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Cities, Investors and a Prince Support Fossil Fuel Divestment

November 03, 2015 Add Comment Edit

What do Prince Charles, Investors and the City of Oslo all have in common? They are all recent advocates of divestment from fossil fuels. What started as a grass roots movement has blossomed into a global effort to call for a future with integrity and common sense. Fueled by the divestment movement, the transition to a more sustainable economy is underway.

Fossil fuel divestment is the fastest growing movement in the world with a 50 fold increase in 2014. If we are to reign in emissions we must radically reduce our use of fossil fuels. This is particularly important as we head down the final stretch towards COP21.

The growth of the divestment movement is increasingly mainstream with a total of more than $2.6 trillion having been divested so far. While this will not bankrupt the fossil fuel industry it does send stigmatize the industry and it sends an important message that is resonating around the world.

There are those who say that fossil fuel divestment is little more than a symbolic act. However, a University of Oxford report, authored by the Smith School of Enterprise and the Environment, disagrees saying, “The outcome of the stigmatisation process, which the fossil fuel divestment campaign has now triggered...poses the most far-reaching threat to fossil fuel companies and the vast energy value chain. Any direct impacts pale in comparison.”

After Paris began restricting cars in the city, Oslo has proposed a ban on private combustion engine vehicles in the city center after 2019. Commuters will have access to more bike lanes and subsidies for the purchase of electric bikes. Even more significantly the newly elected city government has proposed plans to remove fossil fuels from its $9 billion pension fund.

Cities like Seattle pledged to divest a couple of years ago, this move was followed by similar resolutions along the west coast including Portland, Oregon, San Francisco, Santa Monica. Other cities in the US, Europe and Australia have also followed suit. In March London passed a vote calling on the mayor to divest. If it proceeds as planned, Olso would be the first capital city to pledge to divest. These moves are part of the city's effort to adopt a comprehensive plan to slash GHG emissions in half compared to 1990 levels by 2020, and reduce automobile traffic by 20 percent by 2019 and 30 percent by 2030.

There is a powerful logic driving the divestment movement. Buoyed by a powerful moral argument, faith groups are also divesting in droves. A wide range of groups are also divesting from fossil fuels for both moral and practical reasons. These groups range from educational institutions (including Stanford University’s $19 billion divestment) to pension funds (including $850 billion Norwegian sovereign wealth fund).

Investors are increasingly concerned about fossil fuels. They are aware of the volatility and risks associated with such investments. To stay within our carbon budget and to keep the world from warming more than 2 degrees Celsius we will need to keep the vast majority of known fossil fuel reserves in the ground ultimately stranding these assets and rendering them worthless. This puts huge amounts of oil, gas and coal investments in jeopardy.

A wide range of organizations have expressed concern about the long term value of fossil fuels including the Bank of England, HSBC, the International Energy Agency and the World Bank. Businesses, utilities and investors are already being impacted by the divestment movement.

Among those who explore the risks associated with fossil fuels is Hyewon Kong, M.Sc., CFA. She is an Associate Portfolio Manager at AGF Investments Inc., she believes that investors have a role to play in fighting climate change and building a low-carbon, clean economy.

Kong recently moderated a panel discussion in Toronto called The Business of Climate Change, a conversation about the threats posed by climate change and the economic opportunities offered by the global transformation to a low-carbon economy. At this discussion investment bankers, portfolio managers, financial advisors and insurance brokers focused on the issue of climate change.

Investors are often criticized for failing to integrate morality into their buying decisions, however, they are quick to recognize threats to the value of their investments. The economic impacts of unchecked climate change would have economy wide repercussions from basics like food and water, to global infrastructure and the health of humans and ecosystems.

"In our view, the growth of the fossil fuel divestment campaign has been encouraging because it has helped focus the investment community’s attention on the risks, and opportunities, of climate change," Kong explains.

Kong goes on to suggest alternatives to investing in fossil fuels:

"By focusing on the long term, tracking multiple environmental objectives and aligning with key sustainability themes, investors can focus on allocating capital to companies that are offering sustainability solutions...At AGF, our solutions-based approach involves giving investors the opportunity to participate in innovations that are disrupting carbon-intensive industries, such as low-carbon energy and power technologies, waste management and pollution control, waste and waste water solutions, and environmental health and safety."

Prince Charles, recently told some of the world's leading investors that it is vital that finance markets let politicians know that we are serious about acting on climate change. Siting the risks to the financial community, the heir to the British throne said it is important to invest in low carbon projects that will help to keep the world from warming more than 2 degrees Celsius above pre-industrial levels. He further stated that such investments need not hurt returns. “All investors must decide whether they are future-takers or future-makers,” he said.

