Posts Tagged ‘Coal’

The seven megatrends that could beat global warming: ‘There is reason for hope’

November 10th, 2017

Powered by Guardian.co.ukThis article titled “The seven megatrends that could beat global warming: ‘There is reason for hope'” was written by Damian Carrington, Environment editor, for The Guardian on Wednesday 8th November 2017 07.00 UTC

‘Everybody gets paralysed by bad news because they feel helpless,” says Christiana Figueres, the former UN climate chief who delivered the landmark Paris climate change agreement. “It is so in our personal lives, in our national lives and in our planetary life.”

But it is becoming increasingly clear that it does not need to be all bad news: a series of fast-moving global megatrends, spurred by trillion-dollar investments, indicates that humanity might be able to avert the worst impacts of global warming. From trends already at full steam, including renewable energy, to those just now hitting the big time, such as mass-market electric cars, to those just emerging, such as plant-based alternatives to meat, these trends show that greenhouse gas emissions can be halted.

“If we were seeing linear progress, I would say good, but we’re not going to make it in time,” says Figueres, now the convener of the Mission 2020 initiative, which warns that the world has only three years to get carbon emissions on a downward curve and on the way to beating global warming. “But the fact is we are seeing progress that is growing exponentially, and that is what gives me the most reason for hope.”

No one is saying the battle to avert catastrophic climate change – floods, droughts, famine, mass migrations – has been won. But these megatrends show the battle has not yet been lost, and that the tide is turning in the right direction. “The important thing is to reach a healthy balance where we recognise that we are seriously challenged, because we really have only three years left to reach the tipping point,” says Figueres. “But at the same time, the fact is we are already seeing many, many positive trends.”

Michael Liebreich, the founder of Bloomberg New Energy Finance, agrees. “The good news is we are way better than we thought we could be. We are not going to get through this without damage. But we can avoid the worst. I am optimistic, but there is a long way to go.”

Also cautiously hopeful is climate economist Nicholas Stern at the London School of Economics. “These trends are the start of something that might be enough – the two key words are ‘start’ and ‘might’.” He says the global climate negotiations, continuing this week in Germany and aiming to implement the Paris deal, are crucial: “The acceleration embodied in the Paris agreement is going to be critical.”

THE TRENDS

1. Methane: getting to the meat

A lab-grown burger.
A lab-grown burger. Photograph: David Parry/PA

Carbon dioxide from burning fossil fuels is the main greenhouse gas, but methane and nitrous oxide are more potent and, unlike CO2, still rising. The major source is livestock farming, in particular belching cattle and their manure.

The world’s appetite for meat and dairy foods is rising as people’s incomes rise, but the simple arithmetic is that unless this is radically curbed, there is no way to beat global warming. The task looks daunting – people hate being told what to eat. However, just in the last year, a potential solution has burst on to the market: plant-based meat, which has a tiny environmental footprint.

What sounds like an oxymoron – food that looks and tastes just as good as meat or dairy products but is made from plants – has attracted heavy investment. The buzz is particularly loud in the US, where Bill Gates has backed two plant-based burger companies and Eric Schmidt, formerly CEO of Google, believes plant-based foods can make a “meaningful dent” in tackling climate change.

Perhaps even more telling is that major meat and dairy companies are now piling in with investments and acquisitions, such as the US’s biggest meat processor, Tyson, and multinational giants Danone and Nestlé. The Chinese government has just put 0m (£228m) into Israeli companies producing lab-grown meat, which could also cut emissions.

New plant-based products, from chicken to fish to cheese, are coming out every month. “We are in the nascent stage,” says Alison Rabschnuk at the US nonprofit group the Good Food Institute. “But there’s a lot of money moving into this area.”

Plant-based meat and dairy produce is not only environmentally friendly, but also healthier and avoids animal welfare concerns, but these benefits will not make them mass-market, she says: “We don’t believe that is what is going to make people eat plant-based food. We believe the products themselves need to be competitive on taste, price and convenience – the three attributes people use when choosing what to eat.”

