Investor Q&A: Why the Rockefeller Brothers Fund is divesting from fossil fuels

Repost from GreenBiz
[Editor: See also ABC News: Fossil Fuel Divestment Effort Comes to Energy-Rich Colorado – “A campaign to get universities to stop investing in greenhouse gas-producing fuels came deep into energy country Friday as activists asked the University of Colorado to divest from coal and petroleum companies.”  – RS]

Investor Q&A: Why the Rockefeller Brothers Fund is divesting from fossil fuels

IFC SUSTAIN Magazine, Thursday, February 26, 2015 – 2:00am 
Rockefeller Brothers Fund divest fossil fuels
Here’s why a foundation built upon oil is pulling its funds from fossil fuels. Shutterstock/

Rockefeller and oil go together like Starbucks and coffee.

So it took most people by surprise when the Rockefeller Brothers Fund (RBF) announced in September that it would divest from fossil fuels and invest in cleaner alternatives.

In a recent Q&A, Rockefeller Brothers Fund President Stephen Heintz explained what led to the decision, how the foundation is restructuring its investments and how he expects others to react.

Stephen Heintz Rockefeller Brothers Fund
Stephen Heintz, president of the Rockefeller Brothers Fund.
IFC SUSTAIN: Can you explain what led to your decision to divest from fossil fuels?

Stephen Heintz: Combatting climate change with grant dollars alone is no longer sufficient.

Since 2010, the RBF has been working to invest a portion of our endowment (10 percent) in companies that are advancing sustainable practices and clean energy technologies. During Climate Week in September, we announced that the RBF has launched a two-step process of fossil fuel divestment.

IFC SUSTAIN: Can you describe how you are divesting?

Heintz: Our first step was to exit from investments in coal and tar sands oil, two of the most carbon-intensive fossil fuels. The second step of our process has been to undertake a detailed analysis of our remaining fossil fuel exposure (oil and gas) and to develop a plan for further divestment.

We are working to balance our deep concern over fossil fuels with the Fund’s longstanding mandate that our assets be invested with the goal of achieving financial returns that will maintain the purchasing power of our endowment, so that future generations will also benefit from the foundation’s charitable giving.

IFC SUSTAIN: Do you think other investors will follow your lead?

Heintz: Yes, we are very confident others will join this effort. Globally, we need greenhouse gas emissions reductions of at least 80 percent by 2050. We can only get there by leaving the bulk of coal, oil and gasin the ground and by transitioning to clean energy without delay.

Yet the stock price of a fossil fuel company is linked to its reserves. These are stranded and unburnable assets whose economic value is diminished — a reality that investors now understand and are starting to consider in their investment decisions.

Clear evidence of the increasing number of investors recognizing the urgency of this issue and acting on it can be seen in the growing numbers of institutions and individuals who have signed onto the Divest/Invest Philanthropy pledge.

IFC SUSTAIN: How do you think this pressure from investors will affect extractive companies?

Heintz: The pressure from this movement of investors is, we feel, adding weight to the critical conversation about policy — national, international and corporate — on addressing climate change with an urgency that is proportionate to the challenge.

Capital market and regulatory conditions are uniquely material to the viability of extractive businesses. Investor pressure on companies is a part of a larger discussion that will increasingly influence commodity prices, the cost of capital, and global regulatory agendas, which will have an impact on the operations of these companies.

By putting our money where our mouth is, we have been part of an effort that has taken the question of stranded assets from a hypothesis of activists to a mainstream consideration within capital markets and even central banks (see, for example, recent Bank of England statement).

IFC SUSTAIN: What specific changes can extractive companies reasonably make to address climate change and continue to attract investors?

Heintz: Concretely, companies can look at how to be good stewards of shareholder capital and commit to a candid assessment of how to best use their resources. Borrowing to invest in long-term risky projects that require $140 per barrel of oil to break even is difficult to justify.

Responsive companies will focus on returning capital to shareholders instead and migrate from a growth-at-all-costs (regardless of future profits) mindset. Extractive companies can begin to redeploy CAPEX from searching for more reserves to diversifying their businesses by investing more aggressively in renewable energy.

IFC SUSTAIN: Looking into the future, how do you think your energy investment portfolio will evolve?

Heintz: The window of opportunity to avoid catastrophic climate change narrows with each day.

