Often dismissed as unwise by oil industry proponents and criticized as a distraction even by supporters of action on climate change, the divestment movement is no longer being ignored.
Look no further than CeraWeek, an annual get-together of North America’s fossil fuel elite. On April 22, amid discussion panels such as “Asia: Still the Promised Land for New Energy Investment?” or “Canada’s role in the rising North America energy powerhouse,” there was also a session dedicated to divestment and the implications for energy companies. The conversation analyzed how sustainable the business model is for fossil fuel companies as the world moves towards regulating carbon emissions.
The attention paid to the divestment at CeraWeek suggests that the growing publicity and success from the environmental movement’s ability to secure divestment commitments from universities, banks, pension funds, churches, and other wealth funds are starting to be perceived as a threat by the fossil fuel industry.
A few weeks earlier, The Guardian made a splash with its “Keep it in the Ground” campaign, a very firm declaration in support of divestment. The Guardian Media Group vowed to divest its £800 million fund as well.
The growing concern over carbon pollution raises the possibility of a regulatory or tax crackdown, both at the national and international level. Newsweek reported on April 21 that HSBC wrote in a private note to its clients that there is an increasing risk that fossil fuel companies will become “economically non-viable.” As a result, HSBC advised its clients to divest from fossil fuels because they may be too risky. If investors fail to get out of fossil fuels, the bank says, they “may one day be seen to be late movers, on ‘the wrong side of history.’” As the divestment campaign builds up steam, major oil and gas companies are starting to see the writing on the wall.
But there could be a way to adapt. The Carbon Tracker Initiative (CTI) just published a “blueprint” for fossil fuel companies to adapt to a carbon-constrained world. The blueprint provides several recommendations. For example, oil companies should avoid high cost projects such as the struggling Kashagan field in Kazakhstan or expensive oil sands projects in Canada. High-cost projects put companies at risk when they are hit with unforeseen events, such as an oil price crash, a decline in demand, or a change in tax regimes. Instead, companies should invest in lower risk projects with higher rates of return, CTI says. CTI also insists that corporate governance within fossil fuel companies is critical – management needs a clear-eyed prognosis of how exposed their assets are to a potential scenario in which their oil and gas reserves are no longer wanted.
It is far from clear whether or not the oil majors will heed CTI’s advice on adapting their companies. In mid-April, 98 percent of BP’s shareholders voted in favor of an initiative that would force the company to disclose which of its assets would become “unburnable” in a low-carbon world. The results of that analysis will be much anticipated. ExxonMobil undertook a similar study, but summarily dismissed the likelihood that its assets would be affected in the future by climate action.
“Our analysis and those of independent agencies confirms our long-standing view that all viable energy sources will be essential to meet increasing demand growth that accompanies expanding economies and rising living standards,” William Colton, ExxonMobil’s vice president of corporate strategic planning, said in a March 2014 statement. In other words, investors have little to fear — ExxonMobil will be fine.
However, much has changed since then. The divestment movement has gathered quite a bit of momentum as protests hit more campuses and city halls. The U.S. and China reached a landmark agreement to reduce their greenhouse gas emissions. More countries will set policies to reduce energy demand ahead of international negotiations in Paris later this year. Oil prices have crashed, highlighting the vulnerabilities of many over-leveraged oil companies. And clean energy continues to make inroads, amid falling costs for solar, wind, and energy storage.
Oil companies ignore the divestment campaign – and other threats to their business models – at their own peril.
North America’s Oil And Gas Industry Has Taken Over 7 Million Acres Of Land Since 2000
By Katie Valentine, April 24, 2015 at 12:28 pm
Millions of acres of land across the U.S. and Canada has been taken over by oil and gas development in the last 12 years, according to a new study.
The study, published Friday in Science, tallied up the amount of land that’s been developed to house drilling well pads, roads, and other oil and gas infrastructure in 11 U.S. states and three Canadian provinces. It found that between 2000 and 2012, about 3 million hectares (7.4 million acres) have been turned over to oil and gas development, a stretch of land that, combined, is equal to three Yellowstone National Parks.
This land takeover can have ecological consequences, according to the report.
“Although small in comparison with the total land area of the continent, this important land use is not accounted for and creates additional pressures for conserving rangelands and their ecosystem functions,” the report states. “The distribution of this land area has negative impacts: increasing fragmentation that can sever migratory pathways, alter wildlife behavior and mortality, and increase susceptibility to ecologically disruptive invasive species.”
Most of the land converted into drilling operations was cropland and rangeland — a term that encompasses prairies, grassland, shrubland, and other ecosystem types — and roughly 10 percent was woodland. Wetlands, according to the report, were mostly spared by oil and gas developers, though a very small amount have been converted into oil and gas sites.
CREDIT: Science/AAAS
Land takeover due to oil and gas development can have a number of negative consequences, the report states. It removes vegetation that’s important for food, habitat, and carbon storage, and it also fragments ecosystems in such a way that can disrupt the natural behavior of wildlife.
According to the report, oil and gas development reduced the study area’s net primary production (NPP) — the rate at which an ecosystem produces plant biomass, which the report calls “a fundamental measure of a region’s ability to provide ecosystem services” — by 4.5 teragrams (9,920,801,798 pounds). The amount of vegetation lost from rangelands amounts to about five million animal unit months (the amount of vegetable forage required to feed an animal for one month), which “is more than half of annual available grazing on public lands managed by the U.S. Bureau of Land Management.”
“The loss of NPP is likely long-lasting and potentially permanent, as recovery or reclamation of previously drilled land has not kept pace with accelerated drilling,” the report states.