Fossil fuels have immense financial power and influence and they are still the driving force behind the global economy and investment. However, the divestment movement is helping to power a global shift away from fossil fuels and towards low carbon energy sources. Increasingly the fossil fuel industry is seen as the pariah that it is and divestment has played a salient role in helping to bring this awareness into the popular consciousness.

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The Cost of Oil: BP Reaches $20 Billion Settlement with the Federal Government

October 08, 2015 Add Comment Edit

In the largest single entity settlement in the Department of Justice's history, BP will have to pay $20.8 for its role in the infamous Gulf of Mexico oil spill in April, 2010. Since the disastrous explosion of the Deepwater Horizon drilling platform BP has been engaged in protracted negotiations with the federal government. Now the Department of Justice have finalized the settlement with BP. The settlement comes after years of legal wrangling. In July, the Supreme Court denied the company’s appeal to block benefits for those not directly affected by the spill.

As reported by The Hill, the fine breaks down as follows

$5.5 billion to settle civil claims under the Clean Water Act
$7.1 billion for environmental restoration work
$700 million to compensate for still-unknown damages to natural resources in the region
$4.9 million to Gulf Coast states affected by the spill
$1 billion to local communities. Florida, Alabama, Mississippi, Louisiana and Texas will split that portion of the settlement.
BP has also already spent more than $1 billion on environmental restoration work in the area

Almost $9 billion of the settlement money will be used by for a Gulf restoration fund. This money will be invested in coastal and habitat repair, water quality improvement in wetlands and recreational projects in the region.

Biologists have observed that the 3.19 million gallons of oil that pored into the Gulf is having long term effects that continue to this day.

"This is still the largest environmental penalty under the Clean Water Act and Oil Pollution Act, ever," Attorney General Loretta Lynch said. "BP is receiving the punishment it deserves while also providing critical compensation to the damage to the Gulf region."

The punishment will serve as a deterrent that will hopefully prevent similar disasters in the future.

"The steep penalty should inspire BP and its peers to take every measure necessary to ensure that nothing like this can ever happen again," Lynch said.

The $20.8 billion fine is separate from the class-action settlement with businesses and individuals affected by the spill.

Environmental Protection Agency Administrator Gina McCarthy noted that the settlement includes $700 million to address any potential environmental damages that officials have yet to discover.

"Justice is not about dumping a pile of money and walking away," McCarthy said. "It is about investing in sustainable ways that empower and strengthen the Gulf communities over the long term."

The settlement still needs to be approved by a federal court.

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The Costs of Oil: BP Liable for up to 90 Billion
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BP's Legal Wrangling Five Years After the Gulf Oil Spill

April 20, 2015 Add Comment Edit

BP has a lengthy criminal rap sheet that culminated in the Deepwater Horizon explosion in the Gulf of Mexico. Despite BP's long criminal history they are anything but repentant. Rather than accept the penalties levied against them for the 2010 spill they are doing everything in their power to minimize their legal and financial responsibilities.

US District Court judge Carl Barbier found that BP was guilty of "gross negligence" and "willful misconduct." Although the trial concluded earlier this year, the final settlement has yet to be announced.

All throughout the legal proceedings BP has waged a massive and misleading advertising campaign which gives the impression that all is well in the Gulf. However this contention is squarely refuted by the science.

The statutory penalty in the Clean Water Act for BP's actions its actions is $4,300 per gallon, or over $18 billion. Thus far BP has agreed to pay $4.5 billion in related criminal and civil penalties and faces additional fines, as well as to thousands of claims by individuals and companies. It’s also agreed to resolve most private-party lawsuits as part of an uncapped settlement BP values at about $9.2 billion

Whatever the fines, they will be a fraction of the actual costs to the economy, wildlife and the Gulf ecosystem.

After months of negotiations the EPA gave BP the right to bid for US contracts and oil leases on March 2014. However, BPs misinformation and refusal to take full responsibility for the Gulf oil spill casts aspersions on the EPA decision.

As reported by Bloomberg, the EPA imposed the contract suspension in 2012 after determining that BP hadn’t fully corrected deficiencies that led to the Gulf oil spill. BP sued the EPA in federal court in Houston seeking to lift the suspension and then dropped the lawsuit after a deal was reached.

As explained by Tyson Slocum, director of the Public Citizen’s Energy Program in Washington, the EPA decision was premature. This "lets a corporate felon and repeat offender off the hook for its crimes against people and the environment," Slocum said in a statement. BP "was on criminal probation at the time of the 2010 Deepwater Horizon disaster, and it has failed to prove that it is a responsible contractor."

