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Global climate divestment campaigns led by 350.org and Bill McKibben will have a larger moral impact than financial one
Journalist and climate activist Bill McKibben is in Australia in June on his epic Do The Math tour, which aims to highlight the danger of fossil fuel company oil and coal reserves and encourage divestment.
The tour was kick started by McKibben’s Rolling Stone article, Global Warming’s Terrifying New Math, which argued that in order to stay below the 2C warming limit, the global economy has a budget of less than 565 gigatons of carbon dioxide. Unfortunately, fossil fuel companies have reserves of carbon from oil, coal and gas of almost 3000 gigatons — far exceeding the climate’s safe limit if it were to all be burned.
This “math” has been known for some years before McKibben’s article. The Potsdam Institute wrote about humanity’s carbon budget back in 2009, noting that even if we stayed within budget, we still had a 25% chance of going over 2 degrees warming. Alarmingly, the Potsdam report said global emissions must start falling by 2015 and that reductions must exceed even the most ambitious public targets tabled by governments so far.
Nevertheless, although McKibben didn’t invent the “math”, he certainly deserves credit for catapulting it back into the spotlight.
Tied to the tour is the 350.org sponsored carbon divestment campaign, targeting mainly students on campuses around the USA (and now Australia) to pressure their university administrations to dump investments in fossil fuel companies. The message of the campaign is that these students can no longer tolerate “business as usual”.
The campaign has started to spread to churches, local councils, and in Australia, work is under way for activists to start campaigning to superannuation funds.
And in the USA it has been remarkably successful. More than 300 American colleges have active Go Fossil Free campaigns.
Universities like Harvard or MIT have multi-billion dollar endowment funds. While individual college funds may represent just a small drop in the ocean of international financial markets, the Go Fossil Free campaigns are trying to tap into something deeper with their divestment campaigns.
Divestment campaigns historically have never been about economic pressure. The effectiveness of the South African apartheid divestment campaigns were due to the moral pressure they placed on governments and businesses. They made toleration of apartheid in the USA, Britain and other countries (including Australia) impossible. University campuses were the hubs of much of the campaign activities, engaging not just students but academics and the trustees of university administered funds.
The divestment by the University of California Berkeley’s divestment of $3 billion in 1986 was later credited by Nelson Mandela as a catalyst for the collapse of the apartheid government.
Unfortunately, there’s every indication that the big fossil fuel companies targeted by McKibben — like Exxon, BP, Chevron and BHP Billiton — are less concerned than Apartheid South Africa was in global public opinion. For example, BP has managed to bounce back from the Gulf of Mexico oil spill.
It’s likely they also have more economic and political clout. The big fossil fuel companies are some of the most profitable companies in history. BHP Billiton for example made a modest $10 billion profit in 2012, and Exxon made over $42 billion.
Given these numbers, it is unlikely that even the $32 billion Harvard endowment would make much of an impact, even if the entire fund was invested in fossil fuel companies. In Australia, only the University of Melbourne has over a billion dollars in their endowment, and even if all the Australian universities combined divested, the business practices of BHP and Chevron are unlikely to change.
I think the real impact of the divestment campaigns must come from their moral authority. Universities (and hopefully superannuation funds) that do divest are taking a moral stand. That stand must be accompanied by efforts throughout the university to highlight the risks posed by dangerous climate change.
Universities train the business leaders of the future. In fact, the graduate schools are often training the business leaders of today! Most business schools include compulsory courses in ethics, but the carbon budget math needs to be embedded into accounting, finance and economics classes from the undergraduate to graduate level.
Lecturers teaching actuaries about risk should be explaining the effects of runaway global warming and the ecological crisis that will occur if we cross over 2 degrees in warming. Engineering and project management students should look at sustainable energy and ecologically sound product supply chains.
And commerce students need to come to grips with the fact that as we get closer to reaching or exceeding our carbon budget, those fossil fuel reserves may become unburnable, leaving investors stranded.
With more and more reports warning of the dire risks if we do not change course, the Go Fossil Free campaign has its work cut out to ensure we don’t cross the limit in 2015.
Last year, I had the opportunity to see McKibben and Naomi Klein at the Boston leg of the Do The Math tour and found it excellent and informative.
