Our society is addicted to fossil fuels and needs to go cold turkey. According to a January 2015 study published in Nature, over 80 per cent of the world’s currently identified coal reserves should be left in the ground (90 per cent for major producer countries including Australia), together with 50 per cent of the gas and a third of the oil. This is necessary to have a fair chance of keeping the global temperature rise by 2100 below two degrees Celsius and avoiding a runaway climate disaster.

Most of the “easy” fossil fuels have already been extracted. Much of what remains is difficult to get to and increasingly associated with human rights abuses and excessive environmental damage, prompting the new coinage “extreme energy”. In a recent development, oil companies are preparing to sink wells inside Ecuador’s Yasuni National Park, arguably the most biodiverse place on Earth and home to two uncontacted Indian tribes.

Most of the “easy” fossil fuels have already been extracted. Much of what remains is difficult to get to and increasingly associated with human rights abuses and excessive environmental damage.

Analysis of industry data has identified coal as Australia’s top source of dangerous particulate pollution, while coal burning has long been recognised as the primary cause of thick urban smog in China. Coal power is one of the top two global sources of airborne mercury emissions, which are contaminating the oceans and restricting the number of large fish that can safely be eaten, such as mackerel and tuna.

One way to help bring about change is by taking personal action. We can limit our vehicle use, stick solar panels on the roof and buy GreenPower. Another avenue is to sign petitions and write letters, but these might be ignored. Then there is direct action. In her recent book This Changes Everything, Naomi Klein gives the term “blockadia” to the groundswell of protests taking place across the world against unwanted fossil fuel projects, from Maules Creek in inland New South Wales to the Rio Tigre in the Peruvian rainforest.

The divestment movement

Another option is to engage in the market-based campaigns that have proved effective in recent years. Given that fast and radical global action on high-carbon industries is an increasing possibility, tackling climate change could leave fossil fuel investments worthless in the medium-to-long-term, according to the Bank of England. Buzzwords such as “wasted capital”, “stranded assets” and “carbon bubble” are finding their way into the debate.

A divestment campaign was kicked off in 2013 by Bill McKibben, then head of the climate action group 350.org, and has since been growing rapidly. This is targeting coal, oil and gas (including various forms of unconventional gas). Much of the activism today involves urging institutions to quit fossil fuels, the campaign growing so mainstream it has been endorsed by UN and the World Bank.

At the latest count, divestment policies had been adopted by:

• 26 universities and colleges (including Victoria University in New Zealand)
• 42 cities and towns (including six in Australia, Dunedin in NZ)
• 2 counties
• 74 religious bodies (including 10 in Australia, 6 in NZ)
• 32 private foundations
• 19 other institutions

Church bodies have been prominent in the divestment campaign, a significant stance given that, as moral authorities, people often look to them for leadership and guidance. One high-profile divestor is the Uniting Church in Australia whose president, Reverend Professor Andrew Dutney, was quoted as saying, “As Christians we are called to respect and care for the whole of creation.” Similar language has been used by many other divesting churches.

“The aim of divestment is not to bankrupt fossil fuel companies financially but to bankrupt them morally.”

McKibben is aware that shutting down the fossil fuel sector in the short term is unrealistic and also undesirable unless alternatives have been put in place. Divestment instead works in a trailblazing fashion, tilting public opinion and creating an intellectual climate in which restrictive laws are far easier. In his words, “The aim of divestment is not to bankrupt fossil fuel companies financially but to bankrupt them morally.”

For those unmoved by the moral imperative, a further incentive is likely to be higher returns. An analysis of indexes run by the US company MSCI found that, between 2010 and 2015, investors who went fossil-free earned 13 per cent annually compared to 11.8 per cent for the others.

Counter-arguments

Inevitably, discussion about divestment has prompted a range of responses, including some arguments against selling off these holdings.

One that sounds credible on the surface is that you lose the chance to engage with a company with a view to pushing reforms and your place at the board is taken up by someone who probably doesn’t care. While this shareholder advocacy strategy is good for tweaking behaviour, experience indicates it’s likely to fail when faced with rebuilding a company’s operations from the ground up.

Then there is the view that divesting will present buying opportunities to savvy investors, thereby neutralising any downward price movement. This falls down on two counts: the amounts being divested are too small at the moment to yield bargains; and large-scale buyers may be put off by the growing risks.

Fossil fuel divestment in Australia & New Zealand

Immediately following the 2013 election of Tony Abbott, 350.org Australia prophetically warned that the Coalition is a deeply ideological fossil fuel supporter. It argued that rational argument and lobbying can only go so far and that divestment is the most powerful strategy.

Since then, the Abbott Government has tried to boost global demand for Australian coal by attempting to sabotage the 2013 international climate negotiations in Warsaw. Domestically it has gone for broke, repealing the carbon tax, attempting to abolish or lower the Renewable Energy Target and trying, so far unsuccessfully, to abolish the Clean Energy Finance Corporation and the Climate Change Authority.

To date, 11 overseas banks have all signalled that they will not be funding some aspect of the Galilee mines or associated infrastructure.