Plant-based milks – soya, almond, oat and more – have led the way and are now about 10% of the market and a billion-dollar business in the US. But in the past year, sales of other meat and dairy substitutes have climbed 8%, with some specific lines, such as yoghurt, shooting up 55%. “I think the writing’s on the wall,” says Rabschnuk. Billionaire entrepreneur Richard Branson agrees. “I believe that in 30 years or so we will no longer need to kill any animals and that all meat will either be [lab] or plant-based, taste the same and also be much healthier for everyone.”

Plant-based alternatives to meat and dairy products are growing fast

2. Renewable energy: time to shine

Solar panel installation.
Solar panel installation. Photograph: Kristian Buus/Corbis via Getty Images

The most advanced of the megatrends is the renewable energy revolution. Production costs for solar panels and wind turbines have plunged, by 90% in the past decade for solar, for example, and are continuing to fall. As a result, in many parts of the world they are already the cheapest electricity available and installation is soaring: two-thirds of all new power in 2016 was renewable.

This extraordinary growth has confounded expectations: the respected International Energy Agency’s annual projections have anticipated linear growth for solar power every year for the past decade. In reality, growth has been exponential. China is leading the surge but the impact is being felt around the world: in Germany last week there was so much wind power that customers got free electricity.

In the US, enthusiasm for green energy has not been dented by President Donald Trump committing to repeal key climate legislation: bn has been invested since he signed an executive order in March. “I am no longer concerned about electric power,” says Figueres.

Global wind and solar is soaring

3. King coal: dead or dying

The flipside of the renewables boom is the death spiral of coal, the filthiest of fossil fuels. Production now appears to have peaked in 2013. The speed of its demise has stunned analysts. In 2013, the IEA expected coal-burning to grow by 40% by 2040 – today it anticipates just 1%.

The cause is simple: solar and wind are cheaper. But the consequences are enormous: in pollution-choked China, there are now no provinces where new coal is needed, so the country has just mothballed plans for 151 plants. Bankruptcies have torn through the US coal industry and in the UK, where coal-burning began the industrial revolution, it has fallen from 40% of power supply to 2% in the past five years.

“Last year, I said if Asia builds what it says it is going to build, we can kiss goodbye to 2C” – the internationally agreed limit for dangerous climate change – says Liebreich. “Now we are showing coal [plans] coming down.” But he warns there is more to do.

Solar and wind are cheaper than new coal, he says, but a second tipping point is needed. That will occur when renewables are cheaper to build than running existing coal plants, meaning that the latter shut down. If renewable costs continue to fall as expected, this would happen between 2030 and 2040. At that point, says Liebrich, “Why keep digging coal out of the ground when you could just put up solar?”

World coal production peaked in 2013

4. Electric cars: in the fast lane

Vehicles being charged at China’s leading maker of electric cars, BYD Co, in Shenzhen, China.
Vehicles being charged at China’s leading maker of electric cars, BYD Co, in Shenzhen, China. Photograph: Qilai Shen/Bloomberg/Getty Images

Slashing oil use – a third of all global energy – is a huge challenge but a surging market for battery-powered cars is starting to bite, driven in significant part by fast-growing concerns about urban air pollution.

China, again, is leading the way. It is selling as many electric cars every month as Europe and the US combined, with many from home-grown companies such as BYD. US-based Tesla is rolling out its more affordable Model 3 and in recent months virtually all major carmakers have committed to an electric future, with Volvo and Jaguar Land Rover announcing that they will end production of pure fossil-fuelled cars within three years.

“We have a domino effect now,” says Figueres. These cars are “now being made for the mass market and that is really what is going to make the transformation”.

“I don’t think it is going to slow down,” says Viktor Irle, an analyst at EV-volumes.com. Drivers can see the direction of travel, he says, with a stream of choked cities and countries from Paris to India announcing future bans on fossil-fuelled cars.

It is true that global sales of electric cars have now achieved liftoff, quadrupling in the past three years, but they still make up only 1.25% of all new car sales. However, if current growth rates continue, as Irle expects, 80% of new cars will be electric by 2030.

The rapid rise of electric cars has left the oil giants, who have a lot to lose, playing catchup. The oil cartel Opec has increased its estimate of the number of electric cars operative in 2040 by five times in the past year alone, with the IEA, ExxonMobil and BP all bumping up their forecasts too. Heavy transport remains a challenge, but even here ships are experimenting with wind power and batteries. Short-haul electric airplanes are on the drawing board, too.

