Fossil Fuel Divestments Growing Rapidly
Keep it in the ground: five trillion reasons to be happy
From an Article of The Guardian, Manchester UK, December 13, 2016
The value of investment funds committed to selling off fossil fuel assets has jumped to $5.2 trillion, doubling in just over a year.
Five years ago, the idea that investments in fossil fuel companies were morally or financially problematic was all but unheard of. But an argument started to take shape on US university campuses — that with more coal, oil and gas in existing reserves than can ever be burned while keeping climate change under control, it is ethical and economic madness to spend billions looking for more.
Fast forward to today and the argument has rocketed into mainstream financial thinking. It was revealed on Monday that investors worth more than $5tn have now committed to dump their fossil fuel stocks, and more than 80% of that is professional funds run for profit. Furthermore, this risk of a “carbon bubble” is now being taken seriously at the highest level, including by the Bank of England, World Bank and the G20’s financial stability board.
As Lou Allstadt, a former senior executive at Mobil Oil, puts it: “Divestment is speeding up the clock on the final accounting that will show fossil fuels are out and clean energy is in.”
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The Years of Living Dangerously: The Coal Wars
National Geographic Channel, Wednesday, December 14th, 10 Eastern/9 Central
Introduction: Even though coal plants are shutting down across the country, coal remains a major source of energy in the U.S., and burning it emits toxic pollutants and climate-altering carbon dioxide. America Ferrera (actress & reporter) journeys to Illinois, where a still-functioning coal plant is creating tension between those who want to shut it down and those — like the local mayor — who want to keep it open. She meets a group of activists fighting hard to close it in favor of an option that can provide clean energy and green jobs.
Read More:
The Untold Story About the End of Coal by David Crane, former CEO of NRG
Source: http://yearsoflivingdangerously.com/story/the-coal-wars/
See also: www.FrackCheckWV.net
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The human stories behind the ‘coal wars’
Editor’s note: David Crane will appear on this week’s episode of National Geographic Channel’s “Years of Living Dangerously.” Check local listings, many showings on December 14th, e.g. 10 Eastern and 9 Central time.
Just a decade ago, coal was flying high.
Buoyed by high natural gas prices, with climate change but a distant concern to the hyper-myopic power industry, our singular focus at NRG was feeding the machine — securing and delivering the tens of millions of tons of coal needed to satiate the voracious appetite of our thermal power plants.
Back then, there were pinch-points in our national coal transportation system, one of which was a shortage of coal cars. We decided to solve that problem by acquiring a couple thousand new rail cars of our own. It was my first big acquisition at NRG.
I doubt, stopped at a train crossing, you have ever paid attention to the individual coal carriers whose passage is temporarily frustrating your car journey. Most are unkept and uncared for and virtually all are unbranded by their owner. Intentionally so. Traffic nuisances, carrying a necessary but unloved product, coal carriers trundle incognito across the American landscape.
We wanted to be different. We were proud of our role in keeping the lights on across the country; we were proud of our power plants and, most of all, wanted to honor the men and women who worked, day and night, under every condition to keep that coal coming. So I insisted that every one of our coal cars, as they came off the assembly line, be stenciled with both the name of an NRG coal plant and the name of an individual coal handler from that plant.
I insisted that every one of our coal cars … be stenciled with both the name of an NRG coal plant and the name of an individual coal handler from that plant.
When the day came for the first carrier to come off the line, we conjured up a “christening” ceremony. We flew about 15 coal handlers, each with more than 20 years’ experience, from plants around the country to the FreightCar America factory in Danville, Ill. It was the dead of winter. We ate our celebratory dinner at a place with raw meat on display in the in the window and we stayed at a budget hotel that catered to visitors to the medium-security prison across the parking lot.
The cavernous factory was bleak and bitter cold. A worse place to work I could not imagine (until a couple years later when I toured an underground coal mine). It fell to our most senior employee, a coal handler from our Dunkirk Plant in upstate New York named Robert Adams Jr., to do the honors.
After breaking the ceremonial bottle on the “bow” of the first coal car and the unveiling of his name on the car, Bob came up to me, eyes glistening, with hand extended, “David, I have worked at Dunkirk 37 years and before me, my father worked there for 30. Today,” he said as he looked up at his name on the looming on the carrier’s side wall, “my father would be very proud of me.”
This is my point — as we consider the looming cost to all humanity of coal-fired generation, let’s not forget the human cost to workers such as Bob Adams who powered American prosperity through the 20th century and into the 21st. On Dec. 14, “Years of Living Dangerously” airs the final episode of its second season, featuring America Ferrera and focused on another NRG coal plant — this one in Waukegan, Illinois — as it struggles through its own end game.
Unloved by (mostly) all
The Waukegan power plant is supported — often silently — by those who depend upon it economically; opposed by those who focus on the local and global environmental consequences of its operations. It is unloved by all, except for the professionals who made bringing the plant online each day their life’s work.
A few weeks ago, Detroit Edison announced it was shuttering all but one of its remaining coal plants across the lake in Michigan. The coal era is ending, weakened to be sure by relentless environmental pressure, but mortally wounded — ironically enough — by natural gas, another fossil fuel which is only marginally less carbon-emitting
The coal era is ending … mortally wounded — ironically enough — by natural gas, another fossil fuel which is only marginally less carbon-emitting.
Ferrera is an accomplished actress with an extraordinary back story of her own. Maybe that is what makes her both incisive and empathetic as an interviewer. I have not yet seen this week’s episode, but judging from the questions she asked me, America will focus on the gut-wrenching community and personal stories that underpin this most global of issues.