The government suspended BP’s rights to seek federal contracts after the company pleaded guilty to 11 counts of felony seaman’s manslaughter, two pollution violations and one count of lying to Congress in connection with the spill.

In addition to the spill, the EPA cited the 2005 explosion at a BP-owned Texas City, Texas, refinery and two oil spills in Prudhoe Bay, Alaska, as grounds for the 2012 debarment. At the time of the April 2010 spill, BP was on probation after pleading guilty in 2007 to a felony air-pollution charge and paying a $50 million fine for the explosion in Texas City that killed 15 workers.

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The Costs of Oil: BP Liable for up to 90 Billion
Judge Declares BP is Grossly Negligent but are Fines Enough?

The Toll on Wildlife from the Gulf of Mexico BP Oil Spill

April 20, 2015 Add Comment Edit

A number of wildlife species have been devastated by the 2010 BP oil spill in the Gulf of Mexico. This includes seabirds, turtles, fish, and vegetation.

Between 800,000 and one million sea birds have died from oil exposure in the Gulf of Mexico since 2010. Entire seabird populations have suffered from major die-offs. Oil related deaths include 12 percent of brown pelicans (over 200,000 have been exposed to oil), almost one third (32 percent) of northern gulf laughing birds and 13 percent of royal turns. A total of 20,000 Kemp's turtles and 60,000 Ridley turtles died in 2010.

Five times the normal rate of lung disease have been observed in bottlenose dolphins and a total of 1000 dolphins have been found stranded between 2010 and 2015.

Under the water a number of species were impacted including oysters and sea grass which provide food and habitat for a wide range of aquatic life. There has been an 85 percent reduction in the diversity of northern gulf seaweed habitats. Species that depend on this seaweed include shrimps, lobsters and crabs.

In the two years following the disaster there was a 50 percent drop in oysters and 10 square miles of sea grass were adversely impacted.

The importance of the gulf oil spill on fish species is important because two thirds of fish species that live in the area of the spill are found only in the gulf. As few as 50 Brydes whales are thought to be left in the gulf and the calves of this species are particularly vulnerable to the dispersant used to break-up the spill. Dispersants are also thought to have adverse health impacts on Sperm Whales and other species

To this day fish species continue to suffer from disruptions to their growth, development and reproduction. Some fish species were found to be covered in lesions due to the spill.

Heart defects and other morphological abnormalities have been found Atlantic bluefin, yellowfin tunas and an amberjack species. Swordfish, marlin, mackerel and other Gulf species may also suffer from similar impacts.

It will take years if not decades to understand the full scope on the impacts.

Related
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The Costs of Oil: BP Liable for up to 90 Billion
Judge Declares BP is Grossly Negligent but are Fines Enough?

Research Summary of BP's Gulf Oil Spill

April 20, 2015 Add Comment Edit

A number of studies indicate that the environmental impacts of the BP's 2010 oil spill in the gulf is anything but over. Huge amounts of oil are still on the ocean floor and this is finding its way into the food chain. Other studies show fish that spawn in these oil contaminated waters in the Gulf are suffering from a wide range of lethal deformities.

A study published earlier this year suggested that the oil that lingers in the Gulf of Mexico continues to pose a threat to local ecosystems. The study by Florida researchers indicates that About 3,243 sq miles (8,400 square km) of the sea floor is still covered with oil from the disaster.

"This is going to affect the Gulf for years to come," Jeff Chanton, the study's lead researcher and a professor of chemical oceanography at Florida State University, said in a statement.

This study corroborates an October study which found that as much as 30 percent of the spilled oil remains on the ocean floor.

"Fish will likely ingest contaminants because worms ingest the sediment, and fish eat the worms. It's a conduit for contamination into the food web."

CBS news quoted the study’s lead researcher, Jeff Chanton, as saying: ‘This is going to affect the Gulf for years to come.

‘Fish will likely ingest contaminants because worms ingest the sediment, and fish eat the worms. It's a conduit for contamination into the food web.’

Dolphins and turtles in the Gulf are dying in record numbers. Bottlenose dolphins have been dying at more than twice the normal rate over the past five years and the nesting habits of the endangered Kemp's Ridley sea turtle changed dramatically around the time of the spill. Commercial fisheries have also seen a reduced yield.

The BP oil spill was an unprecedented disaster and after five years 2 percent of samples of water and seafloor sediment continue to exceed federal toxicity levels. According to research from the Associated Press the overall health of the Gulf of Mexico has declined 11 percent since April 2010.

The research suggests that lingering impacts of the BP oil spill in the Gulf are being felt by tuna and other species that spawned in oiled offshore habitats in the northern Gulf of Mexico. A Stanford NOAA study revealed that the spill is causing severe defects in the developing hearts of Atlantic bluefin, yellowfin tunas and an amberjack species. The study shows that crude oil exposures is slowing the heartbeat or causing an uncoordinated rhythm in these fish, which can ultimately lead to heart failure.