Global electric car fleet is following a rapidly rising curve

5. Batteries: lots in store

A lithium-ion battery.
A lithium-ion battery. Photograph: Alamy

Batteries are key to electric cars and, by storing energy for when the sun goes down or the wind stops blowing, they are also vital when it comes to enabling renewable energy to reach its full potential. Here too, a megatrend is crushing prices for lithium-ion batteries, which are down 75% over the past six years. The International Renewable Energy Agency expects further falls of 50-66% by 2030 and a massive increase in battery storage, linked to increasingly smart and efficient digital power grids. In the UK alone, government advisers say a smart grid could save bill-payers £8bn a year by 2030, as well as slashing carbon emissions.

Fears that lithium-ion, the technology that dominates today, cannot be scaled up sufficiently are overblown, argues Liebreich, as the metal is not rare. “I think lithium-ion is a banker in that you can be sure it will get cheaper and you can be sure there is enough.” He is also frustrated by frequent claims that a grid based on renewables and storage cannot be cheap and reliable: “That stupidity and absolute certainty is in inverse proportion to any knowledge of how you run an electrical system.”

It is true, however, that batteries will not be the solution for energy storage over weeks or months. For that, long-distance electricity interconnectors are being built and the storage of the energy as gas is also being explored.

Battery costs are tumbling

6. Efficiency: negawatts over megawatts

A zero-carbon house.
A zero-carbon house. Photograph: Alamy

Just as important as the greening of energy is reducing demand by boosting energy efficiency. It’s a no-brainer in climate policy, but it can be very tricky to make happen, as it requires action from millions of people.

Nonetheless, good progress is being made in places such as the EU, where efficiency in homes, transport and industry has improved by about 20% since 2000. Improving the efficiency of gadgets and appliances through better standards is surprisingly important: a new UN Environment Programme report shows it makes the biggest impact of any single action bar rolling out wind and solar power.

But again, continued progress is vital. “We need to drive energy efficiency very, very hard, even for European countries,” says Prof Kevin Anderson at the University of Manchester. “We could power down European energy use by about 40% in something like 10-15 years, just by making the most efficient appliances available the new minimum.”

In countries with cool winters, better insulation is also needed, particularly as a fossil fuel – natural gas – currently provides a lot of heating. “What is a crime is every time a building is renovated but not renovated to really high standards,” says Liebreich, who thinks labelling such homes as “zero-energy-bill” homes, not “zero-carbon” homes, would help overcome opposition.

One sector that is lagging on energy efficiency is industry, but technology to capture and bury CO2 from plants is being tested and ways to clean up cement-making are also being explored.

Energy efficiency has improved in EU homes, transport and industry

7. Forests: seeing the wood

The destruction of forests around the world for ranching and farming, as well as for timber, causes about 10% of greenhouse gas emissions. This is the biggest megatrend not yet pointing in the right direction: annual tree losses have roughly doubled since 2000.

This is particularly worrying as stopping deforestation and planting new trees is, in theory at least, among the cheapest and fastest ways of cutting carbon emissions. But it is not getting the support it needs, says Michael Wolosin at Forest Climate Analytics. “Climate policy is massively underfunding forests – they receive only about 2% of global climate finance.” Furthermore, the .3bn committed to forests by rich nations and multilateral institutions since 2010 is tiny compared with the funding for the sectors that drive deforestation. “Brazil and Indonesia’s governments alone invested 6bn in the same timeframe, in just the four key driver commodities: palm oil, soy, beef and timber,” says Franziska Haupt at Climate Focus.

In fact, new research has shown that better land management could deliver a third of all the carbon cuts the world needs, and Wolosin says there are some grounds for hope that new forests can be planted. “Achieving large-scale forestation is not just theoretical. We know we can do it because a few countries have done it successfully.”

In the past two decades, tree-planting in China, India and South Korea has removed more than 12bn tonnes of CO2 from the atmosphere – three times the entire European Union’s annual emissions, Wolosin says. This action was driven by fears about flooding and food supply, meaning that global warming needs to be seen as equally urgent in this sector. Regrowing forests can also play a crucial role in sucking CO2 out of the atmosphere, which is likely to be necessary after 2050, unless very sharp cuts are made now.