Clean energy technologies and other business strategies that advance energy efficiency, decrease dependence on fossil fuels, and mitigate the effects of climate change are the way forward. Our investments in these sectors will continue to grow as more and more economically attractive opportunities open up.

This article first appeared at SUSTAIN, a magazine produced by the International Finance Corporation, a member of the World Bank Group.


    City of Torrance acknowledges gaps in response to ExxonMobil refinery explosion

    Repost from The Daily Breeze
    [Editor: See also in the Los Angeles Times: Too much pressure in equipment triggered Torrance refinery explosion.  – RS]

    Torrance acknowledges gaps in response to ExxonMobil refinery explosion

    By Nick Green, Daily Breeze, 02/25/15, 7:16 PM PST
    Aerial view of affected area at the Exxon/Mobil refinery in Torrance following an explosion and fire on Feb. 18, 2015. (Brad Graverson / Staff Photographer)

    TORRANCE >> In response to criticism in the wake of last week’s explosion at ExxonMobil’s Torrance Refinery, city officials acknowledged this week that a new telephone alert system needs improvement.

    “It shows us things we have to tweak and modify,” City Manager LeRoy Jackson said at Tuesday evening’s City Council meeting in response to complaints from the council and public alike. “We did not use all the tools in our toolbox.”

    Councilman Tim Goodrich, who formerly worked for a California labor union, was perhaps most critical of ExxonMobil. He wondered whether safety was really the company’s top priority, an issue also raised by United Steelworkers Local 675, which represents workers at the plant.

    “Honestly, I’m not at all surprised that happened,” Goodrich said. “How many close calls is ExxonMobil willing to have before we have one we’re really going to regret?”

    ExxonMobil officials attended the meeting, but did not respond to the comments.

    Municipal officials had expected a big crowd, but there were plenty of open seats in the council chambers and only a handful of people spoke. At a meeting ExxonMobil hosted Friday night, scores of residents vented their frustration.

    Still, the incident has attracted the attention of state legislators. The Senate Energy, Utilities and Communications Committee and the Environmental Quality Committee will hold a joint hearing at 6 p.m. March 5 at City Hall to address the emergency response, the refinery’s safety record and impacts to the community.

    Inadequacies to the emergency response addressed Tuesday included:

    • A decision not to use the ExxonMobil emergency siren to alert the community to the explosion and subsequent ash and dust fallout because officials determined the emergency was confined to the 750-acre refinery. “We have this great siren system that wasn’t used and it probably should have been,” Councilman Mike Griffiths said.
    • A decision not to close the barriers that cordon off Crenshaw Boulevard, the closest thoroughfare to the explosion. “We had a close scrape here,” said Councilman Kurt Weideman. “The question arises in my mind why we didn’t close the barriers on Crenshaw.”
    • The ineffectiveness of a new, partially implemented Torrance Alerts automated mass telephone notification system that informs residents of what they should do in the case of an emergency or natural disaster. Mayor Pat Furey, who lives two blocks from the refinery, said it took three phone calls before the recorded alert played, while Weideman said he didn’t get one at all at his north Torrance home of 35 years.
      Councilman Geoff Rizzo said the alert’s readout on his caller ID did not convey the urgency of the situation, a sentiment echoed by Councilwoman Heidi Ashcraft, who screens all calls to her home phone.
    • A lack of education about what the public should do when hearing the siren, or as one resident put it: Should people “run like hell” or shelter at their home or office? (It’s the latter.)

    “We need, along with the refinery, to do a better job of outreach and educating folks,” Deputy Fire Chief Dave Dumais said Wednesday.

    Fire Chief William Racowschi said officials would use the incident as a “baseline” to incorporate what they learned into improving the largely untested mass notification system and other elements of the response.

    “We learned a lot and, thank God, it was a localized event that didn’t cause a whole lot of destruction and death,” he said Wednesday.

    Note: This version has been changed from the original to reflect Tim Goodrich’s status as a former, not current, worker for a labor union.

