Investors’ Fossil Fuel Company Activism, Rather Than Divestment

As a dynamic treatment of fossil fuel companies by environmental investors, much could be accomplished to lower carbon emissions through activism, rather than the passive act of divestment. This would involve universities and foundations that hold fossil fuel stocks to collaborate on their strategies,  and to pool their votes at shareholder meetings, and in the election of boards of directors.

An example of this is to lower emissions by switching from coal to natural gas by carefully managed fracking in appropriate areas. One account I read said that there are 50,000 drilling companies carrying out fracking.  The major oil companies are starting to acquire companies in this area.  If almost all fracking was done by the few major oil companies, the companies could responsibly, uniformly, and economically regulate where fracking was done and how.  Government inspection would also become effective and economical.  Sites would be chosen out of any zones where earthquakes could be caused.  Fracking wastewater would be cleaned rather than injected in deep wells, or injected only in safe areas.  The safest combination of chemical additives would be chosen.  Delivery pipelines would be of the best quality to prevent leakage.  Burning of waste gas would be carefully monitored, as per new government regulations.  Replacing coal by lossless natural gas treatment would reduce carbon emissions for electricity generation by half, where coal is replaced.

Simple divestment will lower fossil fuel stock prices a little, only to be picked up by investors only interested in profits, and not environmental safety.

The plans for divested stocks to be replaced by buying wind and solar stocks may not produce greater profit, or even supply more money to those companies. Only if the company is giving a public offering to raise money or selling stock that it has held will the company get investment money.  The continuance of at least solar investment depends on the continuance of large government subsidies that are being challenged every year, and could easily disappear with Republican control of the Senate or the next Presidency.  The vast number of wind turbines needed to generate a gigawatt, like a nuclear reactor does, is 1,000.  Wind farms are meeting resistance in many areas in which the electricity is used.  Otherwise, a new country-wide grid is needed to distribute wind power from the mid-West to the coastal areas.  Both solar and wind have problems with fluctuations, and must be backed up by natural gas plants anyway, as a condition for their usefulness.

Universities and foundations, whose investments can be guided by the smartest people with environmental sensitivities, should consider how to actively cooperate and use those investments for guidance in lowering emissions, rather than just passively giving them up.

About Dennis SILVERMAN

I am a retired Professor of Physics and Astronomy at U C Irvine. For a decade I have been active in learning about energy and the environment, and in lecturing and attending classes at the Osher Lifelong Learning Institute (OLLI) at UC Irvine.
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