November 11, 2016

Fossil Fuel Divestment & Election Day: What You Need to Know

With all of the attention on the surprising election night outcome of Donald Trump, other major stories out of the election are slow to be considered. Yet regardless of opinions around the election result itself, there are key items to consider around what the recent election day results mean for the future of the fossil fuel divestment movement.

For starters, activists are no doubt strategizing how to navigate this new political landscape but the facts on divestment remain the same.  Groups in support of divestment, devastated by a Trump presidency, hope to rally their troops on the ground. As Katie McChesney with Fossil Free wrote:

“We must organize. We must organize the masses in our institutions to pull their support of the fossil fuel industry. We must strip the fossil fuel industry of their social license – they cannot continue to act with disregard for each and every one of our futures.”

While it can be argued that Trump’s victory was partially fueled by a reaction to this form of extreme anti-fossil fuel agenda, these organizations will likely be fighting harder than ever to push their agenda at colleges and the local level as they see less opportunity in Washington. In turn, universities looking to protect their endowments should remember the facts about the ineffectiveness and high costs divestment imposes.

Secondly, a new administration means new policies for the energy industry. It is well understood that fossil fuels will continue to play a critical role in providing energy across the globe. Yet divestment activists in recent years have argued that regulations restricting fossil fuel development will only grow, in turn making these “stranded assets” and, therefore, bad investments. Yet a new administration will likely create a new landscape for increased energy development in years to come. Combine that with the continued need of these resources across the globe, and the economic case for divesting gets even weaker than it already was.

Outside of the presidential election, voters in states like Colorado and Vermont cast their support for leaders in opposition to divestment. On Tuesday, Vermont voters overwhelmingly supported State Treasurer Beth Pearce, a Democrat who garnered 74 percent of the vote, who has been an outward opponent of divestment. In Colorado, voters also sent a strong message by electing Heidi Ganahl to the University Board of Regents. Importantly, much of the conversation in that race focused on energy policy and Ganahl from the outset made clear she was opposed to fossil fuel divestment. It’s worth noting that her opponent Alice Madden, a leading Democrat who has worked on energy policy both in the Obama and Ritter administrations, was also opposed to divestment but was overwhelmingly favored and endorsed by the Keep It in the Ground campaign.

The bottom line: No matter your political preferences, divestment is all cost and no impact. As a Washington Post editorial on divestment in recently noted:

“The problem with such symbolism is that it’s no more than a feel-good gesture — a hypocritical one — that would achieve no actual reduction in carbon consumption while imposing very real costs on the county’s pension fund, on which tens of thousands of retirees depend. The hypocrisy of selling off fossil fuel firm stocks — just $65 million out of pension funds worth $4.3 billion — is that Montgomery, like every other locality in the United States, would continue to consume fossil fuels for countless purposes: to run police cars, ambulances and fire engines, and to heat and cool county-owned buildings, to name just a few.” (emphasis added)

The Baltimore Sun also faced a swift and direct response from readers following its own editorial in support of divestment.  According to Norris McDonald of the African American Environmentalist Association:

“In reality, divestment is a feel-good strategy that does nothing to directly help the environment and would undermine the ability of companies to create a sustainable future. A 2016 Progressive Policy Institute study even shows that energy production companies actually reinvest over $33.8 billion back into the economy — the second most of any sector in today’s economy.”

IPAA senior vice president Jeff Eshelman also responded, emphasizing that lawmakers should focus on “policies that actually support the environment, not empty political gestures like divestment.”

As universities, pension funds, and municipalities are pressured to move towards divestment in days and months ahead, they should keep in mind that divestment is costly and ineffective.  Activists may have a new surge of energy after this election, but they will continue to hit roadblocks in their divestment campaign because the facts simply aren’t on their side.