Global tree losses are increasing

The race against time

Will these megatrends move fast enough to avoid the worst of climate change? Opinions vary and Anderson is among the most hawkish. He says it remains possible for now, but is pessimistic that the action will be taken. “We’re pointing in the right direction but not moving [there]. We have to not just pursue renewables and electric vehicles and so forth, we have to actively close down the incumbent fossil fuel industry.”

Stern is cautiously optimistic, saying that what has changed in recent years is the realisation that green economic growth is the only long-term option: “There is no long-run high-carbon growth story because it creates an environment so hostile that it turns development backwards.

“There are some tremendous developments so I am very confident now we can do this, but the change, attractive as it is, has to be radical,” he says. “Will we have the political and economic understanding and commitment to get there? I hope so.”

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The argument for divesting from fossil fuels is becoming overwhelming

March 17th, 2015

Powered by Guardian.co.ukThis article titled “The argument for divesting from fossil fuels is becoming overwhelming” was written by Alan Rusbridger, for theguardian.com on Monday 16th March 2015 13.06 UTC

The world has much more coal, oil and gas in the ground than it can safely burn. That much is physics.

Anyone studying the question with an open mind will almost certainly come to a similar conclusion: if we and our children are to have a reasonable chance of living stable and secure lives 30 or so years from now, according to one recent study 80% of the known coal reserves will have to stay underground, along with half the gas and a third of the oil reserves.

If only science were enough.

If not science, then politics? MPs, presidents, prime ministers and members of congress are always telling us (often suggesting a surrender of civil liberties in return) that their first duty is the protection of the public.

But politics sometimes struggles with physics. Science is, at its best, long term and gives the best possible projection of future risk. Which is not always how politics works, even when it comes to our security. Politicians prefer certainty and find it difficult to make serious prudent planning on high probabilities.

Climate change petition

On climate change, the public clamour is in inverse proportion to the enormity of the long-term threat. If only it were the other way round. And so, year after year, the people who represent us around the UN negotiating tables have moved inches, not miles.

When, as Guardian colleagues, we first started discussing this climate change series, there were advocates for focusing the main attention on governments. States own much of the fossil fuels that can never be allowed to be dug up. Only states, it was argued, can forge the treaties that count. In the end the politicians will have to save us through regulation – either by limiting the amount of stuff that is extracted, or else by taxing, pricing and limiting the carbon that’s burned.

If journalism has so far failed to animate the public to exert sufficient pressure on politics through reporting and analysis, it seemed doubtful whether many people would be motivated by the idea of campaigning for a paragraph to be inserted into the negotiating text at the UN climate talks in Paris this December. So we turned to an area where campaigners have recently begun to have marked successes: divestment.

There are two arguments in favour of moving money out of the biggest and most aggressive fossil fuel companies – one moral, the other financial.

The moral crusaders – among them Archbishop Desmond Tutu – see divestment from fossil fuels in much the same light as earlier campaigners saw the push to pull money out of tobacco, arms, apartheid South Africa – or even slavery. Most fossil fuel companies, they argue, have little concern for future generations. Of course, the companies are run by sentient men and women with children and grandchildren of their own. But the market pressures and fiduciary duties involved in running public companies compel behaviour that is overwhelmingly driven by short-term returns.

So – the argument goes – the directors will meanwhile carry on business as usual, no matter how incredible it may seem that they will be allowed to dig up all the climate-warming assets they own. And, by and large – and discounting recent drops in the price of oil – they continue to be reasonably good short-term businesses, benefiting from enormous subsidies as they search for even more reserves that can never be used.

What is fossil fuel divestment and why does it matter?

The pragmatists argue the case on different grounds. It is simply this: that finance will eventually have to surrender to physics.

If – eventually – the companies cannot, for the sake of the human race, be allowed to extract a great many of the assets they own, then many of those assets will in time become valueless. So people with other kinds of fiduciary duty – people, say, managing endowments, pension funds and investment portfolios – will want to get their money out of these companies before the bubble bursts.