      RAILWAY AGE: Why tar sands train became a fireball – bitumen isn’t necessarily safer than Bakken

      Repost from Railway Age
      [Editor: Significant quote: “This blend of bitumen and petroleum-based diluents, known as “dilbit,” has a low flash point. Thus, the widespread belief that bitumen from Alberta’s northern oil sands is far safer to transport by rail than Bakken crude is, for all intents and purposes, dead wrong. This may be disruptive news for bitumen shippers, carriers, and regulators.”  – RS]

      Why bitumen isn’t necessarily safer than Bakken

      By  David Thomas, Contributing Editor, February 23, 2015 
      Feb. 14, 2015 CN oil train derailment near Gogama, Ontario
      Feb. 14, 2015 CN oil train derailment near Gogama, Ontario. CBC News/Dillon Daveikis

      The chain reaction fireballs that attended the Feb. 16, 2015 derailment of a CSX unit oil train in populated West Virginia probably blinded observers to the significance of the concurrent derailment and explosions of a CN oil train in a remote and uninhabited area of northern Ontario. Most reports treated the two events as equals, given that both trains consisted of recently manufactured CPC-1232 tank cars loaded with crude oil.

      CN’s Ontario conflagration is the more disturbing of the two mishaps: The railroad reported that its train was not carrying the extra-light Bakken crude that, in a series of high-energy derailments since 2013, has proved to be explosive. To the contrary, the CN train was laden with bitumen, the extra-heavy tarry substance extracted from Alberta’s oil sands. Bitumen, in its natural highly viscous form, is considered to be essentially inflammable by petrochemical experts and is rarely considered in safety evaluations of crude by rail.

      So why did the bitumen ignite and explode in Ontario’s -40ºC (-40ºF) weather? The reason, based on research consulted by Railway Age, is that the diluent added to make bitumen flow into and out of tank cars makes the blended lading quite volatile.

      This blend of bitumen and petroleum-based diluents, known as “dilbit,” has a low flash point. Thus, the widespread belief that bitumen from Alberta’s northern oil sands is far safer to transport by rail than Bakken crude is, for all intents and purposes, dead wrong. This may be disruptive news for bitumen shippers, carriers, and regulators.

      The hope for Bakken crude is that it can be treated to remove benzene and other “light end” substances before loading, rendering it mildly flammable instead of highly explosive. The same is not true for dilbit, because the highly volatile diluents are added to the crude to make it less viscous. A safer procedure is to heat bitumen at origin before loading into a tank car and again at destination, prior to unloading. Some tank cars are equipped with internal steam coils for this purpose and are used in crude oil service, but a requirement for such heating elements is not included in the specifications proposed for a future DOT-117 tank car to replace both the DOT-111 and CPC-1232 cars now in CBR service.

      According to “Properties of Dilbit and Conventional Crude Oils,” a February 2014 report by the Alberta Innovates consortium of industry, government, and university researchers, “[T]he flash point of fresh dilbit is initially lower than other oil types and is comparable to a diluent.” It says that dilbit will ignite upon exposure to an ignition source at -35ºC, compared to -9ºC for conventional light oil. The flash point of raw diluent is -35ºC or less. The flash point of undiluted bitumen is +151ºC, well above the +60ºC flammability threshold specified in current hazardous materials classification regulations.

      The reason for the low flash point of dilbit is that ignitability is determined by a blend’s most volatile components, in this case, the diluent itself: “[T]he flash point is determined by the lowest-boil-point components (volatiles). Consequently, the flash point of the dilbit is governed by the 20%-30% volume diluent component . . . .”

      The study defines flash point as “the temperature to which the fuel must be heated in order to produce an adequate fuel/air concentration to be ignited when exposed to an open flame. The flash point of the crude oil is used as an index of fire hazard in North America.”

      Thus, flash point is the critical factor in determining whether a tank car breach will lead to its contents burning or exploding upon exposure to the pyrotechnics of a high-energy derailment.

      Canada’s Transportation Safety Board can be expected to analyze the dilbit lading of CN’s Ontario accident, as it did the Bakken crude that exploded at Lac-Mégantic in 2013. TSB reported then that Bakken crude is more volatile than other varieties. Should TSB conclude that dilbit has a volatility similar to Bakken crude, as the Alberta research suggests, the hazmat classification of crude oil could be in question.


