The trend towards investment funds being diverted towards environmentally friendly energy and away from Big Oil seems to be gathering pace. The Rockefellers built their fortune on Oil, so for them to change like this is noteworthy.
Are we on the cusp of a big shift in economic strategy for private as well as public money? Or is it just a bit of ‘noblesse oblige’ from people who have so much money they can afford philanthropic gestures?
I mentioned that in the last paragraph of this post so I’ll just link it instead of repeating it.
I don’t think there’s anything frivolous about it. Perhaps the Rockefellers are trying to buy absolution the way the Carnegies and other robber barons did in years past when they engaged in hugely visible charitable donations, but the reason doesn’t matter as much as the fact that there does seem to be a trend among some of our foremost institutions to distance themselves from fossil fuel companies as a matter of principle. It seems that the purveyors of fossil fuels, by their historic and their ongoing mendacity and the intrinsic nature of the business they are in, are rapidly acquiring the same unsavory reputation as tobacco companies, and for many of the same reasons. People dislike discovering that they were lied to, and they dislike being harmed.
Renewables keep going down in cost per MWH produced. As far as I know fossil fuels do not. If/when fossil fuels do, it will be because they become renewable (ie made out of carbon dioxide and algae or something) rather than finite resources. On a long enough timeline (ie the next 50 years) I don’t see how fossil fuels can hope to compete barring the discovery of some massive untapped resource of finite fossil fuels. And even then if prices drop 80% for fossil fuels, that’ll just make other means of extraction non-economically feasible which will result in prices going up again.
However that is grid energy, we are still a decade plus away from when renewable energy cars are cost effective compared to fossil fuel ones (esp considering that ultra high MPG cars could be hitting the market in the same time period).
Megan McArdle’s been writing several columns on fossil fuel divestment, which appears to be gathering steam. She argues that it’s effectively useless (or worse, since it’s like slactivism and makes people think they’re actually accomplishing something) Here’s a reasonable sample. She’s specifically talking about an attempt to get a university to divest, but I think that her point applies to the Rockefellers.
I tend to agree with her. People aren’t divesting from fossil fuels because it’s effective; they’re doing it because it’s easy, and getting people to actually reduce fossil fuel use is hard, since in the short term it mostly means lowering your standard of living.
Nah, same attempt from her that many others do to misdirect.
Like I said in another thread: take the example of acid rain: the energy companies that were more responsible for the emissions of acid rain chemicals got reigned in thanks to regulations and new technology that was used to remove or scrub the sulfur dioxide and nitrogen oxide.
The point here is that we, the regular people that did not create those emissions, did not need to be shamed to do the right thing because back then (as it is mostly the case today) there were groups that were doing most of the damage. As we are responsible too, it does not mean that it should be free for all, only that one has to think that the price to pay will come and we are more likely to accept it once it comes as solutions are being implemented.
Related to acid rain, what she mentions would be like applying the wrong solution to acid rain, shaming the common users is not really a good idea, nor it makes economical sense. Consider the deployment of the catalytic converter that converts emissions that contribute to acid rain into less harmful items. If we had followed back then the silly examples and solutions that she claims the ones proposing this should follow; then a hodge podge of solutions, and many of them shady or fraudulent, would had appeared. But instead the car companies were compelled to add the item to the cars, resulting in a more economical solution than going alone and with iffy results. The big companies then did so and had the slight increase in costs passed to the consumers.
As it should be in this case. Most people that understand the issue then accept and approve of the increase in costs.
BTW many economists have looked at the larger issue and conclude that the real fear mongers are the ones that claim that the environmentalists are in favour of getting us back to the stone age.
ETA: Responding to iamthewalrus…
Except that no one is arguing that divestiture is in and of itself the solution to the problem. There’s a short article in the current New Yorker that I think is more balanced than either the original news story I linked or the rather defensively pro-business Bloomberg piece. It points out that (a) the Rockefeller Brothers Fund (the smaller of the two major Rockefeller foundations) has been divesting fossil fuel holdings for some years now so this isn’t entirely new, (b) that at least 70 other foundations have been doing the same, and that (c) it may actually make financial sense to do so.