Alan Rusbridger in London, for the launch of the Guardian's climate change campaign.
Alan Rusbridger in London, for the launch of the Guardian’s climate change campaign. Photograph: David Levene

Of course, the financial risk comes not simply from the threat of regulation, but could also be hastened by the march of alternative clean energy. Global investment in clean energy jumped 16% in 2014 to £205bn, but because of the rapid drop in the price of that energy (the cost of solar has dropped by two-thirds in 6 years), the money invested last year bought almost double the amount of electricity capacity as in 2011.

So there’s a risk calculation to be done by anyone invested in fossil fuels – which, one way or another, is probably most of us. Get out too early and you might forgo the reasonable returns based on current performance and the book value of the assets that are notionally exploitable.

But what of the risk of being a late exiter? Do you wait and judge when the politicians could finally summon the will to start making regulatory and market interventions … and then get out? And at the same time as everyone else is trying to do the same?

This is why the divestment movement has changed from being a fringe campaign to something every responsible fund manager can no longer ignore. How could they, when even the governor of the Bank of England, Mark Carney, has warned that the “vast majority of reserves are unburnable” and the bank itself is conducting an inquiry into the risk that inflated fossil fuel assets pose to the stability of the financial system?

When the president of the World Bank, Jim Yong Kim, urges: “Be the first mover. Use smart due diligence. Rethink what fiduciary responsibility means in this changing world. It’s simple self-interest. Every company, investor and bank that screens new and existing investments for climate risk is simply being pragmatic”?

When the Bank of England’s deputy head of supervision for banks and insurance companies, Paul Fisher, warns, as he did this month: “As the world increasingly limits carbon emissions, and moves to alternative energy sources, investments in fossil fuels – a growing financial market in recent decades – may take a huge hit”?

Or listen to Hank Paulson, no bleeding liberal, but secretary of the Treasury under Bush and former CEO of Goldman Sachs: “Each of us must recognise that the risks are personal. We’ve seen and felt the costs of underestimating the financial bubble. Let’s not ignore the climate bubble.”

President Obama puts it most pithily: “We’re not going to be able to burn it all.”

So the argument for a campaign to divest from the world’s most polluting companies is becoming an overwhelming one, on both moral and pragmatic grounds. But the divestment movement is sometimes misunderstood. The intention is not to bankrupt the companies, nor to promote overnight withdrawal from fossil fuels – that would not be possible or desirable.

Divestment serves to delegitimise the business models of companies that are using investors’ money to search for yet more coal, oil and gas that can’t safely be burned. It is a small but crucial step in the economic transition away from a global economy run on fossil fuels.

The usual rule of newspaper campaigns is that you don’t start one unless you know you’re going to win it. This one will almost certainly be won in time: the physics is unarguable. But we are launching our campaign today in the firm belief that it will force the issue now into the boardrooms and inboxes of people who have billions of dollars at their disposal.

It’s clear, from our researches over the past few weeks, that many company directors and fund managers have had a nagging feeling that this is something coming up the agenda that – one day – they will have to think about. As the Guardian’s campaign mounts, we hope they will appreciate that there is some urgency about the choices they make.

Who will take the lead? Some huge endowments and investment funds have already announced that they will be decarbonising their portfolios, exiting fossil fuels altogether and/or investing in cleaner alternatives.

They include the Rockefeller Brothers Fund; Stanford, Glasgow and Australian National Universities; the British Medical Association; Norway’s Government Pension Fund Global, which has sold off 32 coal companies on climate and environmental grounds; AP4, the giant Swedish pension fund; and many other faith groups, local councils and asset managers. The World Council of Churches has committed not to invest.

Our own campaign will give readers the information they need to make their own investment decisions and to apply pressure on the workplaces, unions, schools, colleges, churches, NGOs, pension advisers and charities in their lives. But we also want to try to change minds at one or two institutions that have demonstrated inspiring thought leadership in other spheres of life.

Professor Jeremy Farrar, director of the Wellcome Trust.
Professor Jeremy Farrar, director of the Wellcome Trust. Photograph: James Drew Turner/Guardian

The Wellcome Trust handles a portfolio of more than £18bn and invests around £700m a year in science, the humanities, social science education and medical research. The Bill and Melinda Gates Foundation has an endowment of .5bn. Last year it gave away .9bn in grants towards health and sustainable development.