        Another derailment: Fifty hurt when Southern California commuter train slams into truck

        Repost from Reuters
        [Editor: Significant quote: “…in a move that may have helped avert a more catastrophic accident, the train used an emergency braking system moments before impact, and the rail cars had safety features that helped absorb the energy of the crash….”  It’s a good thing that safety improvements in commuter cars are well ahead of those for hazmat tank cars.  – RS]

        Fifty hurt when Southern California commuter train slams into truck

        By Michael Fleeman, OXNARD, Calif. Tue Feb 24, 2015 5:40pm EST
        An aerial view shows the scene of a double-decker Metrolink train derailment in Oxnard, California February 24, 2015.   REUTERS-Lucy Nicholson
        An aerial view shows the scene of a double-decker Metrolink train derailment in Oxnard, California February 24, 2015. Credit: Reuters/Lucy Nicholson

        (Reuters) – A Los Angeles-bound commuter train slammed into a produce truck apparently stuck on the tracks in a Southern California city before dawn on Tuesday, injuring 50 people in a fiery crash, some of them critically.

        The truck driver, who was not hurt, left the scene of the destruction in Oxnard on foot and was found walking and disoriented one or two miles away, Assistant Police Chief Jason Benitez said.

        Benitez said the 54-year-old driver from Arizona was not arrested but investigators were trying to determine if there was any criminal wrongdoing in the 5:45 a.m. PST (8:45 a.m EST) wreck, which overturned three double-decker Metrolink rail cars. Two others derailed but remained upright.

        While no-one was killed, the force of the impact ripped the truck apart and left burned-out chunks and twisted wreckage still smoldering hours later.

        Benitez said it appeared that the truck driver had taken a wrong turn in the pre-dawn darkness and ended up on the tracks, where the rig became stuck as the train approached at 79 miles per hour.

        But in a move that may have helped avert a more catastrophic accident, the train used an emergency braking system moments before impact, and the rail cars had safety features that helped absorb the energy of the crash, Metrolink spokesman Jeff Lustgarten said.

        “I think we can safely say that the technology worked. It definitely minimized the impact. It would have been a very serious collision, it would have been much worse without it,” Lustgarten said.

        The crash came three weeks after a Metro-North commuter train struck a car at a crossing outside New York City and derailed in a fiery accident that killed six people.


        Ventura County Emergency Medical Services administrator Steve Carroll said 50 people were hurt in the Oxnard incident, 28 of whom were transported to hospitals.

        Among the most seriously injured was the train’s operator, who was in critical condition in the intensive care unit at Ventura County Medical Center, hospital spokeswoman Sheila Murphy said.

        The operator, who has not been publicly identified, suffered extensive chest injuries affecting his heart and lungs but was able to communicate with doctors, Murphy said.

        National Transportation Safety Board Member Robert Sumwalt said investigators would examine the train’s recorders and seek to determine if crossing arms and bells were functioning properly.

        “We are concerned with grade crossing accidents. We intend to use this accident and others to learn from it so that we can keep it from happening again,” Sumwalt said.

        The incident took place where the Metrolink tracks cross busy Rice Avenue in Oxnard, a street used by a steady stream of big rigs and farm trucks and lined with warehouses and farmland.

        “It is a very dangerous crossing,” said Rafael Lemus, who works down the street from the crash site. “The lights come on too late before the trains come. It is not safe.”

        A Ventura County Medical Center spokeswoman said the hospital had received nine victims, three of whom were listed in critical condition.

        Los Robles Hospital & Medical Center received six patients with minor injuries such as back, leg or shoulder pain, said spokeswoman Kris Carraway. St. John’s Pleasant Valley Hospital in nearby Camarillo was treating two patients for minor injuries, a spokeswoman said.

        The wreck triggered major delays to Metrolink lines across Ventura County, forcing commuters onto buses. Oxnard is an affluent coastal city of some 200,000 about 45 miles northwest of Los Angeles.

        In 2008, a crowded Metrolink commuter train plowed into a Union Pacific locomotive in Chatsworth, California, killing 25 people and injuring 135 in an accident officials blamed on the commuter train engineer’s failure to stop at a red light.

        In 2005 a Metrolink train struck a sport utility vehicle parked on the tracks in the Los Angeles suburb of Glendale, killing 11 people and injuring 180.

        (Reporting by Michael Fleeman in Oxnard, Laila Kearney, Barbara Goldberg and James Dalgleish in New York, Rory Carroll in San Francisco, Eric Johnson in Seattle and Eric Kelsey and Dan Whitcomb in Los Angeles; Writing by Dan Whitcomb; Editing by Jeffrey Benkoe, Bill Trott and James Dalgleish)