DIVESTMENT OF FOSSIL FUELS: THE FOSSIL FREE ACT CAMPAIGN

OF 350.ORG

Warwick Cathro

Presentation to Sustainable Population AustraliaAnnual General Meeting

10 May 2014

Outline

• [1] Climate change: the science, the evidence and the policies

• [2] Fossil fuels, the carbon budget and the financial risks

• [3] The divestment movement and the role of 350.org

• [4] The ACT Fossil Free campaign

[1] Climate change:

• The science

• The evidence

• The policies

My starting point

Climate science

Hansen’s latest article:

Public Library of Science. PLoS ONE 8(12), 3 December 2013.www.plosone.org

The evidence [1]

• Global average surface temperatures: of the 10 warmest years on record, 9 of them have occurred since 2002 (source: NOAA National Climatic Data Center)

• Australia’s record breaking “angry summer” of 2012/13 (source: Climate Commission)

• Arctic sea ice: the September minima have been declining at 13% per decade since the 1970s, and the lowest was in 2012 (source: National Snow and Ice Data Center, University of Colorado)

• … with an upsurge in northeast and northwest passage shipping since 2009

The evidence [2]

• Glaciers: of 136 major glaciers, 90% are retreating, and their mass loss is accelerating (source: World Glacier Monitoring Service)

• Hydro-meteorological disasters: up from 100 per year in 1980 to 300 per year since 2000 (source: Centre for Research on Epidemiology of Disasters)

• Example: bushfires in eastern Australia in 2013 that were unprecedented for October

• These have happened with average global warming of 0.8oC in the past century. What will it be like when warming exceeds 2oC?

The sceptics

• “Man made climate change is a left wing conspiracy to de-industrialise the Western world” (Senator Nick Minchin, November 2009)

• “Peer reviewed sciences are the Kool-Aid of the left-wing liberal conspiracy” – parents speaking to Cheryl Manning, high school science teacher in Evergreen, Colorado (PBS Newshour, 2 May 2012)

• “No evidence that man made emissions are adding to the temperature on earth … no increase in temperature for the past 17.5 years” (Maurice Newman, head of Business Advisory Council, 22 April 2014)

• … and this bumper sticker, seen in Farrer, ACT:

Bumper sticker seen in Farrer:

The policy response failure

• Failure of the 2009 Copenhagen conference

• Lack of a national carbon price in the US

• Inadequate carbon price in Europe

• China’s regional carbon markets in their infancy

• Breakdown of the policy consensus (2007-2009) in Australia

• “There’s now really no point in looking to government if you’re concerned about climate change. You have to look elsewhere for hope” – Mike Seccombe, The end of coal, The Saturday Paper, 26 April – 2 May, 2014

Those advocating a carbon price include …

Some positive developments …

• Falling price of solar PV, now challenging the price of fossil fuel derived electricity

• Rapid uptake of solar in many countries (especially China, Japan, US, UK, Germany)

• Strong development of solar and wind energy in the ACT and South Australia (though wind energy is threatened by the RET review)

• Innovations in battery storage will create future prospects for solar PV households to go “off grid”

• Australia’s carbon emissions from the electricity sector have fallen by about 12% from their peak in 2008

[2] Fossil fuels

• The carbon budget

• The financial risks

The world’s carbon budget

• If we want to limit warming to below 2oC, we must limit all future CO2 emissions to around 500 gigatons – and we are emitting 30 gigatons per year

• Known world fossil fuel reserves exceed the equivalent of 2500 gigatons of emitted CO2

• These reserves are “above ground” economically - ie factored into the assets of fossil fuel companies

• They are worth over A$25 trillion – a potential “carbon bubble”

• They are potential “stranded assets”, facing unanticipated writedowns, similar to the fate of Kodak and Nokia

The assumption on CCS

• We are making this assumption: that in the medium term future, Carbon Capture and Storage is very unlikely to become a practicable, reliable and economic approach to abatement of emissions from fossil fuel power plants

• So far there are a number of pilot plants but industrial scale effectiveness, if feasible at all, seems decades away

The need to disclose risks

• John Hewson leads the Asset Owners Disclosure Project

• “Of the 70 trillion dollars invested through the world’s top funds, 55% are in climate exposed industries and only 2% are in low carbon industries – a very substantial risk”

• “A change in the balance is needed”

• He is encountering push back against his disclosure campaign, even from universities

The Kepler Cheuvreux report

• A leading independent European financial services company

• Report: Stranded assets, fossilised revenues (24 April 2014)

