Fossil Fuels

Fossil Fuel Divestment Is Not Going to Go the Way Bill McKibben Thinks

But doesn't mean ruling out disruptive new energy technologies.

|

OilRigsSunsetDennisThompsonDreamstime
Dennis Thompson/Dreamstime

Calls for financial institutions to divest from fossil fuel producers have become a staple of climate activism. Bill McKibben, founder of the climate activist group 350.org, reprises the idea in a New York Times op-ed called "Cashing Out of the Climate Casino." On "a planet with a melted Arctic and a burning California," he writes, investing in or lending to a fossil fuel company is "the single most dangerous and reckless way to deploy money."

McKibbens' group argues that world is experiencing a "carbon bubble." Fossil fuel businesses "are overvalued," 350.org argues, "because if and when the world ever gets serious about dealing with the climate crisis, the fossil fuel companies won't be able to burn their carbon reserves, from which they derive their value."

McKibben's op-ed argues not merely that fossil fuel divestment would be wise, but that it's starting to happen. The Axa insurance company, he notes, has said it will divest from Canadian oil sands production. ExxonMobil, he adds, has agreed to do assessments of how climate change can affect its businesses. And the World Bank has declared that it will end all financial support for oil and natural gas projects by 2019. "Finance, not politics, may turn out to be the soft underbelly of the climate monster," McKibben concludes.

But divestment will have an effect only if demand for fossil fuels falls signficantly in the future. As long as companies and consumers want to buy oil, gas, and coal, some institutions will want to invest in their production. So what does future demand look like?

In 2015, fossil fuels accounted for 83 percent of all energy consumed. Oil made up 33 percent of that total, natural gas 23 percent, and coal 27 percent. The Energy Information Administration (EIA) projects that fossil fuels will still account for 77 percent of global primary energy consumption in 2040. By then the agency expects humanity to consume 28 percent more energy than we do today. As a result, the EIA projects that global oil consumption will increase by 15 percent and natural gas by 41 percent, while coal consumption will essentially remain flat.

The EIA's forecasters think global energy consumption from nuclear and renewable power will rise from 17 percent today to 23 percent by 2040. But it sure sounds like somebody will be financing and profiting from new fossil fuel wells and mines over the next couple of decades.

Of course, these projections assume no truly disruptive technological developments with regard to energy production and consumption. The prices of solar panels continue to fall steeply, as do battery prices. And who knows? Perhaps regulators will finally get out of the way and allow tech entrepreneurs to develop and deploy novel nuclear power technologies like thorium and traveling wave reactors.

Disclosure: Bill McKibben very generously blurbed my book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution.

NEXT: Can Repeated Speech Be Criminalized Just Because It's Intended to "Seriously Annoy"?

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. People who claim the market is wrong are almost always wrong themselves.

    1. Not to give Trump too much credit but I wonder how much of this is really ‘revisionist power’. The NYT’s political leanings both domestically and with regard to international affairs isn’t a big secret and Bill McKibben is literally a climate activist rather than a writer or scientist… I don’t quite grasp how this isn’t blatantly advertising or power peddling. It just seems that with all the FCC/NN, Fake News, Twitter blacklisting, and Sinclair Broadcasting Corporation stuff this feels very blatantly propaganda-y.

    2. The market is wrong about the Kardashians.

      1. I believe we have reached Peak Ass.

  2. The governments of the world are go to snap their fingers and fissils fuels will no longer be needed and hence will be outlawed.

    How many people that will impoverish and kill will not be discussed.

    1. Predictable outcomes are never unintended.

    2. If people can be wrong then markets can be wrong.

      1. If people can fall down, then gravity is wrong.

        If people can stand up, then gravity is wrong.

        One of these statements is the same as the other.

    3. “How many people that will impoverish and kill will not be discussed.”

      People and wildlife are killed every day by the toxins released from burning fossil fuels. Why don’t we wring our hands over them every once in a while.

      1. “People and wildlife are killed every day by the toxins released from burning fossil fuels. Why don’t we wring our hands over them every once in a while.”

        Cite missing, shitbag.

        1. Hand wringing missing, shitbarf.

          1. mtrueman|12.19.17 @ 2:14PM|#
            “Hand wringing missing, shitbarf.”

            Still no cite, shitbag? I wonder why? Maybe it’s because you pulled that out of your ass like you do most everything you post here.
            BTW, for those who missed it, shitbag here is more than willing to toss farmers in the slammer if they dopn’t treat their animals like shitbag’s opinion of how they should be treated, because shitbag KNOWS ‘right and wrong’, right shitbag?
            And the cost to those on the margins? Let ’em eat cake!

      2. Toxins like CO2 that plants literally need to survive? Cute.

    1. frickin’ computers…..

      Finance, not politics, may turn out to be the soft underbelly of the climate monster Fine, it that’s it’s good economics, I’m sure even the [sarc] child-enslaving, monocle cleaning monsters at Reason [/sarc] don’t want to be dumping CO2 into the air just for the hell of it. Just so long as it’s really economics, and not subsidies or fines.

