’s findings and bemoan the way influencers have infiltrated how information spreads. But it’s not their fault that they’ve managed to capture people’s attention. If news organizations or government campaigns want to actually reach young people, they could stand to take some tips from TikTok stars.

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    Alberta reviewing future of regulated rate option for electricity

    No final decisions on the program have been made, province says

    Paula Duhatschek · CBC News · 
    A power line is pictured in Calgary, Alta.
    A power line is pictured in Calgary. The price of electricity has soared in recent months. (Evelyne Asselin/CBC)

    The future of Alberta's regulated rate option (RRO) for electricity is in question as it undergoes a provincial review — a move one economist says isn't surprising given how high rates have climbed in recent months, though he questions what the alternative might be. 

    "If you get rid of the RRO … what is the default and how do you ensure that it's reasonable?" said Blake Shaffer, an assistant professor in the University of Calgary's economics department. 

    In Alberta, the RRO is the default electricity option for consumers who don't want to sign a contract with a competitive retailer. It's also used by those who can't sign a contract because of certain barriers, such as a poor credit score or a lack of cash to pay an up-front deposit, said Shaffer. 

    Rather than being locked into a fixed rate for a set period, customers on the RRO pay a monthly rate that's tied directly to the market price of electricity. 

    That can mean customers see significant price swings on their monthly bills. In recent months, those prices have hit record highs. 

    In December, regulated rates surpassed 20 cents per kilowatt hour and surged even higher this year, though customers on the RRO have recently been paying no more than 13.5 cents per kilowatt hour after the province brought in a temporary price cap. (Any costs over and above that cap have been deferred, and will have to be repaid eventually.)

    Blake Shaffer is assistant professor in the Department of Economics in the School of Public Policy at the University of Calgary.
    Blake Shaffer is an assistant professor in the department of economics at the University of Calgary. He says many Albertans still use the RRO, but their ranks have declined in recent years. (University of Calgary)

    Premier says rate could be phased out

    Alberta Premier Danielle Smith said Saturday — on Corus Entertainment's Your Province, Your Premier radio program — that the regulated rate is the most volatile rate.

    She said fixed income seniors, renters and newcomers are among the most affected by price fluctuations. 

    "We've got to do something more to make sure that they have a lot more price stability. So we're going to be figuring out the best way to phase that rate out," Smith said. 

    In a statement, the provincial government told CBC News it's now reviewing the RRO "as part of our ongoing work to explore ways to improve affordability and rate stability for Albertans."

    "As part of this review, we will be working with industry and others to examine various options, including around the future of the RRO, to ensure the needs of Albertans are being met," said Andrea Farmer, a spokesperson for the Ministry of Affordability and Utilities.

    She added that no final decisions on the RRO have yet been made. 

    The province didn't specify what options are being considered, or what an alternative to the RRO could look like. 

    The NDP's energy and natural gas critic, Kathleen Ganley, said in a statement the RRO plays an important role in making sure everyone has access to power, no matter their financial circumstances.

    "Any changes to the RRO would require continued regulatory oversight of prices and the ability for Albertans with low credit to access affordable electricity," she said. 

    'Has it served its purpose?'

    A sign is pictured outside the Enmax Corporation building in Calgary.
    A sign is pictured outside the Enmax Corporation building in Calgary. (David Bell/CBC)

    Speaking at a recent conference, the head of Enmax Power agreed the RRO needs to be "seriously" looked at. 

    "I don't think that there was ever the intention that we would have customers on the RRO as long as we have," said Jana Mosley, president of Enmax Power, during a panel discussion hosted by the Independent Power Producers Society of Alberta.

    "We really do need to think seriously about, 'Has that served its purpose?'"

    Given the cost pressures consumers are facing, Janine Sullivan, president and CEO of FortisAlberta, said it's understandable the RRO is up for discussion. She noted it would likely be a complex program to phase out if the province decided to go that route. 

    "We have over 330,000 customers on the RRO in our service area, so just the education and the transition of those customers from something like that into a different arrangement will be very complex," she said. 

