Fossil fuel companies will never voluntarily walk away from dirty energy, so it is up to us to walk away from them. It is futile to try to encourage Big Oil to stop sucking at the teat of their carbon rich cash cow. They will continue to use their vast wealth and influence to advance their own agenda at the expense of people and the planet.
Esteemed environmentalist Jonathon Porritt worked on sustainability projects with big oil companies for years and he has indicated that it is “impossible” for today’s oil and gas companies to adapt to climate change and it is equally unlikely that they will voluntarily stop extracting fossil fuels. They are part of an entrenched culture that is resistant to the very idea of green energy. As Porritt said, these “hydrocarbon supremacists” persist despite the fact that they know that their business model threatens the future of humanity.
The science could not be more clear, the burning of fossil fuels is the leading cause of global warming. We know that if we are to have a chance of staving off the worst impacts of climate change we must prevent global temperatures from climbing more than 2 degrees Celsius above preindustrial times. To stay within this upper threshold limit we must leave at least three quarters of all known fossil fuel reserves in the ground. However, oil companies are undeterred they continue to spend astronomical sums of money on new developments. In 2013 alone $670 billion was spent on new fossil fuel exploration.
Many people around the world now understand that we must reduce our reliance on fossil fuels and they also are coming to acknowledge that we cannot rely on common sense from the hydrocarbon dinosaurs that run oil companies. The world is rising up and challenging the power of Big Oil.
On February 13 the world came together to stage hundreds of events for Global Divestment Day. This was the largest single day focused on fossil fuel divestment in history.
Fossil fuel divestment is the fastest growing movement in the world today. There are now 600 divestment campaigns around the world and 180 institutions have already divested from fossil fuels. So far $50 billion has been divested and investors representing assets of $1.2 trillion have committed to the pledge.
Even the current negotiating text of the U.N. climate agreement includes a call for divestment. This has implications for the $45 trillion of assets under management by 1,314 United Nations Principles for Responsible Investment (UNPRI) signatories.
In 2014 alone the number of prominent institutions that divested from fossil fuels more than doubled. One of the most notable is the Rockefeller Brothers Fund which pledged to divest its fossil fuel holdings in September 2014. More recently Norway’s sovereign wealth fund, valued at $850 billion, decided to divest from coal and tar sands companies.Norway is divesting from coal mining, coal fired electricity, tar sands producers, cement makers and companies involved in mountaintop removal.
Health organizations are also turning away from fossil fuels. In October the Australian Health Fund announced that it would divest its coal assets. This follows a number of US, Australian and UK health organizations that divested over the summer of 2014.
In June British Medical Association (BMA) moved to transfer its investments in fossil fuels to clean energy. There was even an editorial calling for divestment in the British Medical Journal. A number of health groups have joined the call including Medact and Healthy Planet UK. In September Gundersen Health System announced that it will restrict investments in fossil fuels. The Health Employees’ Superannuation Trust Australia (HESTA), with over $29 billion AUD in assets, announced a restriction on investments in thermal coal.
Some big utility companies are showing signs of moving away from dirty sources of energy. At the end of 2014 the German utility EON became the first big energy company to turn away from fossil fuels and focus on renewables. The company will split into two and one of the companies will relinquish all of its gas, hydro, nuclear, and the drilling rigs. The company has also indicated they will increase their investments in wind, solar and smart grids.
The EON decision follows European energy giant, Vattenfall’s announcement that it will pull out of brown coal mining. Germany’s other power giant, RWE announced that it will focus on clean energy. Another utility behemoth, NRG recently announced that it had set a goal of 90 percent emissions reductions by 2050.
These are but the most recent in a slew of universities, faith groups, philanthropies, pension funds, governments and wealthy investors who are divesting from fossil fuels.
There is a powerful moral and religious argument driving fossil fuel divestment. However, divestment is also a pragmatic bottom line oriented decision. Investors are increasingly asking for and getting sustainability data, the more transparent the data offering the more divestment pressure will build.
The economic argument for divestment is compelling. Divesting from fossil fuels is not only about saving the planet from runaway climate change it is about avoiding the kind of risks that could seriously undercut the value of oil assets.
A massive carbon bubble is forming and this will make fossil fuels reserves worthless in the future. This is not environmental hyperbole, this is a view taken very seriously by some leading financial institutions including, Goldman Sachs, Citibank, the Bank of England, and many others.
A Deutsche Bank research paper stated, “If the world takes its climate change commitments seriously, then the dynamics of oil will be altered beyond recognition. Oil will become constrained by the level of demand allowed under CO2 emission limits and this will have implications for the behaviour of countries, companies and consumers alike. Perhaps last year’s fall was the first rumbling of this upcoming profound change.”
The divestment movement will not bankrupt the fossil fuel industry any time soon. However what it does is challenge their social license to operate and this may prove to be a catalyst that spells the beginning of the end for fossil fuels.
Source: Global Warming is Real