      1. Why not dump CO2 into the atmosphere just for the hell of it? We’re closer to the minimum amount of CO2 required for all life to continue on Earth than we are to prehistoric values of CO2 in the atmosphere. We know life thrives with a CO2 content of around ~3000PPM, we’re at ~450PPM, life ends at around ~170PPM.

        And yes, that is parts per million.

  3. Good article, but I don’t understand this last point: “Perhaps regulators will finally get out of the way and allow tech entrepreneurs to develop and deploy novel nuclear power technologies like thorium and traveling wave reactors.”

    Doesn’t government restrictions not matter? I mean coal consumption declined and you informed us that it had absolutely nothing to do with government restrictions and so there was no need to eliminate those restrictions? Wouldn’t the same apply here?

    1. Coal has declined because new sources of natural gas were discovered. NatGas has never been nearly as regulated as nukes are.

      1. Right, regulations had nothing whatsoever at all to do with it. Because a single paper tells us so. Ergo, the same applies to nuclear energy.

    2. Doesn’t government restrictions not matter? I mean coal consumption declined and you informed us that it had absolutely nothing to do with government restrictions and so there was no need to eliminate those restrictions? Wouldn’t the same apply here?

      Onerous taxation and regulation ONLY burdens stuff like alcohol. Not icky stuff like, you know, energy.

      LIBERTARIANISM!!!

      Ron, you’re aware that the climate change movement is about as far from Libertarianism as anything on Earth could be. North Korea might be more open to free markets than environmentalists.

        1. “Kim has to jump, if for no other reason than there will be unhappy property owners in his capital if the economy slows and apartment prices decline.”

          From all I’ve read, Kim would have had the tanks flatten Yeltsin if he were in that position, and not surprisingly. He has not fall-back position, no Plan B. If he is somehow called to take responsibility for his actions, he’s dead. I doubt he worries about any falling condo prices.
          I keep trying to see an end-game with NK (“The Famine” may be over but the starvation ain’t), and all of it presumes that Kim^3 will hold on with everything he has.
          Any presumption of offing the bastard has to contend with a (claimed) 100,000 comitatus, and the presumption that THEY are not hungry like most all of the country is (including the rank and file military).
          Yes, a search does not say “Kim Cut Off Assistance”; you have to look under such qualifiers as “North Korea limits access for NGO assistance” before you get any info regarding the ban on foreign assistance (particularly that with the US flag on it.). The question remains moot how many of what rank have to go hungry before things change.
          Plus, according to the reports, he makes it a point to make sure few know where he is at any time.
          It’s tough. A tin-pot dictator with nukes and a population petrified of confronting him. And you can whine about Trump, but I doubt he has any desire to off several million starving civilians in an effort to off Kim.

  4. I’m not sure what they think is supposed to happen when an institution sells its oil stocks. Someone else is going to buy them and the oil companies are still going to keep making money and paying dividends.

    1. Pretty much this. If California wants to move away from a profitable portfolio, who are we to stop them and why should we care? From what I understand there are good reasons to move away from coal and oil, but to completely divest from all fossil fuels would appear to be a pretty bizarre move.

  5. ExxonMobil, he adds, has agreed to do assessments of how climate change can affect its businesses.

    Far be it from this functioning retard to understand the issue but it’s funny how a shakedown from a New York State Attorney will change the way a company seeks rent.

    And the World Bank has declared that it will end all financial support for oil and natural gas projects by 2019.

    Good. If the World Bank would end altogether it would be even better.

    1. ExxonMobil, he adds, has agreed to do assessments of how climate change can affect its businesses.

      Far be it from this functioning retard to understand the issue but it’s funny how a shakedown from a New York State Attorney will change the way a company seeks rent.

      Hey, why are you blaming the AG? Didn’t you read McKibben’s piece? He said it was economics not politics. 🙂

      And the World Bank has declared that it will end all financial support for oil and natural gas projects by 2019.

      Good. If the World Bank would end altogether it would be even better.

      No shit.

      The entire climate change movement is built on deep and insidious racism. They don’t want black Africans to ever rise up from where they are now and to ALWAYS be their charity cases.

    2. Yeah, one gets the sense that the World Bank won’t hesitate to throw money at more expensive “renewables”.

      1. And when the metal mining required for battery production for all the electric cars they will force us to drive becomes a problem, the World Bank, 350, and the rest of these dipshits will still say that its Big Oil’s fault.

        1. I guess they have solar powered mining machinery.

        2. Not to mention the slave labor mining the cobalt for the cathodes in lithium-ion batteries.

    3. ExxonMobil, he adds, has agreed to do assessments of how climate change can affect its businesses.

      “Hey, you know all those assessments we’ve been doing on how this climate-change stuff can affect our business? Yeah, the ones we do along with all the other assessments of things that can affect our business because people who run businesses study that stuff. Well, now we can ‘agree’ to do them, and keep this pecksniff off our backs.”

  6. McKibben’s op-ed argues not merely that fossil fuel divestment would be wise, but that it’s starting to happen. The Axa insurance company, he notes, has said it will divest from Canadian oil sands production.