    Policy reform could help people get off RRO

    While there are still many Albertans using the RRO, their ranks have declined in recent years, Shaffer said, with a particular drop in the last year as prices have skyrocketed. 

    Currently, about 63 per cent of Alberta customers are on competitive retail electricity contracts and the other 37 per cent are on the RRO, according to the latest numbers from the Market Surveillance Administrator. 

    Some have remained on the RRO because they don't have the credit score or the deposit money to sign a contract, Shaffer said. One simple way to reduce reliance on the RRO, he said, could be to reduce those barriers. 

    "The government could really easily step in and say to the competitive retailers, 'Look, we will cover any non-bill payment that's needed, but we're going to make sure you allow people even with low credit to go and get their electricity from you," said Shaffer. 

    Shaffer said this would likely reduce the amount of non-payment overall, as people with low credit scores or low incomes would have more stability in their monthly bills.

    "I'm actually confused as to why the government over the past two years hasn't moved to try to help folks get on to fixed rates by removing those credit barriers."

    Shaffer hopes to see this policy change made sooner rather than later, as anyone still on the RRO after the temporary cap is lifted will be left to pay the deferred costs. 

    The province said its review will continue through 2023. 

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    Visualizing California’s GDP Compared to Countries


    March 18, 2023
    By StatsPanda
    Featured Creator
    Article/Editing:
    Aran Ali



    California’s GDP Compared to Countries

    Comedian Trevor Noah once said America is fifty little countries masquerading as one.

    From an economic sense, this might carry some truth. When looking at the economic output of each state, especially the largest and wealthiest ones, they often compare to or even exceed the GDPs of entire nations.

    To illustrate, this visual from StatsPanda looks at California’s $3.36 trillion GDP using data from The World Bank and compares it to 10 sizable country economies. Let’s take a closer look.
    Sizing Up California’s GDP in 2021

    California’s $3+ trillion GDP is an enormous figure in its own right, so it’s no surprise that it is larger than certain nations’ economic output.

    But even when comparing with economies like Malaysia, Colombia, and Finland, all among the top 50 countries by GDP, California stands tall.


    Country GDP (2021 USD)
    Malaysia $372B
    Hong Kong $369B
    Vietnam $366B
    Iran $359B
    Pakistan $348B
    Chile $317B
    Colombia $314B
    Finland $297B
    Romania $284B
    Czechia $281B

    Total $3,307B

    California $3,357B


    What’s more, these 10 countries are quite densely populated, with a combined population of 653 million compared to California’s 39 million total.

    A Closer Look At California’s Economy

    What makes California’s GDP so vast and their economy so powerful?

    Relative population is a big factor, as the state is the most populous in the U.S. with roughly 12% of the country’s population calling it home. But since California’s GDP makes up over 15% of the country’s economic output, there must be something else at work.

    One key driver is the technology sector. Not only does Silicon Valley generate massive amounts of technological output, this also translates directly to wealth and economic activity. Many tech markets follow winner-take-all dynamics, bringing large revenues back to the state. In addition, smaller technology companies are frequently gobbled up by larger competitors, adding wealth back into the mix through M&A.

    This might partly explain why California’s GDP is actually estimated to overtake Germany’s in the coming years and become the world’s 4th largest economy.

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    Banking complaints reached new records in 2022: report



    Joey Chini
    CTVNews.ca Writer-Producer
    Published March 17, 2023 

    Canada's Ombudsman for Banking Services and Investments (OBSI) says it responded to a record high of more than 10,000 public inquiries in 2022, and the number of fraud complaints rose dramatically year-over-year.

    OBSI is a national and independent not-for-profit that deals with disputes between people and financial services. In its 2022 annual report, OBSI recorded a 40 per cent increase in public inquiries year-over-year. OBSI says the jump was mainly driven by banking complaints—which rose 56 per cent compared to 2021—while investment complaints increased by eight per cent.

    OBSI says it opened 1,151 cases last year, also a new record high and an increase of six per cent from the last record set in 2021.