• US$28 trillion of fossil fuel revenues are at risk

• The greatest risk lies with marginal oil production (such as deep water, oil sands, shale)

• Even with “ business as usual”, fossil fuel companies face serious risks from an acceleration in the deployment of renewable energy

Developments in Europe

• RWE (the second largest electricity utility in Germany) wrote down its fossil fuel assets by €5 billion in March 2014

• Norway’s sovereign wealth fund, the world’s largest at US$840 billion, is considering selling out of its investments in carbon intensive companies (source: Forbes, 10 March 2014)

Oxford’s Stranded Assets Programme

Key findings

• Major new Australian coal mines need a coal price above $100 per ton to be viable - the price has been falling since 2011 and is currently $74

• Deutsche Bank, Citigroup, HSBC, Morgan Stanley and UBS all forecast that coal demand in China will peak between 2016 and 2020 (source: Institute for Energy Economics and Financial Analysis)

• Issues in China include:

• Serious concerns about air quality

• Seven regional carbon markets

• Rapid uptake of solar energy

• China is also moving to replace imported coal with domestic production

[3] The divestment movement

• The divestment concept

• The role of 350.org

Fossil fuel divestment movement

• Began in 2010 in the US

• A response to public policy failure

• Energises local communities and organisations to take action where government has failed

• Seeks public recognition that fossil fuels are no longer an ethical or responsible investment

• Aims to pressure fossil fuel companies to switch to less carbon-intensive energy sources

• Inspired by examples such as the 1980s South Africa divestment campaigns

Australia Institute report [1]

Australia Institute report [2]

• Analysed 51 major Australian companies and categorised them into four tiers based on the relative level of fossil fuel exposure

• As examples:

• Whitehaven Coal was placed in Tier 1 (substantially involved in fossil fuel extraction)

• ANZ Bank was placed in Tier 4 (indirect fossil fuel exposure)

• Eliminating Tier 1 and Tier 2 companies from an investment portfolio made negligible difference to investment earnings and growth

350.org

• The most significant player in the divestment movement

• A grassroots movement represented in 188 countries

• Aims to see CO2 in the atmosphere reduced to the safe level of 350 ppm

• Public rallies

• Coal mine blockades

Its fossil free campaigns

Divestment achievements

• 11 universities and colleges

• 22 cities and 2 counties in the US (including Seattle and San Francisco)

• 26 religious bodies (including the Uniting Church in NSW and ACT)

• 19 foundations

[4] The ACT Campaign

• The Open Letter

• What you can do

• Conclusions

The Fossil Free ACT Campaign

• Open Letter to Andrew Barr

• Applauds ACT Government for its actions on climate change, such as its:

• emissions reduction target of 40% by 2020

• goal of 90% of electricity from renewables by 2020

• Calls on ACT Government to go further by:

• Disclosing its investments in fossil fuels

• Placing a freeze on such investments

• Developing a 5 year plan to divest, subject to financial responsibility

• We believe that these are moderate proposals

ACT Government investments

• Total investments of about $3 billion

• A portion of this is in companies with fossil fuel exposure such as Horizon Oil, New Hope Coal, Aurora Oil and Gas, Santos, Envestra Ltd

• The ACT Responsible Investment Policy mandates a veto on investing in companies involved in tobacco manufacture, landmines and cluster bombs

Support for the Open Letter

• Endorsement has been received from:

• 10 environmental organisations

• 2 health organisations

• Several prominent religious organisations

• 2 unions

• Approaches have been made to another 10-15 organisations which are still being considered

Related activities

• 350.org Canberra has also:

• Held public Fossil Free rallies such as the one outside the Legislative Assembly on 27 March

• Supported the protest at the Maules Creek coal mine in northern NSW

• Supported the National Day of Divestment Action on 2 May

What you can do

• If your Super fund has a “Sustainable” or equivalent investment option, consider moving to it

• If you hold shares in companies with high carbon exposure, reduce those holdings:

• Check out the Tier 1 and 2 companies in the Australia Institute report

• Investigate renewable energy companies

• If you bank with one of the big four banks, consider moving to a bank that does not invest in fossil fuel companies or projects

• Consider rooftop solar!

To conclude

• 350.org Canberra is committed to working with groups and individuals that are concerned about climate change

• We support the divestment strategy in the light of public policy failure in Australia and other countries

• We aim to foster public recognition that fossil fuels are not an ethical or responsible investment

• We are motivated by the imperative of keeping the earth for our young people, so they can enjoy its beauty, its flora and fauna, and its habitability