Protesters and environmentalists are spending money and time pushing schools and public pensions to divest fossil fuels, but perhaps they should’ve entertained one important question before starting their campaign: Is divestment even possible?
The U.S. economy and the endowments of large universities are infused with fossil fuel assets – the majority of which reside in mutual and private equity funds. These assets, of course, do not include the actual services and electrical grids that run on fossil fuels.
Analysts and economists who study the nuts and bolts under-girding divestment suggest it’s simply impossible to have a mass oil purge, especially given the fact that nearly every portion of the economy is either reliant on or operated by fossil fuels.
“Divesting from fossil fuels is an incredibly complicated undertaking,” Todd Kendall, an economist with economic consulting company Compass Lexecon, told a Wednesday panel hosted by the American Fuel & Petrochemical Manufacturers.
“What makes it so complicated,” he added, “is that oil assets are literally tied to every sector of the economy, not to mention every asset of a university’s endowment.”
These assets are from banks that give loans to oil companies, Kendall said, while still others are tied up in technology firms that, among other things, develop tools that help distribute oil from one place to another. Fossil fuels and their corresponding technologies are peppered throughout commingled mutual and private equity funds and therefore difficult to distinguish between green energy, oil assets, or any other assets for that matter.
A university’s fossil fuel assets operate as a type of “six degrees of Kevin Bacon,” Kendall said, wherein they can be tied to literally every portion of a school’s endowment.
The nature of these funds seriously undermines the anti-fossil fuel crusaders’ plan of replacing oil with renewable energy resources, Kendall told The Daily Caller News Foundation in early June, because green funds can’t be divorced from oil assets.
Universities are beginning to come to terms with the Herculean efforts involved in divestment.
New York University, for instance, wrote a memorandum Friday announcing its move to reject divestment, citing the fictional costs associated with the purge, as well as the shear influential scope fossil fuels have on a school’s finances.
Studies consistently show divestment would wallow out NYU’s $3.9 billion endowment, leaving the university with no way to raise the kind of money needed to operate on a day-to-day basis.
A report from from the University of California, Los Angeles, explored how much divestment would cost NYU and four other leading universities – and according to the study, the school’s endowment would lose $4.16 million every year if it sold off its oil assets.
The NYU pronouncement also recognized the irony of deeming the fossil fuel industry a morally reprehensible plague on society, while, at the same time, using it for some of the school’s most important services.
“It seems disingenuous for NYU to, on the one hand, deem the fossil fuel industry morally reprehensible—the clear implication of a decision to divest—while on the other hand continue to regularly and willingly use their products to power and heat our campus and to transport our students and faculty (albeit in ways that are more efficient and less carbon intensive than in the past),” the memorandum stated.
Divestment critics like Marc Morano, who produced the global warming skeptic film “Climate Hustle,” say the divestment movement is more about recruiting a new generation of climate justice warriors capable of generating publicity for environmentalists.
Even Morano told The Daily Caller News Foundation that the campaign to jettison oil assets will only be possible once, “ordinary citizens can waltz into their nearest Wal-Mart and buy a solar panel on the cheap – but until that time, fossil fuels are here to stay.”
Ultimately, he added, the movement to divest is purely a public relations and recruitment program to wrangle young people into the environmental movement.
“Some universities have divested, sure, but mostly it doesn’t really matter, so long as environmentalist leaders like Tom Steyer and Bill McKibben can gain some publicity,” Morano said, adding, “The whole effort is largely symbolic.”
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