"We know from the 1989 Exxon Valdez spill in Prince William Sound that recently spawned fish are especially vulnerable to crude oil toxicity," said Nat Scholz, Ph.D., leader of the ecotoxicology program at NOAA’s Northwest Fisheries Science Center in Seattle. “"That spill taught us to pay close attention to the formation and function of the heart."

"This fits the pattern," said Dr. John Incardona, NOAA research toxicologist and the study’s lead author. "The tunas and the amberjack exposed to Deepwater Horizon crude oil were impacted in much the same way that herring were deformed by the Alaska North Slope crude oil spilled in Prince William Sound during the Exxon Valdez accident."

"The timing and location of the spill raised immediate concerns for bluefin tuna," said Barbara Block, Ph.D., a study coauthor and professor of biology at Stanford University. "This spill occurred in prime bluefin spawning habitats, and the new evidence indicates a compromising effect of oil on the physiology and morphology of bluefin embryos and larvae."

The culprit in the heart defect appears to be oil-derived polycyclic aromatic hydrocarbons (PAHs). PAHs can persist for many years in marine habitats and cause a variety of adverse environmental effects. Other observed morphological abnormalities on oil-exposed larva were also revealed in the study. This includes poor growth of fins and eyes.

"We now have a better understanding why crude oil is toxic, and it doesn’t bode well for bluefin or yellowfin embryos floating in oiled habitats.” said Block. “At the level of a single heart muscle cell, we’ve found that petroleum acts like a pharmacological drug by blocking key processes that are critical for cardiac cell excitability."

The authors further suggest that other species like cardiac-related impacts on swordfish, marlin, mackerel and other Gulf species may also be impacted cardiac abnormalities if they spawned in proximity to oil.

Experts say it could take "decades" for the ecosystem to recover.

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The Costs of Oil: BP Liable for up to 90 Billion
Judge Declares BP is Grossly Negligent but are Fines Enough?

The BP Oil Spill in the Gulf Five Years Later

April 20, 2015 Add Comment Edit

Exactly five years ago (April 20, 2010), BP's Deepwater Horizon oil well exploded in the Gulf of Mexico killing 11 people and injuring 17 more. The explosion unleashed one of the worst environmental disasters in human history. For 87 days (April 20 and July 15, 2010) the oil spewed from the well and by the time it was finally contained at least 3.2 million barrels (134 million gallons) of crude oil had contaminated the Gulf of Mexico and 1,100 miles of coastline.

The worst marine disaster ever damaged bird sanctuaries, marine and wildlife habitats. It also soiled beaches, killed wildlife and devastated local economies. The ecologically vital marsh lands of the gulf coast have not recovered and wildlife is still suffering.

The Gulf may look clean but it is not. Even after a five year $28 billion clean-up operation the repercussions from the spill continue to this day. While much of the oil has evaporated or dissolved, up to 10 million gallons of oil remain on the sea floor. About 3,243 sq miles of the sea floor is still covered with oil from the disaster. Oil can also be found in marshes along the coast and deposits still wash up on shore.

The unprecedented spill took place 5000 feet below the surface of the ocean, 40 miles off the Louisiana coast. It had immediate economic impacts on the fishing industry and tourism. It also took a devastating toll on wildlife. Untold thousands of birds, turtles fish and shrimp were killed in the aftermath and a range of species are being impacted to this day. Dolphins and turtles are dying in record numbers and fisheries are still being affected.

The head of the NOAA during the spill Jane Lubchenco aptly summarized events when she said, "The spill was — and continues to be — a disaster. The bottom line is that oil is nasty stuff. Yes, the Gulf is resilient, but it was hit pretty darn hard."

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Judge Declares BP is Grossly Negligent but are Fines Enough?

Beijing's Coal Plant Closures are Cause for Australia to Think Twice about Investing in Dirty Energy Projects

March 26, 2015 Add Comment Edit

Concerns about air pollution and poor viability have pushed Beijing to announce the closure of all of its coal plants. As a major coal supplier to China Australia is watching with interest and more than a little bit of concern. The move to shut Beijing's remaining coal plants comes in response increasingly vocal protests that are making government officials nervous. Pollution is one of the major sources of friction between the government and citizens. There are also a very real productivity issue at stake. The move to close the plants is intended to reduce the incidence of death and disease associated with the chronic air pollution.