Steve Running, co-author of the study and ecology professor at the University of Montana, told Midwest Energy News that the upward trend of oil and gas development is concerning in terms of land use, especially if serious efforts to reclaim land aren’t taken.
“The point we’re trying to make with this paper is not so much that some huge fraction of current land area has been de-vegetated, as much as the trajectory of drilling, (consuming) a half-million acres per year,” he said. “If we continue that to 2050, you get to some seriously big amounts of land.”
CREDIT: Science/AAAS
Right now, there’s not much known about to what extent oil and gas areas in the U.S. are being reclaimed after they’ve been developed, said Samuel D. Fuhlendorf, another co-author of the report from Oklahoma State University. And, he said, there isn’t much work at the federal or state level to regulate or enforce this reclamation. Some states — including Pennsylvania, Ohio, North Dakota, and West Virginia — do require oil and gas companies to submit plans for reclaiming land after they’re done drilling. But others, like Colorado, don’t require these plans.
“You’d expect there would be both state- and federal-level policy,” Running told Midwest Energy News. “But we’re not aware of a clear policy on this. We don’t see any active discussion or regulatory planning of how that’s going to be done, who will do it and when it will be done. Beyond policy, is there actual enforcement. We are not aware that any state or federal policies are actively following this.”
Tufts students stage sit-in to urge fossil fuel divestment
By Aneri Pattani, April 22, 2015
Students protested Tufts University’s fossil fuel investment at the president’s office. David L Ryan/Globe staff
Tufts University students and alumni entered the university president’s office Wednesday morning and began a sit-in, vowing to persist until the administration commits to fossil fuel divestment.
The protest began just before 9 a.m. when members of the student group Tufts Climate Action entered president Anthony Monaco’s office in Ballou Hall, said Shana Gallagher, chairwoman of the student group.
Gallagher, 20, said the group wants the university to commit to divesting its endowment from fossil fuel companies over a five-year period and freeze all new investments immediately.
“We are planning on staying here until we are given some commitments,” she said. “The president is out of town, but we will be right here waiting for him when he gets back.”
The sit-in at Tufts is the latest in a series of protests staged at Boston-area schools recently to urge fossil fuel divestment. Last week, a group of Harvard students and their supporters rallied in Harvard Yard.
Tufts issued a statement Wednesday saying it recognizes the diversity of opinions on the subject of divestment and welcomes continued discussion that is thoughtful and respectful.
“Tufts University is proud of its students’ active involvement in a wide range of issues,” the statement said. “However, it is important that the debate about divestment not overshadow the progress Tufts is making in support of environmental stewardship.”
The university said it has launched a new sustainability investment fund, has begun construction of a high-efficiency central energy plant, and is making new investments in recycling and waste-reduction programs.
For the 33 students, alumni, and local supporters involved in the sit-in, as well as numerous other students who participated in a divestment rally at noon, the efforts need to go further, Gallagher said.
“We are hoping to reopen that line of communication and make sure we can be working with the administration on the issue of fossil fuels,” she said.
Tufts executive vice president Patricia Campbell met with some members of the student group Wednesday morning after the sit-in began, Gallagher said. Another round of negotiations is scheduled for Thursday morning.
“This was the step we felt we had to take to initiate these negotiations,” Gallagher said.
The university determined last year that divestment “would have an immediate adverse impact on the educational experience at Tufts,” and it “would not be prudent to expose the university to that kind of risk at this time,” the university said in the statement.
The university said a group of students, trustees, faculty, and staff concluded that “divestment would likely result in a significant reduction in operating funds.”
“We will continue to examine the feasibility of divestment in the future,” the statement said.
Ben Weilerstein, 21, a member of Tufts Climate Action, said he thought the protest was a necessary step to bring attention to the role of fossil fuels in causing climate change.
“This is important because Tufts has millions of dollars invested in an industry that is destroying communities across the world,” he said.
Norway’s divestment is great news. But this is the last moment to be complacent.
By Tim Ratcliffe February 6, 2015
Today’s news that the Norwegian Sovereign Wealth (oil) Fund has divested from a total of 22 companies, potentially totaling billions of dollars in assets, is a huge win for the rapidly growing divestment campaign and should be celebrated. In fact, in terms of amount of money it is likely the biggest divestment decision to date, so reason to be optimistic that this rapidly growing campaign is having a serious impact.
But once the celebrating is over, there’s no time to sit back. Now is the time to push. In the words of Naomi Klein, acclaimed author and journalist, regarding the implications of the falling oil price, “We’re in a much better situation to win but we need to understand that this is a window. This is the last moment to be complacent.”
This has been reiterated in recent publications by both the Economist and Deutsche Bank. The reality is that most of the carbon in our already proven reserves must stay in the ground and that legislation to ensure that this is the case is just around the corner. Now is the time to demand big changes.
The Norwegian oil fund still invests in well over 100 fossil fuel companies with assets totalling around $40bn, and total reserves representing well over 500gt CO2 if burnt. Enough to take the world soaring past a 2 degree target and any chance of stopping dangerous changes to the climate system.
“I see this as a “counter-move” from Norges Bank Investment Management (NBIM), the group that oversees investments by the fund, to the growing pressure from divestment, where they try to demonstrate to politicians that they can do OK without stricter political mandates,” suggests Truls Gulowsen, campaigner with Greenpeace Norway. “It is still up to Parliament to instruct the Fund to complete full fossil fuel divestment, as the Fund still has billions in coal, oil and tar sands investments. This decision is scheduled for May this year, so maximum pressure on Norway is needed.”
Global Divestment Day next week, 13 and 14 February comes at the perfect time to increase the pressure on institutions such as the Norwegian Sovereign Wealth fund to commit to full divest from fossil fuels.
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