That puts a different spin on the divestment movement. Some investors have looked at the issue and decided not to divest, but to use a shareholder activism model instead. ‘Aiming for A‘, for example, is a coalition of investors pushing companies towards best practice and full accountability. The Church of England is a member of this coalition, which has looked to some like the best of both worlds – you can claim the ethical high ground while still enjoying the ongoing dividends from fossil fuels. The findings from this new research show why this approach doesn’t satisfy divestment campaigners. There’s just no such thing as responsible fossil fuels any more.
A second problem that this research highlights is that if we can’t fully exploit what we already have, then we need some kind of process to wind down production. That’s a tough sell. Holding back on building new capacity is one thing, but shutting down existing facilities is another thing altogether. Even countries that have embraced the energy transition are finding it politically difficult to call time on domestic fossil fuels. Germany has its coal belt, and unions, lobbyists and investors ready to defend it. So who’s going to willingly forego potential profits and close production?
There’s a good argument for letting developing countries press ahead with production for the time being, and ensuring that countries with higher historical emissions make the sacrifice first. Britain ought to be at the head of that queue, as the birthplace of the coal age. We could be taking a lead and redirecting investment from the North Sea to renewable energy and efficiency. Instead, the government wrote it into law that we have to maximise recovery from the North Sea, and we’re the only country in the G20 to be expanding our fossil fuel subsidies. Since we also have legally binding carbon targets that we won’t be able to meet if we maximise North Sea recovery, we’ve managed to write a commitment to doing the impossible into the law of the land. Well done Britain.
Is anyone going to dare to shutter fossil fuel production early? Well, maybe. China has plans to close thousands of coal mines. Admittedly it’s mostly to do with halting surplus production as the economics of coal is changing, but it’s still a politically difficult thing to do. A growing list of energy companies are announcing plans to move out of fossil fuels, or at least out of coal, led by the utility companies. But really, the idea of a managed decline in the fossil fuel industry is still anathema in a growth economy.
Oil Change International have further work to come on how we plan and deliver the early closure of fossil fuel production. In the meantime, it looks like there’s a new importance on divestment, and those that had stuck with shareholder activism would do well to think again.