A swathe of proposed coal mines in Queensland’s Galilee Basin, if fully developed, would use up six per cent of the world’s remaining carbon budget. Activist energies have focused on the expansion, necessary for Galilee, of the Abbot Point export terminal on the edge of the Great Barrier Reef. To date, 11 overseas banks have all signalled they will not be funding some aspect of the Galilee mines or associated infrastructure.

Meanwhile, Australia’s big four banks are all holding their cards close to their chest, refusing to signal their intentions, although the Commonwealth Bank is facing particular scrutiny for its advisory role on Adani’s proposed 11-billion-tonne Carmichael mega-mine.

Spearheading the Australian divestment campaign has been Market Forces, an affiliate project of Friends of the Earth Australia. This group organises periodic national divestment action days and has identified roughly AU$20 billion (NZ$20 billion) in fossil fuel loans by the big four banks over the past five years. No equivalent research has been carried out in New Zealand.

Coal still holds sway in the Australian political arena despite a severe downturn in the industry. Over 2012–2015, it massively underperformed compared to the rest of the share market, the “pureplay” coal companies operating in Australia shrinking in value by 60 per cent during this period. Falling coal prices have been largely driven by decreasing demand from China and India as they ramp up renewables.

Perhaps the most revealing episode was a two-week-long media storm following the Australian National University’s decision to sell holdings in seven mining companies, most in the fossil fuel sector. Criticisms of the decision were made by Tony Abbott, five other federal ministers, the mining industry and elements of the media. Vice-chancellor Ian Young was even summoned to appear before a Senate committee.

New Zealand has been actively encouraging oil and coal seam gas development while enacting a law intending to stop recent flotilla protests, which will mean a heavy fine for anyone coming within half a kilometre of drilling rigs or ships. The Key Government has been criticised for a weak stance on climate change and between 1990 and 2012 the country increased its greenhouse emissions by a staggeringly high 111 per cent despite agreeing under the Kyoto Protocol to stabilise them over the same period.

A fossil-free world

If there is a major shift away from fossil fuels, in line with the divestment movement’s aims, how do we stop the world from grinding to a halt?

For stationary power, Australia is blessed with abundant solar resources and baseload power offering a continuous supply can be achieved via solar thermal concentrators with molten salt storage. New Zealand has a head start, with 80 per cent of its electricity already coming from renewable sources, largely hydro power, and scope to achieve the remainder with windfarms. In both countries, demand for off-site power generation is being curbed by domestic photovoltaic and solar hot water systems.

From around the world, there are multiplying examples of the energy-intensive demands of industry being met by wind turbines, biogas or mammoth rooftop solar installations, with other major opportunities available from investing heavily in energy efficiency. The use of oil-based plastics could be reduced, coupled with a shift towards the use of more sustainable materials.

Australia is blessed with abundant solar resources and baseload power offering a continuous supply can be achieved via solar thermal concentrators with molten salt storage.

In terms of vehicles, new breakthroughs in efficiency are being made with hybrid cars and electric models that can be charged using solar power. Shell technicians modified an Opel station wagon in 1973 to achieve 0.6 litres per 100km and had by the late 1970s reached 0.2 litres per 100km. The fact that these ultra-high efficiencies have not been incorporated into cars points to high-level collusion between auto makers and oil companies.

Such achievements make a nonsense of oil scarcity as well as the calls to expand biofuels, some grown on arable land, as “sustainable” substitutes for petrol and diesel.

Personal divestment

Australian research carried out in 2014 for 350.org Australia showed that an impressive 67 per cent of those polled were supportive of investing their money away from fossil fuels. Here are some suggested steps for putting this into practice:

Bank accounts

As an alternative to Australia’s major banks, most small banks have no direct exposure to this sector and this is largely the case for building societies and credit unions, too. New Zealand options are Kiwibank and the Co-operative Bank, in addition to credit unions and building societies.

Superannuation

Australia’s first and only fossil fuel-free super fund is Future Super, with a second option being the socially responsible funds run by UniSuper, an industry fund available only to university employees and their partners. Australian Ethical Super has a policy of steering away from coal and coal seam gas mining, making it nearly fossil-free.

A very useful resource is Super Switch, a site covering the largest 35 funds, allowing users to see at a glance the percentage of their fund’s holdings that are avoiding the fossil sector.

In New Zealand, SuperLife’s Ethica fund excludes fossil fuel extraction and Grosvenor’s KiwiSaver socially responsible investment funds screen out companies whose primary activities are in the fossil fuel sector. A further option is Australian Ethical Super, although currency conversion is a hassle and currency exchange risks need to be taken into account.

Investment funds

Among investment funds, Hunter Hall in Australia is completely fossil fuel-free and open to worldwide investors. Australian Ethical Investment is close to being fossil-free and is an option for both Australians and New Zealanders.

Home loans

In early 2015, switching mortgages became the new front in the Australian divestment campaign with the launch of Future Home Loans, a mortgage-broking company that compares products from roughly a hundred fossil-free lenders. Similar options are available in New Zealand via credit unions and building societies.

When faced with the threats posed to the planet and the climate by fossil fuels, taking the easy option by adhering to a business-as-usual approach can be seen as dangerous insanity masquerading as mature level-headedness. The alternative is to become a part of this historic world-changing movement.