My Times column on the flawed fossil-fuel divestment campaign:
Institutions and pension funds are under pressure to dump their investments in fossil-fuel companies. The divestment movement began in America, jumped the Atlantic and has become the cause célèbre of the retiring editor of The Guardian, Alan Rusbridger. The idea is that if we do not “leave it in the ground”, the burning of all that carbon will fry the climate.
Some are resisting: the Wellcome Trust has politely declined to divest, saying it thinks it is better to keep the shares so it can lean on company executives to decarbonise; the University of Edinburgh unexpectedly voted last week not to divest, using a similar argument; and Boris Johnson has just rejected a motion by the London Assembly to divest its pension funds of fossil-fuel shares. The Church of England has cunningly confined its divestment to “thermal coal” and Canadian oil sands companies, getting good publicity but not having to sell many shares.
Of course, divestment represents an admission that fossil fuels are not going to run out, as was commonly believed until the shale bonanza began. The governor of the Bank of England, Mark Carney, seems sympathetic to the argument that climate change policies will soon make fossil fuels unburnable and that oil reserves may become “stranded assets”. So sell your BP shares before the company’s raison d’etre vanishes in a puff of non-smoke.
It’s all mad. Divestment won’t work, is unethical, hypocritical, aimed at the wrong target and based on flawed premises.
First, there is a buyer for every seller. Those pressing for fossil-fuel divestment see themselves as the successors to those who fought apartheid and tobacco by the same means. But all the tobacco divestment movement achieved in the 1990s was to lower share prices temporarily, enabling tobacco companies to buy back their shares. Anybody who bought tobacco shares when others sold beat the market handsomely over the next decade. Smoking is going to be killed by innovation (vaping), not divestment.
Tobacco (like apartheid) has no health benefits, only harms. That’s not true of fossil fuels. They make fertiliser, which banishes famine and lowers food prices. They replace wood as a fuel, saving forests. They transport goods and people, raising living standards. They make affordable electricity, providing light, heat and freedom from fatal indoor smoke. The divestment fanatics who think only of the bad effects of fossil fuels ignore all this.
So, second, if the world went cold turkey on fossil fuels the people who would suffer most would be the poor. Divestment is not an ethical thing to do; it’s a harsh, cold-hearted decision. It says: sorry, poor people (and rainforests), we have to make you suffer today so that our great grandchildren can be safe from a risk of rising sea levels in the event that no other energy technology comes along.
Third, it is hypocritical because the divesters continue to use electric light and gas heating, and to travel by car and plane. That’s because there is no alternative to fossil fuels on the scale we use them. Nuclear power could eventually fill the gap but not cheaply and not quickly: it currently provides 4 per cent of world energy consumption. Wind and solar provide only 1 per cent between them, after two decades of frantic expansion, and need far too much land. We would need to build 100,000 wind turbines on 30,000 square miles of land each year just to keep up with the annual increase in world electricity consumption, let alone gain market share. That’s a whole Scotland each year.
Fourth, the campaign will have little effect on the oil industry. Exxon is the 11th biggest oil company in the world in terms of reserves; Shell 19th and BP 20th. All but one (Lukoil) of the rest of the top 20 belong to governments: Iran, Saudi Arabia, Venezuela, Iraq, Nigeria, Russia, and so on. These regimes will pay no attention to students occupying senior common rooms in London. Indeed, if they see quoted firms hurt by divestment and pulling out of oil, they will shed a crocodile tear, jack up the price and move in.
It’s not just state-owned firms that will benefit. So will those owned by private equity or families. I regularly declare a commercial relationship with a coal company, but it’s not quoted, so divestment will not hurt it.
Finally, the whole argument is based on a flawed premise. The divesters argue that if we are to have a decent chance of limiting any temperature rise to 2C from pre-industrial levels, then we must burn less carbon in the future than we have burnt in the past two centuries.
Specifically, the Intergovernmental Panel on Climate Change (IPCC) says that we can burn only 820 gigatonnes of carbon (gtc) in total to have a 50 per cent chance of staying within 2C. We burn about 10gtc a year and have burnt 515gtc so far. Since we have raised the world average temperature by about 0.8C (some of which may have been natural), then they are suggesting that another 300gtc has an evens chance of bringing us to the point where the temperatures will have risen by another 1.2C.
Note that they are therefore assuming a rapid acceleration of the rate of warming, whereas in fact it has slowed down in the past two decades. That’s one flaw.
A bigger one is this. The IPCC models assume high sensitivity of the climate to carbon dioxide. With a more realistic estimate of climate sensitivity taken from a raft of recent high-quality, observation based studies, and still assuming fossil fuel burning at 10gtc a year, we would probably not hit the 2C threshold for more than 100 years (which is bang in line with the rate of warming over the past 60 years).
A third flaw is that 2C above pre-industrial levels is not the point at which climate change becomes catastrophic. It is just the point where (if it comes quickly enough and we do nothing to adapt) it — perhaps — becomes net harmful. So we are being asked to prioritise the possibility of the start of net harm in the time of our great-great-grandchildren over the plight of the poor today.
By 2115 the OECD reckons that the average person will be between three and 15 times richer than today — if they are not, they will have burnt less carbon — so they will most likely be using advanced forms of zero-carbon energy.
Where is the morality in hurting today’s poor people for the sake of these distant plutocrats?
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