The University of Denver (DU) has done more to cut carbon emissions than those who would have the school purge its fossil fuel investments, Colorado-based energy analysts told the university Thursday.
Simon Lomax, an energy analyst at Colorado-based Independence Institute, told a task force on fossil fuel divestment the university’s ability to cut carbon emissions by 15 percent since 2006, even as the university has grown, shows that it has little reason to consider jettisoning its fossil fuel assets.
Lomax’s comments were in response to environmentalist Bill McKibben’s group, 350.org, pushing to get the university to sell off its oil and gas investments. The group refuses to retract lofty, yet mostly incorrect claims, that 500 institutions representing over $3.4 trillion in assets have pledged, in some form, to purge oil assets.
“You don’t have to explain yourself to 350.org or any other environmental group for that matter,” Lomax said. “You are walking the walk while they talk the talk.”
The school is considering bending, and ridding its entire endowment from investments tied to oil or natural gas. DU created a task force in July, and has received testimony from university officials, investment advisers and anti-oil campaigners. Officials took public comments from the fossil fuel industry for the first time Thursday.
Lomax, who was joined by 25 other energy analysts, detailed the growing list of failures by those urging schools to keep oil in the ground, and documented the role the energy sector plays in Colorado’s economy.
The oil and gas industry added $29.6 billion to Colorado’s economy through hydraulic fracking, or about 10 percent of all annual economic activity in the Centennial State. The industries also supported 111,500 jobs.
Most of the examples the group uses to bolster the inevitability of divestment were of schools using what is now called the Syracuse model of divestment – institutions divest only direct fossil fuel holdings, not oil assets tied to commingled mutual funds.
The University of Maryland decided in June to sell off $70 million in direct fossil fuel assets from its massive $1 billion endowment. The number is paltry, especially when considering the school has no direct investments in coal, tar sands or any companies on the Carbon Underground 200 list, according to the university’s newspaper.
Lomax’s fellow panelists seconded his comments. Some argued the transactional costs associated with divestment are more expensive and risky than the oil investments themselves.
Kristy LeGrande and Wendy Walker, of the investment advisory firm Cambridge Associates, told the task force that investment strategies for most endowments involve commingled funds, and explained that screening funds of oil assets is a service not typically offered by top-notch investment managers.
Walker and LeGrande’s comments seem to reflect research conducted in June showing that divestment has the potential to wallow out endowments, ultimately causing them to lose as much as 12 percent of their total value over a 20-year time frame.
The research indicated that the transactional costs, or those associated with managing the complex endowments, could cost an endowment fund as much as $7.4 billion in value over a 20-year period.
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