    "These higher volumes continued a trend we have seen throughout the pandemic period, as Canadians, small businesses and financial services firms continue to cope with unprecedented economic challenges, increasing levels of financial stress, and increasing rates of financial fraud," said Sarah Bradley, Ombudsman and CEO at OBSI, in a news release accompanying the report.

    RELATED LINKS


    BANKING CASES

    People complaining about their bank accounted for 686 cases OBSI dealt with in 2022—a 33 per cent increase from 2021’s 514 cases.

    Bradley says on top of economic pressures brought on by the COVID-19 pandemic, changes last year to financial consumer protections laws have also led to more complaints being brought to and addressed through the system.

    More consumers than ever are making use of Canadian banks’ internal complaint-handling services to resolve their concerns and a record number are escalating their concerns to us for an independent expert review of their case,” Bradley said.

    According to the report, fraud was the leading issue for complaints against banks in 2022. Thirty-one per cent of banking cases opened by OBSI were fraud-related, an increase from 22 per cent in 2021. Most fraud cases involved complaints regarding e-transfers, credit cards and wire transfers.

    Nineteen per cent of all banking complaints were about service issues, while credit card chargebacks made up seven per cent of all banking cases. OBSI adds complaints about interest rates increased from nine cases in 2021 to 26 cases last year.

    Credit cards, personal chequing and savings accounts and e-transfers were the top banking products people raised complaints to OBSI about in 2022. Credit card complaints made up 32 per cent of all banking cases, savings and chequing account complaints made up 15 per cent, while complaints about e-transfers accounted for 14 per cent.
    INVESTMENT CASES

    Cases involving investments decreased in 2022 by about 18 per cent, compared to 2021.

    "Investment cases started the year with some moderation to near pre-pandemic levels, but surged later in the year, largely driven by investor concerns relating to ongoing market downturns and volatility, as well as increasing problems associated with fraud and service issues," Bradley said.


    Towers are shown from Bay Street in Toronto's financial district, 

    According to the report, fraud-related cases jumped drastically to 11 per cent of all investment cases in 2022, a rise from one per cent in 2021.

    A breakdown of investment cases includes: Mutual funds – 37 per cent
    Common shares (equities) – 33 per cent
    Service issues – 21 per cent
    Investment suitability – 15 per cent
    Fee disclosure – Eight per cent

    The newest category of complaints—crypto assets—was the third most common complaint for investors in 2022, accounting for 11 per cent of all investment cases.

    "The rise in crypto asset complaints is associated with the increasing regulatory oversight of cryptocurrency dealers, which led to a number of dealers joining OBSI in 2022 as participating firms," OBSI said in a release.

    With files from The Canadian Press
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    Crypto at a crossroads: Some provinces are wary of the technology's vast appetite for electricity

    B.C. energy minister says province must put its power to 

    the best use

    Christian Paas-Lang · CBC News · 
    Miners at work at the Bitfarms bitcoin mine in Magog, Que., on May 8, 2019.
    Miners at work at the Bitfarms bitcoin mine in Magog, Que., on May 8, 2019. (Paul Chiasson/The Canadian Press)

    Proponents of cryptocurrency mining say the industry's future in Canada is hanging in the balance after several provinces moved to restrict new projects earlier this year in response to concerns about their electricity usage.

    Crypto entrepreneurs — most of them focused on Bitcoin — have been drawn to Canada because of the abundant supply of clean, inexpensive electricity in provinces like British Columbia and Quebec. Most crypto operations need unfettered access to cheap power to operate the rows of high-powered computers required for cryptomining.

    "Why Canada? So, first of all, we said, 'What are the key ingredients you need to run this computing service?'" said Dan Roberts, an Australian cryptocurrency entrepreneur whose company, Iris Energy, operates three facilities in B.C.

    "Cool temperatures — really important. Stability of law, good regulatory jurisdiction. But most importantly, renewable energy."

    Roberts said he sees a new wave of economic prosperity growing out of cryptocurrency mining in provinces like B.C., which currently enjoys an electricity surplus.

    "We can build a whole industry around this. We can go into those regional towns where they've been decimated by the end of the pulp-and-paper mill … rehire local workers, retrain them, and deliver all these benefits back into the community," he said.

