DIVESTMENT OF FOSSIL FUELS: THE FOSSIL FREE ACT CAMPAIGN
OF 350.ORG
Warwick Cathro
Presentation to Sustainable Population AustraliaAnnual General Meeting
10 May 2014
Outline
• [1] Climate change: the science, the evidence and the policies
• [2] Fossil fuels, the carbon budget and the financial risks
• [3] The divestment movement and the role of 350.org
• [4] The ACT Fossil Free campaign
[1] Climate change:
• The science
• The evidence
• The policies
My starting point
Climate science
Hansen’s latest article:
Public Library of Science. PLoS ONE 8(12), 3 December 2013.www.plosone.org
The evidence [1]
• Global average surface temperatures: of the 10 warmest years on record, 9 of them have occurred since 2002 (source: NOAA National Climatic Data Center)
• Australia’s record breaking “angry summer” of 2012/13 (source: Climate Commission)
• Arctic sea ice: the September minima have been declining at 13% per decade since the 1970s, and the lowest was in 2012 (source: National Snow and Ice Data Center, University of Colorado)
• … with an upsurge in northeast and northwest passage shipping since 2009
The evidence [2]
• Glaciers: of 136 major glaciers, 90% are retreating, and their mass loss is accelerating (source: World Glacier Monitoring Service)
• Hydro-meteorological disasters: up from 100 per year in 1980 to 300 per year since 2000 (source: Centre for Research on Epidemiology of Disasters)
• Example: bushfires in eastern Australia in 2013 that were unprecedented for October
• These have happened with average global warming of 0.8oC in the past century. What will it be like when warming exceeds 2oC?
The sceptics
• “Man made climate change is a left wing conspiracy to de-industrialise the Western world” (Senator Nick Minchin, November 2009)
• “Peer reviewed sciences are the Kool-Aid of the left-wing liberal conspiracy” – parents speaking to Cheryl Manning, high school science teacher in Evergreen, Colorado (PBS Newshour, 2 May 2012)
• “No evidence that man made emissions are adding to the temperature on earth … no increase in temperature for the past 17.5 years” (Maurice Newman, head of Business Advisory Council, 22 April 2014)
• … and this bumper sticker, seen in Farrer, ACT:
Bumper sticker seen in Farrer:
The policy response failure
• Failure of the 2009 Copenhagen conference
• Lack of a national carbon price in the US
• Inadequate carbon price in Europe
• China’s regional carbon markets in their infancy
• Breakdown of the policy consensus (2007-2009) in Australia
• “There’s now really no point in looking to government if you’re concerned about climate change. You have to look elsewhere for hope” – Mike Seccombe, The end of coal, The Saturday Paper, 26 April – 2 May, 2014
Those advocating a carbon price include …
Some positive developments …
• Falling price of solar PV, now challenging the price of fossil fuel derived electricity
• Rapid uptake of solar in many countries (especially China, Japan, US, UK, Germany)
• Strong development of solar and wind energy in the ACT and South Australia (though wind energy is threatened by the RET review)
• Innovations in battery storage will create future prospects for solar PV households to go “off grid”
• Australia’s carbon emissions from the electricity sector have fallen by about 12% from their peak in 2008
[2] Fossil fuels
• The carbon budget
• The financial risks
The world’s carbon budget
• If we want to limit warming to below 2oC, we must limit all future CO2 emissions to around 500 gigatons – and we are emitting 30 gigatons per year
• Known world fossil fuel reserves exceed the equivalent of 2500 gigatons of emitted CO2
• These reserves are “above ground” economically - ie factored into the assets of fossil fuel companies
• They are worth over A$25 trillion – a potential “carbon bubble”
• They are potential “stranded assets”, facing unanticipated writedowns, similar to the fate of Kodak and Nokia
The assumption on CCS
• We are making this assumption: that in the medium term future, Carbon Capture and Storage is very unlikely to become a practicable, reliable and economic approach to abatement of emissions from fossil fuel power plants
• So far there are a number of pilot plants but industrial scale effectiveness, if feasible at all, seems decades away
The need to disclose risks
• John Hewson leads the Asset Owners Disclosure Project
• “Of the 70 trillion dollars invested through the world’s top funds, 55% are in climate exposed industries and only 2% are in low carbon industries – a very substantial risk”
• “A change in the balance is needed”
• He is encountering push back against his disclosure campaign, even from universities
The Kepler Cheuvreux report
• A leading independent European financial services company
• Report: Stranded assets, fossilised revenues (24 April 2014)
• US$28 trillion of fossil fuel revenues are at risk
• The greatest risk lies with marginal oil production (such as deep water, oil sands, shale)