In 2014 the Wellcome Trust had £564m invested in Shell, BP, Schlumberger, Rio Tinto and BHP Billiton alone. The Gates Foundation has a financial stake of over bn in fossil fuel companies.

Bill and Melinda Gates.
Bill and Melinda Gates. Photograph: Oli Scarff/Getty Images

By most standards, these are huge sums of money, helping to fund the extraction of unusable oil gas and coal on a massive scale. But, as a proportion of the foundations’ own endowments, they are relatively small – just a few percent for the fossil fuel investments we know about. So they could, we think, be divested without damaging overall returns. Indeed, we think they could achieve higher and, over time, safer returns by putting their money into other investments with real opportunities for growth in a world tackling climate change

Because both foundations are a) so progressive in their aims and actions and b) have human health and science at the heart of everything they do, we hope they, of all institutions, will see the force of the call for them to move their money out of a sector whose actions, if unchecked, could cause the most devastating harm to the health of billions. A landmark report by the Lancet and University College London concluded in 2009: “Climate change is the biggest global health threat of the 21st century.”

The ask of them is, we think, both modest and simple. We understand that fund managers do not like to make sudden changes to their portfolios. So we ask that the Gates Foundation and Wellcome Trust commit now to divesting from the top 200 fossil fuel companies within five years. And that they immediately freeze any new investment in the same companies.

We will, of course, suggest that the Guardian Media Group does the same, and keeps you informed about its own deliberations and decisions.

Please sign, retweet and generally spread news about the petition. In everything we say to these foundations, we will emphasise that we come in admiration for what they have done, and continue to do for human health and wellbeing. They aren’t the “bad guys”. But they could certainly show themselves to be the good guys in this matter of life and death.

Petition sign-up

One final thing. This campaign is going to be backed up by much reporting and analysis. We would be very pleased to hear from anyone working in the fossil fuel industries at a senior level, either currently or recently. We are interested, for instance, to learn about internal discussions and papers about the state of knowledge and debate about the environmental harm caused by the extractive industries. You can email me confidentially at alan.rusbridger@theguardian.com; see my PGP key on @arusbridger on Twitter; or use the Guardian’s encrypted securedrop platform, which enables anyone to send us documents without being traced.

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10 myths about fossil fuel divestment put to the sword

March 10th, 2015

Powered by Guardian.co.ukThis article titled “10 myths about fossil fuel divestment put to the sword” was written by Damian Carrington, for theguardian.com on Monday 9th March 2015 16.00 UTC

1. Divestment from fossil fuels will result in the end of modern civilisation

It is true that most of today’s energy, and many useful things such as plastics and fertilisers, come from fossil fuels. But the divestment campaign is not arguing for an end of all fossil fuel use starting tomorrow, with everyone heading back to caves to light a campfire. Instead it is arguing that the burning of fossil fuels at increasing rates is driving global warming, which is the actual threat to modern civilisation. Despite already having at least three times more proven reserves than the world’s governments agree can be safely burned, fossil fuel companies are spending huge sums exploring for more. Looked at in that way, pulling investments from companies committed to throwing more fuel on the climate change fire makes sense.

2. We all use fossil fuels everyday, so divestment is hypocritical

Again, no-one is arguing for an overnight end of all fossil fuel use. Instead, the 350.org group which is leading the divestment campaign calls for investors to commit to selling off their coal, oil and gas investments over five years. Fossil fuel burning will continue after that too, but the point is to reverse today’s upward trend of ever more carbon emissions into a downward trend of ever less carbon emissions. Furthermore, some of those backing a “divest-invest” strategy move money into the clean energy and energy efficiency sectors which have already begun driving the transition to a low-carbon world.

3. Divestment is not meaningful action – it’s just gesture politics

The dumping of a few fossil few stocks makes no immediate difference at all to the amount of carbon dioxide entering the atmosphere. But this entirely misses the point of divestment, which aims to remove the legitimacy of a fossil fuel industry whose current business model will lead to “severe, widespread and irreversible” impacts on people. Divestment works by stigmatising, as pointed out in a report from Oxford University: “The outcome of the stigmatisation process poses the most far-reaching threat to fossil fuel companies. Any direct impacts pale in comparison.”