    But some provinces have slammed the brakes on new projects, saying the mining sites — where computers churn through complex equations to verify cryptocurrency transactions on the blockchain ledger (earning digital assets as a reward) — consume a staggering amount of electrical power.

    B.C. currently has seven mining sites in operation, with six more in advanced states of development. But it also has imposed an 18-month moratorium on connecting any new crypto mining projects to its electrical grid — halting 21 other projects which the province says would have used the same amount of power as 570,000 homes.

    Manitoba also has paused new crypto hookups, while Hydro-Québec has set up higher rates and an electricity usage cap for mining projects. Ontario has proposed excluding crypto miners from an incentive program that could allow them to save money on electricity.

    Uncertainty clouds future investments

    Right now, Canadian crypto miners account for the fourth highest amount of computing power being contributed to the blockchain network, after crypto operations in the United States, China and Kazakhstan. Moves by some provinces to ration the sector's access to electricity have some crypto enthusiasts questioning whether Canada will continue to be a major player.

    "As a public company, I have shareholders and I need to pause or not make decisions until I know what the rules are. And once I know what the rules are, I look at whether to invest in Canada or somewhere more lucrative," said Sheldon Bennett, CEO of DMG Blockchain Solutions and part of the Canadian Digital Asset Mining Coalition, an advocacy organization.

    B.C. Energy Minister Josie Osborne told The House B.C.'s decision to impose the moratorium was meant to give the province time to consult with the industry to make sure energy is being put to good use.

    A dam under construction in British Columbia.
    The Site C dam in B.C., under construction in 2021. (B.C. Hydro/submitted)

    While B.C. has an energy surplus right now, Osborne said that might not always be the case.

    "We don't want to put that electricity at risk. It's why we have to take this pause right now and instead use the electricity for the best opportunities in the future," she told host Catherine Cullen.

    Osborne argued that in order for B.C. to achieve its climate and economic goals, it has to look at other areas where its electricity might be more useful.

    "Cryptocurrency definitely does not create the number of jobs that other industry does," she said.

    It also does nothing to help B.C. achieve its climate goals, she added.

    "Cryptocurrency mining doesn't lower pollution in other industries," she said. "We want to use that electricity for our mines and for forestry operations, for marine port operations, for hydrogen operations [so] we could use the hydrogen to blend natural gas and decarbonize there. We want to use these electrons for their highest and best use."

    Osborne did signal her government is somewhat open to hooking up new crypto operations in the future.

    A man in a red vest and safety goggles stands in front of banks of computer equipment.
    Dan Roberts, co-founder of the cryptocurrency company Iris Energy, says Canada's supply of clean energy is a huge draw for his industry. (Bob Keating/CBC)

    Cryptocurrency was once a trendy topic in Canadian politics. It was championed by Pierre Poilievre during his successful run for the Conservative leadership (he famously bought a shawarma sandwich with Bitcoin just under a year ago).

    Poilievre suggested at the time that cryptocurrencies could allow ordinary Canadians to "opt out" of inflation because they are not influenced by central banks. That was before many cryptocurrencies crashed last year; Bitcoin's value in late 2022 had dropped to about one-fourth of what it had been a year prior.

    But policy development on crypto is moving forward. The Canadian Securities Administrators (CSA), the umbrella organization representing Canada's provincial and territorial securities regulators, has pushed for restrictions on crypto trading, while the Bank of Canada is in the midst of a digital asset review.

    The shift of some cryptocurrencies like Ethereum — the second largest cryptocurrency — to what's known as a "proof of stake" system has eliminated the need for mining, and thus for most of the currency's energy consumption. That's provided hope to some advocates that the energy argument against cryptocurrencies can one day be eliminated.

    But Bitcoin remains on a "proof of work" model, where mining is key. Bennett said he wonders about Canada's willingness to engage with the new sector.

    "What does Canada decide it wants to do with this industry? Does it want to foster it and grow it? Does it appreciate the technology, the jobs and the investment that's coming into it and want to grow that?" he said.

    "Or does it want to sit back and see how other countries manage it?"

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