Beijing's last coal fired electricity plants will be switched off in 2016. Beijing has air pollution rates that are almost twice the national standard. However, Beijing is not the most polluted city in China. Nine out of ten Chinese cities exceed the government's own minimum air quality standards.

The closures will reduce China's consumption of coal by 9.2 million metric tons annually and prevent 30 million tons of climate change causing carbon from being released into the atmosphere each year. The Beijing coal plant closures are in addition to the closure of more than 2,000 smaller plants which are slated to occur by the end of this year.

At present almost two thirds of China's energy is derived from coal. However, people in China are concerned about air pollution and these concerns are a contributing factor pushing the central government's world leading climate mitigation efforts. China's energy equation is rapidly changing due to massive investments in cleaner energy including hydroelectric, solar, wind and nuclear.

As the world's largest emitter of carbon, China is under pressure from within and without to reduce its emissions. China has already signed a major emissions reduction deal with the US and further cuts can be expected at the COP 21 climate talks later this year in Paris.

All of this calls into question Australian Prime Minister Tony Abbott's efforts to supply more coal to China. He is working to significantly expand the nation's coal extraction and he is investing billions of dollars to expand Australia's coal export infrastructure.

These Australian coal projects, not only imperil the Great Barrier Reef, they may end up being worthless if the Chinese coal market dries up. At the very least the reduction in Chinese coal consumption will drive down the already low price of coal. To make matters worse last fall China announced that it will reintroduce import tariffs of 6 percent a tonne on thermal coal used to generate electricity.

Like Canada's tar sands, coal is a dirty source of energy and a major contributor to climate change. At a time when the data clearly shows that the world is moving away from coal, Abbott's massive coal investments make little sense. There is already a glut of coal as markets are rapidly declining.

Indian mining giant Adani is developing the Carmichael coal mine in central Queensland and Australia's largest coal terminal at Abbot Point. In January, the Mackay Conservation Group launched a legal challenge to the project. They allege that the Abbott government's environmental assessment was flawed because it did not take into account projected greenhouse gas emissions from the project. The same criticisms have been leveled at the Keystone XL pipeline which would ferry 800,000 barrels of tar sands crude each day from Alberta to the the Gulf of Mexico.

The indigenous people of Australia are challenging the coal project. In a similar fashion Canada's indigenous people have challenged the tar sands.

Abbott and Canadian Prime Minister Stephen Harper have a lot in common when it comes to fossil fuels. The Canadian situation may serve as a cautionary tale for Australia. Just as Canadians are reaping the economic repercussions of Harper's misguided energy efforts, Australians will end up footing the bill for Abbott's energy miscalculations.

Abbott and Harper are united in the love for fossil fuels and they also share a belligerent disregard for climate science. Their common obsession with fossil fuels wastes tax payer's money on doomed energy investments and it would appear they are both destined to preside over vast quantities of stranded assets.

In addition to epic energy mismanagement, the defining legacy of these two men will likely be their wanton disregard for future generations.

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BP Issues Climate Warning and Calls for Carbon Pricing

March 18, 2015 Add Comment Edit

One of the world's largest oil companies has stated that we have to price carbon to curtail carbon emissions.

The science is clear and there have been a vast number of warnings coming from a wide variety of sources including, AGU, IEA, IPCC, PwC, World Bank, and the World Meteorological Organization stating that our current trajectory is catastrophic. Now even those responsible for the problem are coming forward with warnings of their own.

In a February 2015 report titled, "Energy Outlook 2035," BP says that to keep carbon dioxide emissions within upper threshold limits the world must take coordinated action.

BP's warning foreshadows demands that will be made for global emissions reductions at the forthcoming COP 21 climate talks at the end of the year in Paris. The UN and many other scientific bodies have repeatedly said that we must keep global temperatures from rising more than 2 degrees Celsius above preindustrial times to avert the worst impacts of climate change.

Many people think that the only way we can curtail climate change is through some forms of carbon pricing scheme and it would appear that BP agrees. BP has warned that atmospheric levels of CO2 from burning fossil fuels are unsustainable in the absence of global pollution regulations. The BP report predicts that CO2 emissions will increase by 1pc per year, or 25pc in total, through to 2035.

"The most likely path for carbon emissions, despite current government policies and intentions, does not appear sustainable. The projections highlight the scale of the challenge facing policy makers at this year’s UN-led discussions in Paris. No single change or policy is likely to be sufficient on its own," said BP chief executive, Bob Dudley. "This underpins the importance of policy-makers taking steps that lead to a global price for carbon, which provides the right incentives for everyone to play their part."

The author of the report, BP’s new chief economist Spencer Dale also acknowledged the volatile nature of oil prices from here on in.

"After three years of high and deceptively steady oil prices, the fall of recent months is a stark reminder that the norm in energy markets is one of continuous change," said Mr Dale.