Yet the faces you will not see — the voices you will not hear — will be the men and women who work at the Waukegan Power Plant. And this will not be because Ferrera or “Years of Living Dangerously” is insensitive to them, but because NRG, following conventional corporate procedure, will not have made them available for interviews, on-camera or off.
And that is a shame. My colleagues who worked at our coal plants were the finest people I have had occasion to know, and they deserve to be heard. So, in their absence, spare a thought for them.
For my part, in the years since, I have thought of my encounter with Bob Adams often but only saw him once more. At Dunkirk, at work, his face and uniform stained by the pervasive coal dust that hung in the air, he greeted me warmly and we talked — for the 30 seconds he had to spare while they were moving the next coal car into position. Then he broke off the conversation to return to his controls.
You have to understand that it is not common in big companies for employees to walk away from their CEO, but there was a coal train that needed to be unloaded, and coal trains wait for no man, not even the CEO.
Source: https://www.greenbiz.com/article/human-stories-behind-coal-wars
See also: http://www.FrackCheckWV.net
How divesting of fossil fuels could help save the planet
By Olaf Weber, The Conversation, December 10, 2017
Recently, a number of institutional investors, including Caisse de dépôt et placement du Québec in Canada and Norway’s sovereign wealth fund, announced their intent to reduce their exposure in investments linked to fossil fuels.
The announcements show that investors withdraw their funds to either mitigate financial risks or for ethical reasons. But the question remains whether divestment and divestment announcements have a financial impact on the share price of fossil fuel companies.
We’re a team of researchers at the School of Environment, Enterprise and Development (SEED) at the University of Waterloo. We recently conducted an analysis that suggests divestment announcements have a statistically significant negative impact on the price of fossil fuel shares. Our study aggregates the impact of more than 20 announcements across 200 publicly traded fossil fuel companies.
The results suggest that share prices dropped on the days that institutional investors announced they were divesting of fossil fuels.
We’ve concluded that investors, and the market as a whole, perceive divestment as integral to the long-term valuation of the fossil fuel industry. Lower share prices increase the costs of capital for the fossil fuel industry, which in turn decreases their ability to explore new resources and exploit proven resources.
And if the majority of proven reserves remains in the ground, we may be able to meet our climate change goals.
Reserves must stay grounded
The continued exploitation of fossil fuel reserves alone has the potential to increase greenhouse gases and global temperature well beyond the 2°C threshold required to prevent the worst effects of climate change.
To achieve the 2°C target, however, no more than one-fifth of the current proven fossil fuel reserves can be burned.
The necessity to keep the resources in the ground has a direct impact on the valuation of fossil fuel industry assets. They are predominantly influenced not only by production, but also by the value of proven fossil-fuel reserves. In other words, if these resources cannot be exploited, their value will depreciate.
A sudden depreciation would lead to a burst of the so-called carbon bubble, leaving fossil fuel investments stranded.
To avoid the risk of stranded assets, a number of influential private and institutional investors have pledged to reduce their fossil fuel investments or divest from the fossil fuel industry entirely.
Ethical motivations
Other investors are motivated to divest from fossil fuel shares for ethical reasons. They do not want to be part of an industry that is one of the main drivers of climate change.
To explore the financial impact of divestment announcements on the share price of fossil-fuel sector companies, we analyzed 24 divestment announcements, endorsements and campaign events between 2012 and 2015.
These events received a lot of media coverage, with stories appearing in publications that included the Financial Times and the Wall Street Journal.
Our sample of fossil fuel industry representatives included 200 coal, oil and gas firms listed in Carbon Underground 200, which identifies the top publicly traded companies with the highest potential greenhouse gas emissions based on their reserves.
The results suggest that fossil fuel companies experienced statistically significant negative abnormal returns on the day of a divestment announcement, and in the days following the announcement. Furthermore, our findings demonstrate that more recent divestment announcements had a stronger impact on share prices than earlier such announcements, suggesting a snowball effect.
In May 2014, for example, Stanford University’s divestment announcement resulted in a negative abnormal return of .009 per cent in the ensuing 10 days for companies listed on the Carbon Underground 200.
A few months later, in September 2014, the Rockefeller Foundation divestment announcement resulted in a negative abnormal return of -.22 per cent over the following 10 days. And two months after that, the divestment announcement by the Norwegian sovereign wealth fund resulted in -.24 percent for the shares of the companies listed on the Carbon Underground 200.
Markets respond
It seems financial markets are increasingly aware of the importance of divestment.
Divestment announcements by prominent investors signal financial risks to the market, which in turn depress share prices. Therefore, divestment announcements can have a measurable impact on the fossil fuel industry.
The market response to divestment can be either direct or indirect. Market players might directly perceive the announcements of big institutional investors as signalling an increased financial risk to the divested industry. If big market players announce that they divest, others follow.
Alternatively, divestment announcements might have an indirect impact on the reputation of fossil fuel companies. Tarnished reputations weaken confidence and trust in the long-term value of these shares and decreases their price.
Whether the impact is direct or indirect, decreasing share prices make acquiring financial capital more expensive for the fossil fuel industry.
This in turn lowers their ability to explore new resources, exploit proven reserves and secure long-term growth. In other words, lowering fossil fuel industry share prices via divestment can lead to lower productive capacity — and, consequently, to lower greenhouse gas emissions.
Source: https://theconversation.com/how-divesting-of-fossil-fuels-could-help-save-the-planet-88147