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Wednesday, July 29, 2015

Investors Fleeing Fossil Fuels

The inexorable Law of Supply and Demand is at work. Robert Scribbler writes in Climate Change Changes Everything — Massive Capital Flight From Fossil Fuels Now Under Way:

Massive Investor Flight Away From Fossil Fuels

And this year it appears that a number of investors are starting to get it. Get the fact that there’s no future left in burning coal, oil or gas. No future worth living in at least. For investors by the droves are now engaged in removing their assets from fossil fuel based companies.

Some are being pushed out by divestment campaigns run by responsible college students. Students who look to the future and don’t like what they see and so, encourage their schools to scrub carbon emissions from their investment funds. It’s a campaign that has also touched churches — including the great Catholic Church itself — setting off a broadening wave of religious-based divestment. And it’s a campaign that has reached into the sovereign wealth funds of entire nations.

Still more are being shoved along by a death spiral of coal, oil and gas prices. A wholesale disintegration of the paper billions of dollars once claimed on fossil fuel company balance sheets. A disintegration led by plummeting demand for fossil fuel products due to a combined increased efficiency and an ever more rapid adoption of non carbon based energy sources.

It is perhaps for these combined reasons and due to the encroachment of ever-more inexpensive and accessible renewable energy sources that has led to a massive flight of capital away from fossil fuel based energy. Arch Coal, for example, has lost 95 percent of its market capitalization in the past year. Other corporations who’ve cast their lot with continued fossil fuel burning have suffered similar, though slightly less dramatic fates. Suncor, one of the chief tar sands extractors, has lost 20 percent of its value, Exxon Mobil 12 percent, Chevron 18 percent, Chesapeake Energy 55 percent, Conoco Phillips 24 percent, Suncoke 36 percent, and Peabody 85 percent. These are industry-wide losses that are in the process of setting off a string of malinvestment-based bankruptcies that would put the ‘tempest in a teapot’ hype surrounding Solyndra to shame. In essence, it’s the epic and compounding failure of drill, baby, drill politics.

Investors told late last year that oil, gas and coal fortunes would rebound have been sorely disappointed. Coal continues its 5 year long string of monthly bankruptcies. Oil and gas companies trail the S&P 500 by 40 percent. And more than 118 billion dollars in new oil projects has now been shelved. Growing ever more sour on what appears to be an escaped-from-reality chorus of fossil fuel cheerleaders, investors have finally had enough and gone in search of greener pastures. In this case, green pastures include a wind farm now being built off Cape Cod. One that will provide renewable energy based electricity to 30,000 homes that previously got their electricity through dirty, expensive and hothouse-amplifying diesel fuel burning.

It’s the kind of choice investors and the rest of us need to be making if we’re going to avoid the worst of this climate change nightmare we’ve already set in play. And we’d better get a move on. For as commenter Mblanc from the UK recently noted in response to a previous post:

I’ve got a really bad feeling about this. That feeling has been building up over the last few months. Every time I see an anomaly map these days, I can’t help feeling that we in the UK are right in the firing line of Greenland ice melt, and the firing might have already started.

It’s starting. Climate change changes everything — makes our world, our nations and our homes less secure, more vulnerable in the path of oncoming and ever more violent weather. But, if Hansen and other scientists have it right, we can still avoid the worst impacts if we don’t listen to the fossil fuel cheerleaders and keep making all the wrong choices. Thankfully, it appears investors may have wised up a bit. Let’s hope that trend continues.