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BP's Gulf Oil Spill: Summary of Research Evidence Five Years Later
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Supreme Court Gives BP a Lump of Coal for Christmas
Transocean to Pay $1.4 billion for its Role in the Gulf Oil Spill
The Costs of Oil: BP Liable for up to 90 Billion
Judge Declares BP is Grossly Negligent but are Fines Enough?

After a Failed Cover-up Shell Sub-Contractor Pleads Guilty

December 12, 2014 Add Comment Edit

On December 11, Noble Drilling, Shell’s sub-contractor pleaded guilty to eight felony charges relating to environmental and safety violations on board the vessels Noble Discoverer and Kulluk in the Alaskan Arctic in 2012.

In addition to the offenses which include unsafe operating procedures Noble Inc. also tried to cover-up their illegal actions. According to the court ruling, Noble, “actively took steps to conceal its use of illegal [systems]”, and “knowingly made false entries” concealing problems from the authorities. Noble also admitted to illegally discharging bilge water from the Discoverer.

Noble will pay a $12.2m fine and the company has been placed on probation for four years and must upgrade all of its plans to meet safety and environmental protection requirements.

This news comes as Shell prepares to drill in the Arctic's Chukchi Sea next summer.

Shell has scrapped the Kulluk but the replacement called the Polar Pioneer may be worse as it is owned by Transocean, the same company that was behind the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. The US Supreme Court recently denied BP's request to reduce its liability for the disaster.

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Supreme Court Gives BP a Lump of Coal for Christmas

December 09, 2014 Add Comment Edit

The US Supreme Court has rejected BP's bid to decrease the settlement it agreed to pay to businesses and individuals. British Petroleum (BP) is well known for having produced the biggest offshore oil spill in history.

In 2010 BP's Deepwater Horizon exploded killing 11 people and spewing almost 5 million barrels of crude into the Gulf of Mexico. The environmental effects of this spill are being felt to this day.

A study published in October showed how there is a 1,235 square mile ring of coagulated oil residue on the ocean floor.

Another study published in March found that the BP oil spill has caused morphological abnormalities including heart deformities potentially leading to heart failure in several large predatory fish including Atlantic Bluefin tuna, Yellowfin tuna and Amberjacks.

Gulf area business suffered across the board but BP only wants to pay those who can prove that there is a direct link between the oil spill and their losses. On Monday December 8th, the Supreme Court refused to hear BP's argument. So far BP has paid out 2.3 billion of an estimated 9.7 billion to plantiffs. The ruling means that BP will have to pay an additional 7.4 billion to plantiffs.

This is but the latest attempt of BP to shirk its multi-billion dollar responsibility. Just a month earlier BP tried to get the courts to reduce their fines for "gross negligence" under the Clean Water Act from 18 billion to just over 12 billion.

While BP was seeking a multi-billion dollar gift this Christmas, all they got from the courts was a lump of coal.

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The Cost of Oil: BP Barred from Doing Business with the US
The Costs of Oil: BP Liable for Tens of Billions
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World Bank to Stop Funding Coal

November 25, 2014 Add Comment Edit

The World Bank has indicated that due to the impacts of climate change on poverty, it will cease its funding of coal projects and increase its support for renewable sources of energy. The announcement came from World Bank President Jim Yong Kim in an address ahead of COP 20, the UN climate summit scheduled to take place in Lima, Peru next month.

Kim related the decision to a report that his organization commissioned which showed how the world's poorest people will be impacted by extreme weather, declining agricultural yields, water instability, communicable diseases and flooding from higher sea levels.

Kim explained that even if we act soon to reduce emissions, warming of at least 1.5 degrees Celsius above pre-industrial levels is locked in and this will cause more warming alongside a host of other deleterious effects.

"The stakes have never been higher. We cannot continue down the current path of unchecked growing emissions. The case for taking action now on climate change is overwhelming, and the cost of inaction will only rise," he said.

The report also clearly stated that action on emissions need not come at the expense of economic growth

The move to reject coal is an important step given that the bank is one of world's largest supporters of fossil fuels. In addition to ending support for coal projects Kim also advocated on behalf of renewables and cleaner forms of energy.

"The focus is on being able to ramp up our lending and the leveraging of our lending into all forms of renewable energy. That’s the strategy. It includes everything from all sizes of hydro through to wind, to solar, to concentrated solar, to geothermal. I think we’re invested in every dimension of renewable energy."

However, if the Bank is to be consistent it must also withdraw all its support for fossil fuels which according to Oil Change International amounts to $21 billion since 2008. Last year alone the Bank poured $1 billion into oil and gas exploration.