The theory behind item (c) is that fossil fuel companies are not exactly a promising long-term investment, and more specifically that new regulations spurred by climate change concerns could cause some of the reserves that contribute to their asset valuation to become “stranded assets”. Moreover, anything the lowers a company’s stock prices impacts their ability to raise new money, and if this kind of divestiture gains momentum it could help persuade them to start investing in more palatable initiatives like development of the renewables sector, which most of them are presently not doing at all. So even if the primary goal is for us all to cut back on fossil fuels, pulling investments out of oil and coal companies is not necessarily useless – it’s just one more tactic in a long and complex battle.
[Columbo]
Oh, there’s just one more thing Ms. Megan McArdle…
[/Columbo]
I knew something else was looking wrong, you are completely forgetting history in an attempt to score a point.
The main reason for divesting is not economical, but the effect comes in the battle that is going on for hearts and minds.
I think we have to come to grips with the fact that, outside of an unforeseen revolutionary technological breakthrough, there is still lots of oil in the ground and we’re gonna drill damn near every ounce of it.
So let’s clean it up as much as possible, continue research into renewable energies that make them efficient enough to compete, and not play into fantasy.
By the way, I do think that breakthrough is coming, but it’s a wild card; you can’t bet on it.
As Richard Alley reported a few years ago, we do not need to depend on breakthroughs to act, most of what we need has been discovered already. And it is less expensive to deploy than many FUDs out there are claiming.
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Apply that attitude to coal and we’re buggered. Pretty much all the coal that’s still in the ground now has to be left right where it is. “Clean coal” is like fusion power; eternally years off as a viable proposition. We have to actively choose not to use it.
This presumes that they did something wrong in developing the oil industry, a fact that definitely is not proven, nor as widely accepted as you may believe.
It’s a self-serving publicity move designed to keep their family fortunes growing at a rate they are used to, and, to be frank, I will believe in this divestiture when I see it. You just don’t shift $50 billion in a week. My money is on us seeing an article in X years with the headlines “$Y billion of Rockefeller money is still invested in oil. What happened to their grandiose promises?”
That’s true. But even though no one is actually claiming that, I think people believe that it’s more effective than it is. And while I don’t want to let the perfect be the opponent of the good, there’s a real risk that people will focus on this rather than the larger goal.
Yes, this could be the start of a movement. But it could also be a distraction. How do you tell the difference?
Sure, but is it actually an effective one?
Money is fungible, and the vast majority of investment dollars are not allocated according to a particular moral cause. The idea that shifting the allocation of certain highly visible pools of money controlled by celebrities and institutions will have any effect at all seems even less likely to have any effect than the stupid “don’t buy gas on a particular day” events that sporadically gain traction. They both fail for the same reason: no one changes their usage behavior at all.
The current Rockefellers didn’t build much in any way of their fortune. They inherited it. So the fact that these descendants are now choosing to invest in alternative energy should not be viewed as a big shift.
The only presumption behind the divestitures of the 70-some foundations mentioned is that the oil and coal industries are engaged in an environmentally damaging business, a fact which is intrinsic in fossil fuels and quite thoroughly proven and certainly accepted by science. Whatever else one may want to argue, that point is certainly not factually debatable. Such a business was never sustainable over the long term, though few knew this a hundred or even fifty years ago. Today we know that the longer that fossil fuels continue to be a major energy source the more rapid the phase-out is going to have to be.
If they divest from Oil, where will they invest?
I would like nice to see some investment in an energy grid so that wherever power is generated it can be transported to where it is needed because this is enabler for renewable energy. Smart meters could moderate supply and so reduce the number of power stations required. There is a great need for some sort of grid energy storage solution, maybe all those electric car batteries. All of these require huge investments to alter the energy supply, demand and infrastruture.
