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San Francisco Prepares for Historic Vote on Fossil Fuel Divestment

By Thanu Yakupitiyage and Dani Heffernan - Common Dreams, January 18, 2018

San Francisco - On January 24, the San Francisco Retirement Board will vote on a long-awaited resolution to divest San Francisco’s pension fund from fossil fuel companies.

The decision will be seen as an early indication of whether or not the fossil fuel divestment movement can build on the momentum from last week’s historic announcement that New York City would be divesting its pension funds and suing Big Oil for damages caused by climate change.

"This is a definitive moment for San Francisco in the fight for a fossil free world. As the city prepares to host a climate convening of the world's local leaders later this year, it's time to put their money where their mouth is,” said May Boeve, Executive Director of 350.org. “Tackling the climate crisis means that cities everywhere will need to stand up to the fossil fuel industry, specially when federal leaders are slow to act. By divesting their more than $20 billion pension fund from fossil fuels, the City by the Bay will show Big Oil billionaires and communities around the globe that they're serious about real climate action."

Since the campaign launch six years ago, the fossil fuel divestment movement has succeeded in securing commitments from over 800 institutions in over 77 countries representing more than $6 trillion in assets.

In San Francisco, it’s been a long path to next week’s vote. The San Francisco Board of Supervisors voted to endorse fossil fuel divestment in April 2013. Last December, hours before he passed away, Mayor Ed Lee published a piece in Medium endorsing divestment, writing, “By taking the bold step to divest from fossil fuel assets, we are once again taking a strong stand on the essential issue of the environment.”

Meanwhile, many Bay Area institutions have been at the forefront of the divestment campaign. San Francisco State University became the first community college district in the nation to divest from fossil fuels. In the South Bay, the Santa Clara Valley Water District became the first such entity to make a commitment, while Stanford University made an early commitment to divest from coal in 2014.

Divestment has proved an effective tool to help stigmatize the fossil fuel industry and increase investor worries that as the world moves towards renewable energy, coal, oil and gas reserves could become “stranded assets” and drive down the share price of fossil fuel companies. A report from the University of Michigan concluded that the divestment campaign has successfully shifted the conversation around fossil fuels and institutional responsibility to act on climate.

According to many investment advisors and financial experts divesting from fossil fuels poses no significant risk to the portfolio performance. In fact, many are now arguing that as fossil fuel companies become an increasingly risky bet, divestment may be safer than holding onto coal, oil and gas stocks.

"The time to divest from all fossil fuels is now. Our pension board needs to listen to city workers and union members who have testified, written letters, and, presented the facts on the fossil fuel industry for years. SEIU 1021, that counts over 54,000 members in Northern California, publicly supports total divestment,” said Martha Hawthorne, retired RN from the Department of Public Health. “Our hard work built this pension system and we want an end to investments in a system of life killing extraction that endangers our future. We know climate crisis is upon us. This is evident by the drought, record pollution, extreme heat, catastrophic fires and deadly mudslides in just the last few months. We are in a race against time. Divestment is a clear way for San Francisco's pension board to make a difference now."

The nation’s largest environmental groups, notable figures such as Nobel Peace Prize Winner Desmond Tutu and former UN Secretary General Ban Ki-Moon, have all endorsed fossil fuel divestment as a key strategy in fighting climate change.

On January 24, San Francisco has the opportunity to take a bold step forward by announcing that it will join New York City and institutions around the world by divesting from fossil fuels.

Can Coal Make a Comeback?

By Trevor Houser, Jason Bordoff, and Peter Marsters - Columbia Center on Global Energy Policy, School of International and Public Affairs, and the Rhodium Group, April 2017

From the introduction: Six years ago, the US coal industry was thriving, with demand recovering from the Great Recession, and global coal prices at record highs along with the stock prices of US coal companies. By the end of 2015, however, the industry had collapsed, with three of the four largest US miners filing for bankruptcy along with many other smaller companies. While coal mining employment has been on the decline for decades – from a peak of more than 800,000 in the 1920s to 130,000 in 2011 – the pace of job loss over the past six years has been particularly dramatic. After campaigning on a promise to end what he called his predecessor’s “War on Coal,” President Donald Trump signed an Executive Order in March 2017 ordering agencies to review or rescind a raft of Obama-era environmental regulations, telling coal miners they would be “going back to work.”

