The divestment campaign has gathered pace since I last wrote on the subject but two big questions still remain: What risks are our universities opening themselves up to when they invest in oil and gas companies on the stock market and what are the consequences of accepting research funding from these fossil fuel companies?
Some of you may recall a popular divestment campaign, challenging South Africa’s apartheid regime in the 1970s, which spread across campuses globally. By selling off the stocks of companies that did business in South Africa, public pressure lowered the stock prices of target companies and persuaded them to comply with the divestment activists’ demands. A similar call is being made to publicly discredit the fossil fuel industry’s profitable business strategies, in support of more investment in renewable energy.
The fossil fuel shares listed on the stock exchange are worth approximately £900 billion. To compare, the value of shares in renewable energy companies is around £5 billion.
The popularity of the ‘Fossil Free’ divestment campaign in the U.S. that recently culminated in Harvard’s support for divestment arose from an article in Rolling Stone magazine, written by Bill McKibben, author and founder of 350.org. The story started a global student movement to get universities all over the world to divest from the fossil fuel industry because it highlighted three numbers:
- 2°C; the only target our global leaders have settled on to limit global warming.
- 565 gigatonnes; the amount of carbon we can emit before reaching that 2°C threshold.
- 2,795 gigatonnes; the amount of carbon stored in the fossil fuel industry’s known reserves. Five times more than is safe to burn.
Therefore, if we are to limit global warming to 2°C, as the leaders of almost every nation has agreed is necessary, then the share price of fossil fuel companies is based on burning five times more than the permitted amount.
Unburnable Carbon, a report led by Professor Lord Stern of LSE and Carbon Tracker provided the research for McKibben’s article, stating that if all the fossil fuel reserves were burned, we would be heading towards a 6°C increase in global temperatures. By investing in oil, coal and gas companies, universities and other institutions are complicit in supporting the fossil fuel industry’s carbon intensive projects. Today, universities such as Imperial wouldn’t dream of investing or accepting funding from tobacco companies as it would conflict with the Faculty of Medicine’s innovative research on cancer. Should universities be investing in practices that directly contradict their research on climate change adaption and mitigation?
Global investors lend money to the fossil fuel industry, assuming that the reserves held by these companies can be burnt and therefore sold at the price they are given. If carbon limits are put in place, then only one fifth of all known fossil fuel reserves can be burnt and the other four fifths become worthless. Similar to the housing bubble that created the 2008 financial crash; this is the carbon bubble, produced through speculating the future price of oil without taking possible future regulations into account.
The aim of the Fossil Free campaign is to lower the risk our universities are open to through these investments and to break ties with the fossil fuel industry by redirecting investment into the development of renewable energy technologies. Sussex and Aberdeen universities have already divested and the newly launched Fossil Free Health campaign aims to get medical institutions to divest.
Our universities also support the fossil fuel industry by accepting funding from private energy firms. Oil and gas companies fund universities’ research departments to develop technology which may lead to new fossil fuel discoveries, but that also benefit the sponsor’s profit-making business.These companies take advantage of academic vulnerability due to the government’s fixation on the cuts-led commercialisation of higher education. The fossil fuel industry offers support for the UK to be a leader in scientific research and a prime location for international business to recruit the UK’s skilled workforce.
Students in the UK are challenging their universities academic partnerships with oil and gas companies. If global carbon limits are put in place, universities are taking another risk by directing their skilled graduates into unsustainable employment. Should there be an optional module to help petrochemical engineers to develop transferable skills for working in sustainable technology?
Students, staff and alumni are recognising that the third sector’s investment model does not reflect the world-leading research on climate change. To keep within our 2°C threshold of global warming, Fossil Free UK campaigners are asking their universities to implement ethical investment policies that require them to divest from fossil fuel companies and end their partnerships with oil and gas companies.
Universities are cumulatively investing over £4bn in the fossil fuel industry, while accepting up to £100m in research grants. Researchers argue that if this investment is redirected into renewable energy, we’d have a greater opportunity to develop a sustainably skilled scientific workforce in the UK and to provide a safe environment for our future scientists and engineers.
It’s all in the math.