    Which indicates stockholders should sue for poor management and one should divest, post haste, from AXA.

  7. If developed nations like the US stop burning fossil fuels the price will drop and the developing nations will start buying or using more.

    There are still a couple of billion dirt poor people living here on earth. They just want to eat every other day.

    Literally mining coal for Bitcoins in rural China and Mongolia:

    https://tinyurl.com/yd88jpeg

  8. Solar panel and battery prices can only fall so far and who knows when China may say no more chemicals for U.S. for those batteries & panels since we are no longer allowed to mine for them in the U.S.

    when banks stop financing fossil fuel production it will be left to the governments to finance unless they want chaos.
    choose your poison we will need the fossil fuels until far in the future when some magic chrystals are found in a far off planet.

  9. How are solar panel installation prices doing? Labor costs aren’t declining? Huh.

    And why the fuck do we need yet another sodium cooled fast breeder? Or the expense and risk of 233Pa processing?

    1. Solar power costs are still dropping. Solar equipment OEMs are make better products that reduce the installation cost ahead of labor costs in the US. I have watched this. Solar is very OK for capacitive loads. This is not trivial. It costs about $20k to put in an new electrical service, with poles and a transformer, even for a small power draw.

      Inductive loads, like the pumps that handle your sewage and shower water, will not be solar powered.

      1. Labor costs are not dropping. Subsidies are the only thing propping up the solar industry. And phase matching to the load is the job of the inverter or the grid.

  10. These progtards divested from tobacco companies years ago, yet they still remain some of the most profitable stocks to have in your portfolio. You would think they would have learned-and if they are right, you can bet who will own the metal mines, solar panel, and battery factories-yep, Exxon-Mobil and Shell.

    1. If your financial advisor buys stocks that they agree with only, then you have a mighty shitty advisor.

  11. So the future is electric they say, but what about all the extreme weather events they say will happen that will destroy the power grid? What will the generators and heavy equipment run on, unicorn farts?

    1. The ONLY thing Trump could include in an infrastructure bill next year that I could even remotely support would be an update of our electric grid. That thing is a fucking mess and unbelievably fragile.

  12. “Energy is the only universal currency; it is necessary for getting anything done.”

    Energy and Civilization, A History: Vaclav Smil
    The math is straighforward: Even if we captured 100% of the instant solar energy (which of course, would mean the death of flora and therefore fauna), we could not enjoy the lifestyle we do, and those who wish to live like that would be frozen out. Smil is hell on the ‘wind and solar’ folks; they are either lying or ignorant and he makes it very clear.
    We MUST use stored energy, and there are two alternatives: Fossil fuels and nuke. That’s it, folks.
    So, here’s the choice:
    Do you want to live at the margins of existence as humans did up until about 200 years ago, or would you prefer abundance?
    Assuming the later, regardless of whether carbon fuel is causing environmental problems, it WILL ‘run out’ by getting very expensive to recover. So we’d best get moving on nukes while we have the time to do it well.

    1. That first bit is just wrong. If we could capture all of the solar energy falling on the US for about 3 hours every year that would run the country. Of course we can’t do that.

      1. Yeah, I was scratching my head there. If we captured 100% it would power things quite well. There is no doubt to anyone with half a brain that Sol is the most powerful thing in the solar system. It’s beyond retarded to assume that it couldn’t power everything on Earth a trillion times over, regardless of our power usage, just because we haven’t figured out a way to harness it efficiently enough yet.

        That said, fusion or something like it is probably more efficient than space based solar panels with, say, microwave transmitters to Earth. I have to think that solar panel energy collection is not the wave of the future that people think it is.

        1. Solar makes for better bumper stickers all right.

        2. The Sun is spewing it out no matter what we do. At some point it will be practical to capture a significant fraction of it in space. The obvious uses are engineering the rest of the solar system and flinging light sales to other stars.

      2. “That first bit is just wrong.”
        I withdraw that claim for the nonce but will check the book and see if I blew it, or he did (or you guys did).

        1. I’ll show my work:

          US power use is ~100 Quads, a Quad is ~1e18 J, so total is 1e20
          Landmass is 9.16e6 km^2 = 9.16e12 m^2
          Ground solar constant is ~700 W/m^2
          So at 100% efficiency we collect 6.4e15 J/s
          1e20 / 6.4e15 = 15,595 sec / 3600 = 4.33 hours

          I had a slightly different energy number in my first response so that’s the difference. Distribute that 260 min over the year and it’s about one minute per day (with all of the other absurd assumptions in there, of course).

  13. “Ground solar constant is ~700 W/m^2”
    Haven’t gone searching yet, but perhaps this is a key.
    I recall a recovery rate for PVCs of ~100W/m^2 under ideal conditions (clean and new panels, cloudless sky, etc).
    I’ll check to see if I can find the claim. If not, shame on me.

    1. You said we get to capture all incoming solar. Granted that’s an absurd assumption, but it’s the rules you laid out. But even if we only got 1/7 of that we’re still talking one day out of the entire year.

  14. Why would a libertarian writer want Bill McKibben to blurb their book?

Please to post comments

Comments are closed.