With a lot of talk about the future of solar and wind, not to mention other renewables, we often forget that fossil fuels still form a significant part of our energy mix. Over 70% of households across the UK, for example, still use gas to heat their water and radiators.
The mayors of New York and London this week, collaborated in a Guardian Op-Ed to call on cities across the world to divest from fossil fuels.
But what does this actually mean?
It’s about not investing per se but pulling out of investment in companies that are associated with fossil fuels such as coal, oil and gas. This can include any investment, from pension schemes to stocks and shares, bonds and hedge funds. It’s a clean energy initiative that is currently being carried out by a number of different organisations and institutions including universities and local authorities.
Divestment is intended to send a clear message that fossil fuels are the past and that we should be moving more towards cleaner, renewable energy such as solar and wind. This approach has been used before, most notably to work against the tobacco industry. In the case of fossil fuel divestment the growing campaign has taken hold in recent years and is starting to seriously gather pace.
While governments have been slow to move in the divestment direction, other more prominent people have started to voice their opinions including the two mayors of London and New York. According to the op-ed, divestment is well under way in London:
“Already, less than 2% of the London Pension Fund Authority’s investments of £5.5bn ($7.1bn) are in extractive fossil fuels – this year, the authority has rid itself of a further £700,000 of fossil fuel investments, including stakes in Shell and BP, and has plans in place to divest its remaining investments.”
The reason for divestment is primarily to help save the planet but there’s also the potential financial risk of trillions of pounds still currently invested in fossil fuels. If we do manage to meet the demands of the climate change agreement and move to more renewable sources, these investments could well become almost totally worthless – that means there could be a pending economic crisis looming because so much money is currently tied up in them.
For divestment to truly work at the pace green energy activists want to see, it needs to be done by everyone. While public bodies like the mayor’s office can do their bit, private schemes and national companies also need to do theirs. That’s not always a priority, particularly here in the UK where businesses are more concerned about Brexit at the moment than climate change.
The good news is that it is starting to happen on quite a large scale. Recent reports that insurance firms are starting to divest their coal, oil and gas stocks is heartening. In July this year, Ireland voted to divest their fund over the next five years, while Norway has already put in measures to do the same. But there is still a long way to go.
The truth is that UK councils are still invested quite heavily in fossil fuels to the tune of £16 billion. While organisations such as Friends of the Earth are working to change this, individuals can help by contacting their local council to express their objections.
If we are serious about reversing the effects of climate change, we all need to do our bit. You can find out more about fossil fuel divestment here.