The scope of global fossil fuel divestment has doubled over the past 15 months, with institutions and individuals controlling $5.197 trillion in assets pledging to divest. The announcement comes on the first anniversary of the Paris agreement on climate change.
"One year after the adoption of the historic Paris climate agreement, it's clear the transition to a clean energy future is inevitable, beneficial and well underway, and that investors have a key role to play," said UN Secretary-General Ban Ki-moon.
"I commend today's announcement that a growing number of investors are backing a shift away from the most carbon intensive energy sources and into safe, sustainable energy. Investments in clean energy are the right thing to do—and the smart way to build prosperity for all, while protecting our planet and ensuring no one is left behind."
According to a new analysis released today by Arabella Advisors, 688 institutions and 58,399 individuals across 76 countries have committed to divest from fossil fuels. Those sectors that have historically propelled the movement—including universities, foundations and faith-based organizations—account for 54 percent of new commitments made.
Representatives from finance, philanthropy, faith, entertainment, education and others announced these numbers and showed their support for the movement at a simultaneous international press conference today in New York and London—including a former top Mobil Oil executive, Lou Allstadt, who helped implement the Exxon-Mobil merger.
"As the hottest year in history comes to a close, the success of the global fossil fuel divestment movement is undeniable," said May Boeve, executive director of 350.org, the grassroots climate organization whose members have led the charge to divest.
"What began on a few college campuses in the U.S. has spread to every corner of the world, squarely into the financial mainstream. Divestment has permeated every sector of society: from universities and pension funds, to philanthropic and cultural institutions, to cities, faith groups, insurance companies and more. Now at $5 trillion, the movement is unstoppable. Institutions and investors must choose whether to be on the right side of history."
May Boeve, Adrian Grenier and Mark Ruffalo at today's press event announcing $5.197 trillion in assets pledging to divest from fossil fuels.DivestInvest
Support for the movement among early adopters is now increasingly being met by support from profit-driven institutions such as large pension funds, private insurers and banks, which represent $4.5 trillion in assets, citing climate risks to their investment portfolios. As more mainstream financial institutions commit to divest, the industry faces greater scrutiny.
"The oil and gas industry is currently experiencing an unprecedented level of negative factors—from reduced profits to increased borrowing to pay dividends—while the costs of solar, wind and batteries continue to fall," said Lou Allstadt, former executive vice president of Mobil Oil. "The prudent fiduciary is acting now to reduce the risk to their portfolios. Divestment is speeding up the clock on the final accounting that will show fossil fuels are out and clean energy is in."
Mark Campanale, founder and executive director of Carbon Tracker Initiative, agrees. "The financial markets are fast losing faith in the investment case for fossil fuels. A technological revolution is underway in the energy and transportation sectors, as cheap solar and electric cars take away demand for coal and oil. With a climate trifecta of physical risks, stranded assets and the threat of legal liability—fiduciaries are now on notice to implement measures to protect their portfolios."
Today's press conference also brought forward historic new divestment commitments, including Ireland's preeminent university, Trinity College.
"Trinity intends to play our part in delivering on the Paris agreement," said Dr. Patrick Prendergast, the provost and president of Trinity College Dublin. "We aspire to be a leader in sustainability and climate solutions in every aspect of the college, not only in investments but in our research, and also in how the campus operates."
The report also documents rapid growth in the faith sector fueled by Pope Francis' "Laudato Si" encyclical establishing a moral imperative to act on climate, but commitments in the faith sector are not bound to any particular religion. A recent interfaith statement calling for divestment was signed by 303 faith leaders from 58 countries.
"Islam, like other faiths, teaches and asks its adherents to implement an ethic of restraint and conservation," said Imam Saffet Abid Catovic, board member of Islamic Society of North America Green Masjid Task Force. "In the face of the global climate crisis, this ethic, while necessary, is not sufficient to meet this existential challenge and must be coupled with a 'keep it in the ground' investment policy: divesting from fossil fuel holdings and reinvesting a portion of these funds in renewable and clean energy alternatives."
"What the world needs now is DivestInvest Culture: A bold, collective pivot away from the old energy that no longer serves us, and toward the 100 percent renewable energy future that will let the people and the planet thrive," said actor Adrian Grenier, announcing the new campaign today. "I am so excited to help launch DivestInvest Culture today—we are actors, musicians and artists moving our money from the past to the future."
These global and unparalleled commitments by both the public and private sectors are further cementing the call for a clean energy transition—and challenge the U.S. energy policy of the Trump administration, which is shaping up to favor the expansion of the financially risky and environmentally destructive fossil fuel industry.
"At the one-year anniversary of Paris, and after a historic election in the U.S., divestment is needed more than ever," said Ellen Dorsey, executive director of the Wallace Global Fund and leader of DivestInvest Philanthropy. "When governments fall short, people step up. From Apartheid South Africa to the climate front lines, finance is a proven lever for change. Governments should keep their promises, but investors must move their money."