• Even with “ business as usual”, fossil fuel companies face serious risks from an acceleration in the deployment of renewable energy
Developments in Europe
• RWE (the second largest electricity utility in Germany) wrote down its fossil fuel assets by €5 billion in March 2014
• Norway’s sovereign wealth fund, the world’s largest at US$840 billion, is considering selling out of its investments in carbon intensive companies (source: Forbes, 10 March 2014)
Oxford’s Stranded Assets Programme
Key findings
• Major new Australian coal mines need a coal price above $100 per ton to be viable - the price has been falling since 2011 and is currently $74
• Deutsche Bank, Citigroup, HSBC, Morgan Stanley and UBS all forecast that coal demand in China will peak between 2016 and 2020 (source: Institute for Energy Economics and Financial Analysis)
• Issues in China include:
• Serious concerns about air quality
• Seven regional carbon markets
• Rapid uptake of solar energy
• China is also moving to replace imported coal with domestic production
[3] The divestment movement
• The divestment concept
• The role of 350.org
Fossil fuel divestment movement
• Began in 2010 in the US
• A response to public policy failure
• Energises local communities and organisations to take action where government has failed
• Seeks public recognition that fossil fuels are no longer an ethical or responsible investment
• Aims to pressure fossil fuel companies to switch to less carbon-intensive energy sources
• Inspired by examples such as the 1980s South Africa divestment campaigns
Australia Institute report [1]
Australia Institute report [2]
• Analysed 51 major Australian companies and categorised them into four tiers based on the relative level of fossil fuel exposure
• As examples:
• Whitehaven Coal was placed in Tier 1 (substantially involved in fossil fuel extraction)
• ANZ Bank was placed in Tier 4 (indirect fossil fuel exposure)
• Eliminating Tier 1 and Tier 2 companies from an investment portfolio made negligible difference to investment earnings and growth
350.org
• The most significant player in the divestment movement
• A grassroots movement represented in 188 countries
• Aims to see CO2 in the atmosphere reduced to the safe level of 350 ppm
• Public rallies
• Coal mine blockades
Its fossil free campaigns
Divestment achievements
• 11 universities and colleges
• 22 cities and 2 counties in the US (including Seattle and San Francisco)
• 26 religious bodies (including the Uniting Church in NSW and ACT)
• 19 foundations
[4] The ACT Campaign
• The Open Letter
• What you can do
• Conclusions
The Fossil Free ACT Campaign
• Open Letter to Andrew Barr
• Applauds ACT Government for its actions on climate change, such as its:
• emissions reduction target of 40% by 2020
• goal of 90% of electricity from renewables by 2020
• Calls on ACT Government to go further by:
• Disclosing its investments in fossil fuels
• Placing a freeze on such investments
• Developing a 5 year plan to divest, subject to financial responsibility
• We believe that these are moderate proposals
ACT Government investments
• Total investments of about $3 billion
• A portion of this is in companies with fossil fuel exposure such as Horizon Oil, New Hope Coal, Aurora Oil and Gas, Santos, Envestra Ltd
• The ACT Responsible Investment Policy mandates a veto on investing in companies involved in tobacco manufacture, landmines and cluster bombs
Support for the Open Letter
• Endorsement has been received from:
• 10 environmental organisations
• 2 health organisations
• Several prominent religious organisations
• 2 unions
• Approaches have been made to another 10-15 organisations which are still being considered
Related activities
• 350.org Canberra has also:
• Held public Fossil Free rallies such as the one outside the Legislative Assembly on 27 March
• Supported the protest at the Maules Creek coal mine in northern NSW
• Supported the National Day of Divestment Action on 2 May
What you can do
• If your Super fund has a “Sustainable” or equivalent investment option, consider moving to it
• If you hold shares in companies with high carbon exposure, reduce those holdings:
• Check out the Tier 1 and 2 companies in the Australia Institute report
• Investigate renewable energy companies
• If you bank with one of the big four banks, consider moving to a bank that does not invest in fossil fuel companies or projects
• Consider rooftop solar!
To conclude
• 350.org Canberra is committed to working with groups and individuals that are concerned about climate change
• We support the divestment strategy in the light of public policy failure in Australia and other countries
• We aim to foster public recognition that fossil fuels are not an ethical or responsible investment
• We are motivated by the imperative of keeping the earth for our young people, so they can enjoy its beauty, its flora and fauna, and its habitability