The “gesture politics” criticism also ignores the political power of the fossil fuel industry, which spent over 0m (£265m) on lobbying and political donations in 2012 in the US alone. Undercutting that lobbying makes it easier for politicians to take action and the Oxford study showed that previous divestment campaigns – against apartheid South Africa, tobacco and Darfur – were all followed by restrictive new laws.

Those comparisons also highlight the moral dimension at the heart of the divestment campaign. Another dimension is warning investors that their fossil fuel assets may lose their value, if climate change is tackled. Lastly, backing divestment does not mean giving up putting direct pressure on politicians to act or any other climate change campaign.

A cardboard version of the Statue of Liberty stands in the ocean at the Gaviota Azul beach in Cancun December 8, 2010. Greenpeace staged a performance sinking the world's best known landmarks in the ocean as climate talks take place in the beach resort.
A cardboard version of the Statue of Liberty stands in the ocean at the Gaviota Azul beach in Cancun, Mexico. Photograph: Stringer/Reuters

4. Divestment is pointless – it can’t bankrupt the coal, oil and gas companies

More organisations are divesting all the time, from Oslo city council to Stanford University to the Rockefeller Brothers Fund, but the sums are indeed relatively small when compared to the huge value of the fossil fuel companies. But the aim of divestment is not to bankrupt fossil fuel companies financially but to bankrupt them morally. This undermines their influence and helps create the political space for strong carbon-cutting policies – and that could have financial consequences.

Investors are already starting to question the future value of the fossil fuel companies’ assets and, for example, it is notable that no major bank is willing to fund the massive Galilee basin coal project in Australia. This myth can also be turned on its head by considering the risk of fossil fuel companies bankrupting their investors. Many authoritative voices, such as the heads of the World Bank, Jim Yong Kim, and the Bank of England, Mark Carney, have warned that many fossil fuel reserves could be left worthless by action on climate change. If the retreat from fossil fuels does not happen in a gradual and planned way investors could lose trillions of dollars as the “carbon bubble” bursts.

5. Divestment means stocks will be picked up cheaply by investors who don’t care about climate change at all

To sell a stock you have to have a buyer. But the amounts being divested are too small to flood the market and cut share prices, so they won’t be going cheap. Also, the buyers of the stock are taking on the risk that the fossil fuel stocks may tank in the future, if the world’s nations fulfil their pledge to keep global warming below 2C by sharply cutting carbon emissions. If these stocks are risky, then the public and value-based institutions primarily targeted by the divestment movement should not be holding them. The argument that owning a stock gives you influence over a company leads us neatly into the next divestment myth.

Guardian journalists explain the ‘keep it in the ground’ theory in easy to understand terms

6. Shareholder engagement with fossil fuel companies is the best way to drive change

This argument would have merit if there was much evidence to support it. When, for example, the Guardian asked the Wellcome Trust to give instances where engagement had produced change, it could not. And as campaigner Bill McKibben has pointed out, engagement is unlikely to persuade a company to commit to eventually putting itself out of business. In fact some market regulators, such as in the US, do not allow this kind of engagement.

The leading environmentalist Jonathon Porritt spent years engaging with fossil fuel companies only to conclude recently that such efforts were futile. Nonetheless, serious engagement could drive some change and 2015 has seen both BP and Shell having to support such shareholder resolutions. But such resolutions need specific changes and deadlines to be effective. Whatever your view, remember this is not an either/or situation. Many campaigners view divestment as the stick and engagement as the carrot, with both aiming for the same ultimate goal.

Traders work in the crude oil options pit at the New York Mercantile Exchange in New York, U.S., on  February 23, 2011. Oil surged to 0 a barrel in New York for the first time in two years as Libya's violent uprising threatened to disrupt exports from Africa's third-biggest supplier and spread to other Middle East oil producers.
Traders work in the crude oil options pit at the New York Mercantile Exchange in New York, US. Photograph: Michael Nagle/Getty Images

7. Divestment means investors will lose money

Many of those who have divested so far are philanthropic organisations, universities and faith groups who use their endowments to fund their good works. Selling out of fossil fuels would cut their income, say critics, as those companies have been very profitable investments over the last few decades.

