Fossil Fuels – the Good, the Bad and the Ugly
Oil was discovered in 1859 in Pennsylvania – this discovery has profoundly affected our lives today and explains why I am living out my life in Scotland, 12,000 miles from my country of birth, New Zealand – up until the industrial revolution and the development of the railroad, people rarely travelled outside a radius of 50 miles in the whole of their lives.
Firstly, some geology! Fossil fuels are coal, natural gas and oil. These are massive quantities of ancient flora and tiny animal fossils trapped underground or under the sea. To use the energy trapped inside fossil fuels, we need to burn them and this releases CO2 gases into the atmosphere.
Millions of us, along with our stuff, move around every day on the ground and in the air because of the amazing internal combustion engine ……. that needs crude oil (which makes petrol). Oil and gas make a quarter of our electricity, an amazing invention without which it is hard to imagine our everyday lives – how will I work my espresso machine for my morning coffee!? And finally, oil is the raw material for all the plastics around the world. So, for the last 150 years fossil fuel energy has been the basis of our modern civilisation.
But increasingly we now discover that there is a darker side to this energy source……in a BBC Radio 4 programme a couple of days ago on this very topic, oil was described as the ‘devil’s excrement!’.
Geoffrey Supran, Research Associate in Department of the History of Science at Harvard University stated:
“For 60 years the fossil fuel industry has known about the potential global warming dangers of their products. But instead of warning the public or doing something about it, they turned around and orchestrated a massive campaign of denial and delay designed to protect profits. The evidence is incontrovertible”
What is my response to this? Does my personal pension pot have investments in the fossil fuel sector? What are the reasoned arguments on both sides? What kind of large organisations have already divested?
We now know that from 1965, the adverse environmental impact of fossil fuels was known by the oil industry leaders and politicians. Since that time, (54 years ago!) it is estimated that the top 20 oil and gas corporations have contributed 35% of all energy related CO2 and methane emissions in our planet – think of the increased numbers of motor cars and flights over this period. There are also suggestions that the oil and gas leaders went out of their way to muddy the waters by attacking the scientific consensus and exaggerating the uncertainties.
In this context, what are the arguments for continuing to invest in fossil fuels? Some argue that divesting is the wrong way to influence change and that we should work with the fossil fuel industries to transition towards greener energy solutions at a measured pace. We also need to consider the potential for large unemployment within the oil industry if we all divested. At a personal level where it hits my pocket, when I suggested to my Financial Adviser that I wished to divest from fossil fuels in relation to my modest pension pot, he advised that I ran the risk of lower investment returns.
What are the future prospects for the fossil fuel industry? In order to limit the increase in the worldwide temperature to within 2 degrees, it is estimated that 80% of known coal reserves must remain exactly where they are – untouched and unburned.
The London School of Economics Grantham Research Institute looked at the emissions targets for the 10 largest oil and gas companies worldwide. Only two of them are planning to make emissions pledges that align with the UN Paris Agreement on climate change. Five of the 10 companies had no plans at all to reduce their emissions.
Within the fossil fuel industry there does seem to be a headstrong and obstinate attitude where short-term profits and investment returns to shareholders are more important than the longer-term care of our fragile planet for the benefit of our descendants when we are long gone.
With the growing groundswell of resistance to fossil fuels, it does appear that in the longer term, investment in the oil companies would be a less than prudent investment. In this context, Mark Carney, the Bank of England Governor, recently warned that climate change could trigger a major selling of oil industry assets that could result in collapsed valuations in this sector. Along the same vein, the OECD believes that the oil sector assets will eventually become ‘stranded’.
After weighing the arguments, I recently decided to divest in the fossil fuel sector. This is a personal decision and we all need to decide where we stand on this massive topic. I know there will be some who will take a different approach after thoughtfully considering the arguments. I simply wanted to raise awareness of this topic and explain why I made this decision. My thinking was along the lines of:
1. The fossil fuel industry will continue, in the foreseeable future, to make a massive contribution to carbon emissions and the resultant ecological breakdown. Divestment is a big “lever” that large organisations and individuals can all pull to reduce these emissions
2. Divestment sends a message to these contaminating corporations that ‘enough is enough’! The care of our planet so that our grandchildren can enjoy it is more important than profits and dividends for shareholders
3. As developments in renewable energy sources grow, the price of a barrel of oil is dropping and eventually it will make good investment sense to divest
4. Large organisations around the world and including our own University of Glasgow have already made a moral stand and made divestment commitments – I wanted to stand with them.
In the New York Times recently, Archbishop Justin Welby wrote about climate change saying:
“It is not a distant danger – it is already with us. As we continue to burn fossil fuels, its effects will only grow”.
This is particularly pertinent as before he became Archbishop, Justin Welby worked for a decade in the oil industry.
Finally, and in kind of ‘STOP PRESS’ style, three days ago, the European Investment Bank (EIB) made this public statement:
“We will stop financing fossil fuels and we will launch the most ambitious climate investment strategy of any public financial institution anywhere”.
Wow – this is momentous! By divesting the EIB have bravely pulled one of the big ‘levers’ to limit a rise in global temperature. I encourage you to think about pulling on this same lever.
17 November 2019
Credit: Tom Toro http://tomtoro.com/