Scientists have repeatedly warned that if we are to have a hope of keeping temperature increases under the internationally agreed upon upper threshold limit of 2 degrees Celsius below pre-industrial times, we must keep more than two thirds of known global oil reserves in the ground.

In light of this information supporting the search for more fossil fuels in incompatible with attempts to curtail climate change.

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Video - Growing Momentum for Fossil Fuel Divestment

October 04, 2014 1 Comment Edit

Momentum is growing in the movement to divest from fossil fuel companies. On Thursday, South African Archbishop Desmond Tutu called for an anti-apartheid-style boycott and disinvestment campaign against the industry for its role in driving climate change. Meanwhile, nearly 100 members of the faculty at Harvard University released an open letter calling on the Ivy League school to sell off its interests in oil, gas and coal companies. "If the Corporation regards divestment as 'political,' then its continued investment is a similarly political act, one that finances present corporate activities and calculates profit from them," wrote the professors. "Slavery was once an investment issue, as were apartheid and the harm caused by smoking." Harvard has the largest university endowment in the country, worth more than $32 billion. We speak to James Anderson, professor of Chemistry and Earth and Planetary Sciences at Harvard University. He is one of the signatories to the letter urging Harvard to divest from the fossil fuel industry. He has done groundbreaking work exposing the link between climate change and ozone loss. We also speak to Jamie Henn, co-founder of the climate change-focused organization, 350.org.

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Video - Why You Should Divest from Fossil Fuels

October 04, 2014 Add Comment Edit

There is a powerful rational driving the movement to divest from fossil fuels. For more information about the economic reasons why fossil fuels are a bad investment and clean energy makes good investing sense click here.

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Why You Should Divest from Fossil Fuels and Invest in Clean Energy

October 03, 2014 Add Comment Edit

For both moral and economic reasons fossil fuels are a poor investment while clean energy investing has a bright and lucrative future.

Fossil fuel divestment is one of the fastest growing movements on Earth and it continues to gain momentum. Since the divestment movement was launched three years ago, more than 650 individuals and 180 institutions, including 50 new foundations, which hold over $50bn in total assets, have pledged to divest from fossil fuels. Whether in the form of mutual funds, stocks, hedge funds or bonds, fossil fuels are being abandoned at ever increasing rates.

As explained by the New York Times on Sept. 6, "In the 1980s, it was South Africa. In the 1990s, it was tobacco. Now fossil fuels have become the focus of those who would change the world through the power of investing." This is about more than just divestment, this is a global movement towards a low carbon economy. Mitchell Krauss, of Capital Intelligence Associates, called divestment “the biggest, hottest topic.”

The background for divestment is made by increasing temperatures, rising emissions and growing numbers of extreme weather events. Our current trajectory is unsustainable and fossil fuels represent the most significant causal factor contributing to climate change. In the absence of action, we will surpass irreversible tipping points from which we will not be able to recover. According the the EIA, if we continue with business as usual, we will see temperature increases of 5.3 degrees Centigrade by 2100. This is more than 3 degrees above the internationally accepted 2 degree Celsius upper threshold limit. If we do nothing, oceans will rise between 3 and 6 feet in this century, flooding hundreds of cities around the world.

The good news is that there is still time to reverse this troubling trend and divestment from fossil fuel is a crucial first step. Divestment is not only about taking money out of an industry that causes climate change, it is also about diminishing big oil's political clout.

IPCC AR5

There is a 97 percent consensus among scientists that humans are causing global warming and they know that if we are to have any hope of managing climate change, we must leave the vast majority of the world's fossil fuel reserves in the ground.

The Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report (AR5), makes it clear that burning fossil fuels at the current rate is incompatible with the kind of emissions reductions needed to curb climate change. To stay within the upper threshold warming limit, we will have to lower global greenhouse gas emissions (GHG) by 40 to 70 percent below 2010 levels by 2050. The report states that we will need to divest at least $30 billion dollars per year from fossil fuels over the coming decades.

Recent Divestment

A Carbon Tracker report titled Unburnable Carbon indicates that 22 cities, 2 counties, 20 religious organizations, and 6 other institutions have committed themselves to divest from fossil fuels. These efforts are being jointed by public pension funds. Since January 2014, more than one hundred campuses, churches, cities, states, hospitals, pension funds, and others in the United States and abroad have divested from fossil fuels. Early this year, 350.org convinced seventeen foundations, controlling nearly $1.8 billion in investments, to commit to pulling their money out of fossil fuels. In the last month alone, a number of major initiatives were launched. One major institutional investor that recently divested is the $860m Rockefeller Brothers Fund.