A landmark climate change conference starts today in Oberlin, Ohio. The conference will bringing together many of the world's leading thinkers, political figures, economists, investors, philanthropists, business leaders, educators and public intellectuals to discuss the changes needed to "spur a successful transition to a sustainable, resilient, prosperous and equitable economy driven by safe, renewable energy." Oberlin College and The Oberlin Project are hosting After Fossil Fuels: The Next Economy from Oct. 6 - 8.
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The International Energy Agency (IEA) released today a major new report warning that nothing short of an energy sector revolution is required to protect the world from runaway climate change and a global temperature rise beyond two degrees Celsius.
In what is the IEA’s most urgent call for climate action yet, the World Energy Outlook Special Report 2013: Redrawing the Energy Climate Map advocates a “reorientation of an energy system currently dominated by fossil fuels,” and proposes near-term action to clean up the power sector and halt the increase of global emissions by 2020.
It also calls for “transformational” change in energy generation worldwide in the longer term.
IEA Executive Director Maria van der Hoeven said:
Climate change has quite frankly slipped to the back burner of policy priorities. But the problem is not going away—quite the opposite.
This WEO [World Energy Outlook] Special Report is a timely reminder that climate change must remain a permanent and prominent item on the policy agenda. It seeks to outline the intensive action which we need to start implementing today, without waiting to 2020 or later for a global agreement to take effect.
Compared to 2011, energy-related carbon dioxide emissions in 2012 have increased by 1.4 percent.
A new global agreement aimed at meeting this target will not emerge before 2015 and is not likely to be implemented before 2020.
Meanwhile, the world is drifting further towards dangerous levels of average temperature rise and runaway climate change; the IEA projects an increase of 3.6 to 5.3 degrees Celsius by the end of the century. Scientists warn this level of warming could threaten civilization as we know it.
In its "4-for-2 degrees Celsius" scenario, the report proposes four near-term “pragmatic and achievable” measures to put the world on track to limiting warming to safer levels and could reduce emissions by eight percent on levels otherwise expected by 2020 without harming economic growth.
Targeted energy efficiency measures in buildings, industry and transport would account for nearly half of these savings by 2020 while limiting the construction and use of the least-efficient coal-fired power plants could deliver another 20 percent of these savings—while helping to curb local air pollution.
The report estimated renewable energy generation would increase from around 20 percent to 27 percent over the same period to fill the void created.
Halving methane releases from flaring in the oil and gas industry could provide another 18 percent of the savings and implementing a partial phase of out fossil fuel consumption subsidies would account for 12 percent, according to the report.
The IEA also makes the economic case for avoiding a looming 2017 lock-in for long-term warming above 2ºC. While delaying climate action across the entire energy system till 2020 would save $1.5 trillion, the report estimates that an additional $5 trillion will be needed in low-carbon investment after this date.
Fossil fuel power plants have long life cycles and are therefore exposed to serious risks in a carbon-constrained world, facing early and costly retirement or retrofitting, or even becoming “stranded assets.”
In a report last year, the IEA warned that—to stay below two degrees Celsius—about two-thirds of proven global fossil fuel reserves have to stay in the ground. Yet companies spend vast amounts not only digging up known fossil fuel reserves but by looking for and developing new fossil fuel reserves.
A recent report from the Carbon Tracker Initiative found that the financial industry invested $674 billion in such projects last year alone, and warned that $6 trillion could be pumped into a "carbon bubble" over the next decade.
In response to this dire outlook for carbon-intensive utilities, the IEA promotes a strong global carbon market and carbon capture and storage (CCS) technologies as possible ways to avoid problems and to create a role for fossil fuels in the future energy mix of a carbon-constrained world.
However, in the same report the IEA also warns that the use of CCS “remains distant” as the technology has yet to be deployed at scale, and it could still be many years before the power sector could rely on it, if full-scale deployment ever becomes a reality.
While generally welcoming the IEA’s call to action, environmental groups have upped the stakes.
Samantha Smith, leader of the World Wildlife Fund (WWF) Global Climate & Energy Initiative said:
This is a welcome intervention by the IEA, particularly the focus on energy efficiency standards for lighting, cars and appliances as well as cutting methane losses in oil and gas production. Unfortunately, the other policies are incomplete, not ambitious enough or regionally biased. With the world on track for catastrophic levels of global warming, as the IEA says, these stop-gap proposals simply don’t go far enough.
Building on IEA arguments they argue that the IEA should set a target to cut emissions from coal power 20 percent by 2020—targeting all power stations.
They also call for deeper cuts in fossil fuel subsidies, phasing out both consumption subsidies and production subsidies—those providing incentive for exploring for new reserves—in both developed and developing countries.
According to the IEA, $523 billion was spent globally in 2011—up 30 percent from 2010 and huge in comparison to the $88 billion spent on subsidising clean renewables.
WWF says governments should instead use taxpayer money to boost renewables and fight energy poverty.
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