Your article (European energy chief puts forward case for funding coal, 12 May) says the European Bank for Reconstruction and Development has “hinted it may expand funding of high-carbon coal projects despite mounting pressure from climate change campaigners to rule out such investments”. This suggestion is wrong. The EBRD is not considering an expansion of its funding of coal projects. The EBRD has been pioneering in its development of a sustainable energy initiative which is actively promoting energy efficiency and the use of renewable energy sources across the regions where it invests. The EBRD may, on a selective basis and taking into account the lack of availability of alternative sources of energy, consider financing coal-fired projects that would replace highly polluting existing plants with new state of the art ones, thus improving energy efficiency and lowering emissions. But there is no consideration of a policy of expanding its funding for coal projects.
European Bank for Reconstruction and Development
• It is disappointing that the transport select committee (Report, 10 May) calls for the expansion of Heathrow, given that millions of Londoners already suffer from the excessive noise and air pollution of an airport that was built in the wrong place. However, in recognising that Britain needs a competitive hub airport and that Heathrow would need a fourth runway, the committee has accidentally made clear why the Davies commission must reject Heathrow expansion and recommend a new airport to the east of London.
Transport spokesman, GLA Conservatives
EBRD chief Riccardo Puliti warns Europe not to be hasty in adopting ‘ideological’ policy on carbon intensity funding
One of Europe’s most influential government-owned investors in the energy industry has hinted it may expand funding of high-carbon coal projects despite mounting pressure from climate change campaigners to rule out such investments.
Riccardo Puliti, energy chief at the European Bank for Reconstruction and Development (EBRD), warned against an “ideological” policy on carbon intensity in funding decisions without giving weight to other considerations.
The EBRD, which is based in London and owned by more than 60 countries, including the UK, is reviewing its energy policy. It has a €37.5bn (£32bn) loan book, with 41% of its investments last year channelled into the energy and infrastructure sectors.
Puliti’s comments came as scientists declared the highest day-long concentration of C02 in human history and a line of global institutions such as the International Energy Agency have called for public subsidies of fossil fuels to be phased out.
But Puliti defended the EBRD, which has just provided €100m (£85m) to a new lignite plant at Sostanj in Slovenia and is understood to be ready to finance new coal operations in Kosovo and Serbia. Lignite is a particularly polluting form of coal.
“We strongly believe in a transition to a low-carbon economy and that is what we want to do as an active citizen. But other pillars need to be addressed,” he said.
“Affordability is a problem, even in developed countries, and security of supply is a problem. These pillars need to be addressed and analysed in a proper way so we find the best optimum solution. So I can’t say yes or no [to coal].”
Puliti was speaking to the Guardian on the fringes of the EBRD’s annual meeting, this year in Istanbul. He said the EBRD had funded about 200 energy projects between 2006 and 2012 with only two related to coal. Those two were designed to improve efficiency while at least 80 of the 200 schemes were related directly to renewable energy, sustainability or wider energy efficiency.
Puliti said it was impossible to impose a one-size-fits-all policy. “The issue must be seen in the context of different countries. Energy is used not just for power but for heating too. A country like Mongolia has access to just one fuel – coal – although the EBRD has financed and is an investor in the first ever wind farm in Mongolia … You cannot be ideological about this.”
In those countries with no access to gas, nuclear or hydro it may be best to replace old and inefficient coal-based combined heat and power (CHP) schemes with more efficient units, he argued.
But low-carbon campaigners said this policy could not be justified. “With repeated warnings about the need to end public subsidies for fossil fuels, pouring millions of euros into coal is unacceptable for a public institution like the EBRD,” said Fidanka McGrath, from the non-governmental organisation CEE Bankwatch. “At a time of scarce public finance, the EBRD must lead rather than follow markets.”
Bankwatch argues that under the current EBRD policy, nearly half of its energy investments went to fossil fuel projects including oil and gas, with its lending for coal increasing from €60m (£50m) to €262m to (£221m) in the five years to 2011.
The bank has been consulting its member countries since December about its new energy policy and hopes to have a draft document ready by the summer. After this, it will go back to shareholders for the definitive policy to be adopted by December of this year, says Puliti.
Insiders at the bank admit that major coal producers and exporting countries, such as Russia, are putting considerable pressure on the EBRD not to turn its back on coal. But some other countries are pushing in the opposite direction, recognising it is time for change. There have been repeated warnings about a “carbon bubble” of fossil fuel assets as more and more countries move away from coal and oil for powering their electricity systems.