The first response to this is money does not trump morality for many of these groups. But the second is that when it comes to investments, the past is no guide to the future. Coal stocks have plummeted in value in recent years, as has the oil price in recent months, meaning recently divested funds have actually avoided losses. Furthermore, a series of analyses have suggested divestment need not dent profits.

Of course, oil prices might rebound, possibly even coal prices. But such volatility is unwelcome for investors looking for steady incomes. And for long-term investors, major financial institutions including HSBC, Citi, Goldman Sachs and Standard and Poor’s have all warned of the risks posed by fossil fuel investments, particularly coal.

Perhaps the best response to this myth is that the proof of the pudding is in the eating: over 180 organisations have already asked themselves if divestment would help or hinder their missions and then gone ahead and done it. The most notable is the Rockefeller Brothers Fund, founded on a famous oil fortune. Valerie Rockefeller Wayne noted that funding companies that cause the problems being tackled by their programmes is pretty dumb: “We had investments that were undermining our grants.”

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8. Fossil fuels are essential to ending world poverty

Fossil fuel supporters often argue that coal, oil and gas made the modern world and is vital to improving the lives of the world’s poorest citizens. It is an emotive argument. But the most recent report from the UN’s Intergovernmental Panel on Climate Change, written and reviewed by thousands of the world’s foremost experts and approved by 195 of the world’s nations, concluded the exact opposite. Climate change, driven by unchecked fossil fuel burning, “is a threat to sustainable development,” the IPCC concluded.

It warned that global warming is set to inflict severe and irreversible impacts on people and that “limiting its effects is necessary to achieve sustainable development and equity, including poverty eradication”. The IPCC went even further, stating that climate change impacts are projected “to prolong existing and create new poverty traps”.

That could not really be clearer. The challenge is to ensure poverty is ended by the large-scale deployment of clean technology, and shifting money out of fossil fuels by divesting could help that.

An airplane flies past the Canton Tower (L), or Guangzhou TV Tower, during a hazy day in Guangzhou, Guangdong province January 21, 2015.
Smog in China: an airplane flies past the Canton Tower, better known as Guangzhou TV Tower, on a hazy day in Guangzhou, Guangdong province, China. Photograph: China Stringer Network/Reuters

9. Most fossil fuels are owned by state-controlled companies, not the publicly traded companies targeted by divestment

This is true. The International Energy Agency estimates that 74% of all coal, oil and gas reserves are owned by state-controlled companies. The most straightforward response to this is that divestment is just one of many ways of trying to curb carbon emissions and that international action at state level will of course be essential. But there are reasons why divestment could help. The listed fossil fuel companies have huge influence and undermining their power could embolden politicians in leading nations to deliver ambitious international climate action.

In any case, many of the biggest state-controlled companies float some of their stock, while also contracting the publicly traded companies to help extract their reserves. Furthermore, the state-controlled reserves tend to be the ones that are easiest and cheapest to extract and are therefore the most sensible to use in filling up the last of the atmosphere’s carbon budget, the trillion tonnes or so of carbon that scientists say is the limit before dangerous climate change kicks in. Last, the extreme and expensive hydrocarbons that really must stay in the ground – such as tar sands, the Arctic and ultra deep water reserves – are the near exclusive preserve of listed companies.

10. It’s none of your business how other people invest their money

First, some divestment campaigners target their own pensions funds – it is their money. But even if it is not, the impacts of fossil fuel investments are not limited to the stock owners themselves. The carbon emissions from fossil fuel burning are causing climate change that affects everyone on Earth. Furthermore, the “none of your business” argument would imply no divestment campaign was legitimate, meaning the harm caused by tobacco and apartheid South Africa would have gone on longer.

More information:

350.org’s Fossil Free campaign

Carbon Tracker Initiative

The Burning Question, by Mike Berners-Lee and Duncan Clark

The geographical distribution of fossil fuels unused when limiting global warming to 2C, by Christophe McGlade and Paul Ekins (Nature, 2015)

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