Fossil Fuels: The Tide is Turning

(Pöllö/Wikimedia)

(Pöllö/Wikimedia)

On the same day that the federal government released its National Climate Assessment which summarizes the impacts of climate change on the United States, Stanford University trustees voted to divest their $18.7 billion endowment of coal stocks, the largest in a growing group of funds to partially divest from fossil fuels.

The message in the National Climate Assessment was clear: Climate change is upon us and it has already dramatically transformed our national landscape along with our weather. The time for delay on action is over.

The message from Stanford students was equally clear: It’s time for universities to act and divest from all fossil fuels. “Fossil Free Stanford, along with over 400 student campaigns across the country, maintains the goal of divesting from all fossil fuels,” the students wrote in their online statement. “Stanford’s coal divestment alone will not be enough turn the tide on climate change. We call on university administrators across the nation to follow Stanford’s lead and begin the process of divestment.”

Stanford students have worked for several years to build student, faculty and trustee support for an effort to divest their endowment of all fossil fuels. While Stanford has taken the first step in purging its investments of coal stocks, Deborah DeCotis, the Stanford trustee who chairs the investment responsibility committee, conceded that this was not the only step the university was prepared to take: “This is not the ending point. It’s a process. We’re a research institute, and as the technology develops to make other forms of alternative energy sources available, we will continue to review and make decisions about things we should not be invested in. Don’t interpret this as a pass on other things.”

The determination of Stanford students to divest their university from fossil fuels echoes some work several of us at the Institute for Policy Studies launched together with other groups in 1997, when we began to urge the World Bank to divest from all fossil fuels.

Last year, the World Bank issued its own report on climate change, “Turn Down the Heat,” which warned that the planet is on track for a four-degree Celsius temperature rise by 2100. Along with many scientists, the Bank fears that such an increase would be incompatible with civilization as we know it. At the very least, rapid global warming — and the storms, droughts and other extreme weather it would unleash — would render the bank’s mission of alleviating poverty and fostering sustainable development impossible.

It is surprising it took them this long to come to this conclusion. It was in 1992, at the Rio Earth Summit, when the scientific community warned that a climate crisis was imminent, that the World Bank was charged with the task of marshaling the funds to address the emergency. But instead, over the next two decades, the Bank invested roughly $48.8 billion — not in clean energy, but in dirty fossil fuel projects in the developing world. Over the same time period, the Global Environmental Facility, housed at the Bank, invested only $3.5 billion in climate change mitigation projects.

In 2005, our researchers calculated that from 1992 to 2004, the World Bank had financed fossil fuel projects around the world that would release the equivalent of almost two years’ worth of global greenhouse gas emissions over their lifetimes. Our research found that virtually none of this financing would meet the energy needs of the planet’s poorest two billion people, nearly all of whom lived without access to electricity. Instead, the projects would power export-oriented heavy industry and urban areas — and bolster the bank accounts of wealthy corporations like Exxon and Halliburton.

Pressured to conduct its own review, the Bank issued a 2004 report that showed that the global poor were actually harmed by the Bank’s fossil fuel investments. The 2004 report further urged the Bank to stop financing coal immediately, to get out of oil by 2008, and to rapidly ramp up its investments in renewable energy sources. The Bank’s Board of Directors voted to ignore these recommendations, with the exception of setting modest targets for renewable energy lending.

Fast forward to June 2013, when President Obama made a major announcement on climate action in Georgetown, stating that public financing of coal — such as financing via agencies like the Export-Import Bank of the United States (Ex-Im Bank) — should end.

We were the first organization, together with Friends of the Earth, to document the significant climate impacts of the Ex-Im Bank and Overseas Private Investment Corporation’s fossil fuel investments in 1998. That research resulted in a lawsuit filed by Friends of the Earth, Greenpeace, and the City of Boulder challenging both of those public financial institutions with violations under the National Environmental Protection Act, for not calculating the cumulative emissions of their projects on global climate. Obama’s statement took that research and legal action one step further and called for an end to almost all U.S. government funding of coal overseas. The White House statement said:

“…The President calls for an end to U.S. government support for public financing of new coal plants overseas, except for (a) the most efficient coal technology available in the world’s poorest countries in cases where no other economically feasible alternative exists, or (b) facilities deploying carbon capture and sequestration technologies. As part of this new commitment, we will work actively to secure the agreement of other countries and the multilateral development banks to adopt similar policies as soon as possible.”

Shortly after Obama made this statement, other international financial institutions followed suit: First the World Bank, then the Ex-Im Bank rejected a coal burner in Vietnam; the European Investment Bank pledged to get out of most forms of coal; and then the European Bank for Reconstruction and Development followed along with the Nordic countries and the United Kingdom.

The recognition by all of these banks, and now by some university trustees, is abundantly clear: Coal is part of a bygone era. Coal kills, and — in an era of rapidly warming temperatures — it is time to seek other energy alternatives. But divesting from coal is not enough: These banks and universities must divest from all fossil fuels.

Thankfully, the tide is turning. And hopefully it will turn more rapidly than our own tides will rise.