Universities

University students are supporting climate action and divestment in particular. Driven by student demand, universities are divesting and in many cases, they oversee huge endowments. In May of this year, Stanford University announced that it will no longer use any of its $18.7 billion endowment to invest in coal mining companies. Pressure is mounting at Harvard and Yale and other schools to do the same. According to Carbon Tracker, nine colleges and universities have also divested.

Oil industry

The oil industry anticipates that thier profits will be eroded by divestment and declining demand associated with efforts to curtail climate change. In its annual and strategic report for 2013, Royal Dutch Shell said that increasing concern over climate change will lead to new regulations that will hit the company’s production profitability and delay some of its projects.

Drivers

In support of climate science, people are coming together to demand that we transition away from fossil fuels. On a governmental level, divestment is being driven by renewable energy support schemes and emission regulation.

While climate change is commonly understood as an environmental issue, it is first and foremost a health issue. That is why some healthcare professionals are at the forefront of divestment.

In addition to the moral argument, divestment from fossil fuels is being driven on purely financial grounds. Former SEC Commissioner Bevis Longstreth made a convincing financial case for divestment stating that fossil fuels make no sense in the context of expected governmental restrictions on carbon, advances in clean alternatives, growing public awareness about the dangers of high carbon fuels, investor actions to curtail high carbon investments and reputational risks.

Carbon Bubble

Concerns about a carbon bubble are at the core of the financial logic driving divestment. A number of reports have made the case for fossil fuel divestment, warning against exposure to the carbon bubble.

Oil and gas companies continue to invest massive sums of money into sourcing and exploiting new fossil fuel reserves. In 2013, the top 200 oil and gas firms allocated $674 billion in exploration and the removal of new fossil fuel reserves. This is the equivalent of the combined GDPs of the Netherlands and Belgium combined.

Carbon budget

Between 2000 and 2050, the allowable "Carbon Budget" to keep the Earth below 2 degree Celsius of warming is about 886 gigatons. One third of that amount has been burned so far. To stay within our budget, we can burn an additional 565 gigatons by 2050. However, the 200 largest fossil fuel companies, combined with government-owned companies, currently have a total of 2795 gigatons.

Stranded assets

Only 20 percent of the world's total proven fossil fuel reserves can be burned if we are to have a hope of curtailing climate change. To mitigate the risk, investors are acting and will continue to act to divest. Failure to divest prior to an inevitable correction will prove costly.

According to Tim Ratcliffe, European divestment co-ordinator at the campaign group 350.org., “fossil fuel companies are currently grossly overvalued. Eighty percent of their oil, coal and gas reserves need to stay underground to limit global warming below 2C, which will turn them into stranded assets.” Ratcliffe added, “This makes these investments a highly risky gamble.”

Impax Asset Management further concludes that even today, fossil fuel free portfolios that include cleaner sources of energy outperform the average portfolio.

Clean energy

Divesting from fossil fuels is just the first part of a three stage strategy that includes radical energy efficiency. We must also massively invest in renewable forms of energy if we are to succeed in meeting our energy requirements. Money divested from fossil fuels and invested in clean energy will drive down the price of renewable energy.

“Freeing up resources through the divestment allows us to concentrate on the renewables future,” said Richard Woo, chief executive of the Russell Family Foundation, “and to really see the marketplace as a platform for this kind of change.”

Global investment in clean technologies now amounts to about $300 billion a year. According to the IPCC AR5 report, we will need to see an annual investment in low carbon electricity supply of $147 billion a year. According to the International Energy Agency, we will need to reach investments of $1 trillion a year by 2030 in order to stay within the upper threshold limit of 2C of warming.

Difficult road ahead

We still have a long road ahead before we achieve anything close to divestment from all fossil fuels. Governments still subsidize fossil fuels to the tune of 1.9 trillion a year. The big banks continue to invest in fossil fuels and most of the money invested around the world is in some way connected to fossil fuels.

According to Greenpeace, about $800 for each person on the planet is invested into fossil fuel companies through the global capital markets alone. That’s roughly 10 percent of the total capital invested in listed companies. A total of 5.5 trillion dollars is invested into the 200 biggest fossil fuel companies through financial markets.

It will be difficult to unseat these dirty energy behemoths. However, divestment succeeded in putting an end to the apartheid regime in South Africa and Mahatma Gandhi's "passive resistance" managed to get Britain out of India. If a skinny little man in a loin cloth was able to defeat the British Empire, surely the combined energies of millions of people around the world can overcome big oil.

The day of the huge integrated international oil company is drawing to a close. The only question is whether we can substantially reduce our fossil fuel use in time to avert catastrophe. The longer we delay action to foster the low carbon transition, the more expensive addressing climate change will get.