If I heard that the Rockefellers were redirecting their fortune into investments in these areas I would be a bit more optimistic. Though I do realise that there are other areas that maybe more attractive growth industries such as ‘drone futures’, ‘customer data mining’ or electronic evesdropping’.
Where is a family in possession of such a large amount of money to put $50Billion? I guess this has been a problem for other large family concerns such as the Saudis have had for quite some time.
Not sure, but there are many former Apartheid supporters in South Africa that could tell you how effective it was.
And filmstar-en, regarding the Rockefeller group, in previous years its board of trustees committed to investing up to ten per cent of its endowment in companies that meet sustainable-development goals.
The change means that the investments to those companies will increase.
BTW I already pointed out how silly is to concentrate on the behaviour of the users first, while it should be a part of the picture it is clear that what the big corporations do first is more important.
Cute, but was divestment actually effective? You can’t just note that it was done in that case and that Apartheid ended and conclude that one had something to do with the other. Do you have something to support this other than a post hoc claim?
I think there are two big differences in this case. The first is that there were lots of other economic and political sanctions against South Africa. People didn’t just refuse to invest in their companies, they refused to buy their products, or to travel there, or to engage with their athletic teams. I claim that those things
The second is that South Africa was an outlier. Most of the rest of the world condemned their policies and didn’t have similar policies. I’d be a lot more convinced that we could quit using fossil fuels if we were the only country that used them, and we could easily look at other countries and say: “hey, they’re not burning any fossil fuels. Let’s do that!”
No. It won’t, necessarily.
The first order effect is that investments in those companies from the Rockefeller group will increase. Which will drive up their value and make others less likely to invest in them. Meanwhile, other people will be more likely to invest in the oil companies, since the Rockefeller group’s lowered investment will drive down values.
Money is fungible. Considering only the money of a particular group will not show you what the general economic outcome will be.
What you miss, and it is clear that you miss a lot of history like the person you cited, is that this is only part of a bigger effort. Alone one can make a weak point against it, but this is not the only effort going on; like the fight against apartheit this divesting is only a piece of the bigger effort. A related point here is that the “other people” that will come in to invest will have to answer to public, scientific and now even business opinion on why is it that they will be willing to get dirty.
I don’t think I miss that. I just think that it’s a silly and ineffective part, and I don’t think that the comparisons to Apartheid are particularly valid.
In the case of Apartheid, you had one government with a very unjust and unpopular policy. By exerting social and economic pressure with the distinct aim of getting them to change that policy, there’s an easy and obvious solution at hand for the SAfrican government. Change the policy, and this all goes away. And, look, maybe it won’t be that bad. All the other countries manage to not have such terrible policies, so there is a way forward.
In the case of fossil fuels, you have an entire planet that’s using them at an unsustainable rate, and most of them would very much like to use more of them in the near future. There’s no easy and obvious solution available. All the solutions we know of will take time and a lot of money to implement, and that’s ignoring the fact that most of them require some kind of worldwide agreement and regulation. The racial injustice of Apartheid would have been a lot trickier to unwind if someone could have plausibly made the argument “But even if South Africa ends Apartheid, you know that China and India will just start oppressing black people even more”.
Seems to me that it is not valid for the only reason that it does make the point of the article you cited a poor one.
The point was how useful is to put notice on all about how we all need to change, and the pressure is now increasing on the high levels of businesses and mainstream media, that is all. Seems that attempting to make it more than what it is supposed to be is only made to disparage a piece of the whole effort.
And indeed, the solutions will take time, and the experts in the matter already realized that we can not go cold turkey, nor we can change at a very fast pace, the solution now includes adaptation too. And the IPCC and many other groups like the one Richard Alley is a member of reported that it is indeed just fear mongering to exaggerate the amount of money that will be needed to implement. (An specific point that is it not the one made by divesting.)
The overall point also remains. The longer we take to start the more it is likely that we will let outfits like Greenpeace to dictate what we will have to do, I rather have industry and business realize that they should come with solutions and more economical implementations.