Last week Norway’s largest manager of pension funds, KLP, announced that it would be selling off all its investments in coal companies and investing half-a-billion kroner (around USD 75 million) in renewable energy ventures. On the other side of the world, students at Harvard University filed a lawsuit against the president and fellows of Harvard College, among others, because of their decision not to divest from fossil fuels despite student pressure to do so.
Meanwhile in South Africa, a very different context to Norway and the US, a small divestment campaign that started at the University of Cape Town last year is going national with launches in Cape Town, Johannesburg and Durban.
These are just the latest headlines on divestment, a growing global movement, which started on student campuses a few years ago. Divestment involves a strategic challenge against the hegemony of fossil fuel companies by encouraging individuals to use their savings and their consumption to create a message for change.
Driving this movement is an increasingly urgent scientific message that we are heading for runaway climate change unless we act fast. Last month, The Intergovernmental Panel on Climate Change released its latest report detailing the scientific consensus on climate change. The IPCC seeks to provide information, not recommendations or advocacy. They are committed to the scientific method and to the use of scientific language. As a result they are sometimes misunderstood, but they play a crucial and important role in presenting the facts on climate change.
Their latest report, released on 1 November 2014, is unequivocal on a number of fronts:
Greenhouse gases (GHGs) in the atmosphere are at their highest in the past 800,000 years.
Air temperatures over land and sea are on average 0.85C above the pre-industrial levels.
Sea ice has decreased by 3.5-4.1% a decade over the past four decades and the rate of sea and terrestrial ice loss is accelerating.
Mean sea-levels are 19cm above levels of 100 years ago, and the rate of rise is accelerating.
Perhaps the most telling aspect of the IPCC’s latest report is that we will now almost certainly and unavoidably run up to and beyond 2°C of warming. Warming is guaranteed by the nature of heat exchanges between the ocean and the atmosphere and the resultant lags in atmospheric temperature increases. What we do today will affect how far beyond 2°C we go.
This is important. Beyond 2°C we begin to unlock long-standing vaults of GHG in the oceans, in the perma-frost and in forests. This in turn raises the risk of the GHGs we emit through the burning of fossil fuels (which today account for roughly 80% of all emissions) being just a small portion of the total emissions – over which we have no control. This is the scenario of runaway climate change, a scenario that is worth avoiding.
The easiest and cheapest way to prevent runaway climate change is to cut our dependence on fossil fuels. The required technologies exist. We now need people’s purchasing power to create effective demand and to shift finance and investment to credible alternatives.
There is R5.4 trillion worth of savings in South Africa. Yet most investment houses and fund managers are saying that while they are not averse to investing in green tech, they do not yet see “effective demand” for renewable energy portfolios.
This is our challenge. We need to create effective demand. We can do this in very practical ways. For example, by setting up more attractive options (including funds) for investments in renewable energy and carbon sequestration industries and through our own consumption patterns. We can also do this by reminding the people that mange our money (and the people that set the mandates for the people that manage our money) that investments in hydrocarbon companies are not sound, nor safe and are not in our best interests. I don’t want my pension money to be creating the type of world into which it might be hell to retire.
Beyond the moral argument, there is also a compelling economic argument to be made for divestment. We know that between 60% and 75% of the reserves on hydrocarbon company balance sheets cannot be burnt if we are to avoid runaway climate change. This means they will almost certainly become junk assets. It is not good enough to move with the herd – that is the stuff of financial contagion. We need investors to be smarter and more proactive than that with our money. One investor once told me that if he did not hold SASOL shares, he would lose his job. This might be true, given recent oil prices, SASOL’s ability to link its own price to the oil price and the institutional investment support that SASOL enjoys. But I would argue that if the same investor does not hold shares in renewable energy storage (possibly the most game-changing and rapidly evolving area of innovation in the world today) that they should also lose their job. South African capital is a laggard relative to the rest of the world when it comes to climate change and renewable energy, and it is in danger of being exposed.
While on renewable energy, please don’t accept the stylised fact that renewable energy is unreliable and intermittent (as if our current fossil fuel-fired electricity is not intermittent). The research shows that South Africa is the envy of the world in terms of its renewable energy resources, and that the right geographical and technological spread of renewable energy can smooth supply curves and reduce base load requirements by seven-fold. Dr Graham Sinden arrived at this finding in 2006, while a researcher at Oxford University and without consideration of renewable energy storage, which now has the potential to massively improve the security of renewable energy supply.
Of course, in taking up this campaign, we will confront vested interests in the coal, oil and nuclear sectors, and in the patronage networks that rely on these sectors. This is the crux of the matter.
This campaign is about our freedom. We mostly associate our freedom in South Africa with that iconic day in April 1994. But more accurately, that incredible day was a milestone in a much longer process. A process that involved women burning their dompasses, school children protesting the idiom of their tuition and artists refusing to perform in this country. And doing these things repeatedly and bravely.
Our freedom is not yet complete, and breaking our dependence on Apartheid-era energy behemoths is an important next step in creating employment, in removing the poverty trap created by ecological degradation, in encouraging access to safe energy and in realising freedom.
Major campaigns for our political freedom were mobilised on our campuses, and so it is entirely appropriate that this next step towards energy freedom and environmental justice begins on our campuses. That our universities supply the moral force to shift investment patterns, and back this up with well-researched innovations of the technological, political, legal and economic capacity required to affect the change.
The divestment campaign is a cause of this time in South Africa. Let’s make it happen, not only for our children, but for freedom from economic oppression and environmental degradation today. DM