This paper offers an empirical diagnosis of what caused the coal collapse, and then examines the prospects for a recovery of US coal production and employment by modeling the impact of President Trump’s executive order and assessing the global coal market outlook. In short, the paper finds:

  • US electricity demand contracted in the wake of the Great Recession, and has yet to recover due to energy efficiency improvements in buildings, lighting and appliances. A surge in US natural gas production due to the shale revolution has driven down prices and made coal increasingly uncompetitive in US electricity markets. Coal has also faced growing competition from renewable energy, with solar costs falling 85 percent between 2008 and 2016 and wind costs falling 36 percent.
  • Increased competition from cheap natural gas is responsible for 49 percent of the decline in domestic US coal consumption. Lower-than-expected demand is responsible for 26 percent, and the growth in renewable energy is responsible for 18 percent. Environmental regulations have played a role in the switch from coal to natural gas and renewables in US electricity supply by accelerating coal plant retirements, but were a significantly smaller factor than recent natural gas and renewable energy cost reductions.
  • Changes in the global coal market have played a far greater role in the collapse of the US coal industry than is generally understood. A slow-down in Chinese coal demand, especially for metallurgical coal, depressed coal prices around the world and reduced the market for US exports. More than half of the decline in US coal company revenue between 2011 and 2015 was due to international factors.
  • Implementing all the actions in President Trump’s executive order to roll back Obama-era environmental regulations could stem the recent decline in US coal consumption, but only if natural gas prices increase going forward. If natural gas prices remain at or near current levels or renewable costs fall more quickly than expected, US coal consumption will continue its decline despite Trump’s aggressive rollback of Obama-era regulations.
  • While global coal markets have recovered slightly over the past few months due to supply restrictions in China and flooding in Australia, we expect this rally to be short-lived. Slower economic growth and structural adjustment in China will continue to put downward pressure on global coal prices and limit the market opportunities for US exports. Indian coal demand will likely grow in the years ahead, but not enough to make up for the slow-down in China. The same is true for other emerging economies, many of whom are negatively impacted by decelerating Chinese commodities demand themselves.
  • Under the best case scenario for US coal producers, our modeling projects a modest recovery to 2013 levels of just under 1 billion tons a year. Under the worst case scenario, output falls to 600 million tons a year. A plausible range of US coal mining employment in these scenarios ranges from 70,000 to 90,000 in 2020, and 64,000 to 94,000 in 2025 and 2030 -- lower than anything the US experienced before 2015.

These findings indicate that President Trump’s efforts to roll back environmental regulations will not materially improve economic conditions in America’s coal communities. As such, the paper concludes with recommendations for steps that the federal government can take to safeguard the pension and health security of current and retired miners and dependents and support economic diversification. Attracting new sources of economic activity and job creation will not be easy, and even at its most successful will not return coal country to peak levels of past prosperity.

But responsible policymakers should be honest about what’s going on in the US coal sector—including the causes of coal’s decline and unlikeliness of its resurgence—rather than offer false hope that the glory days can be revived. And then support those in America’s coal communities working hard to build a new economic future.

Read the text (PDF).

Divestment Done! and Divestment To Do: the Norwegian Government Pension Fund and Coal

By Heffa Schücking - Urgewald, Future in our hands, and Greenpeace Norway, Summer 2016

(in 2015), the Norwegian Parliament took a historic decision to move the Government Pension Fund Global (GPFG) out of thermal coal. The Parliament determined that companies should be excluded if they “base 30% or more of their activities on coal, and/or derive 30% of their revenues from coal.”1Thiswas an important break-through as the 30% threshold established a new benchmark for divestment actions of large investors. Only months after the Norwegian decision, the world’s largest insurance company, Allianz, undertook a coal divestment action of its own based on the GPFG’s 30% threshold.2And other investors such as KLP and Storebrand, which had already undertaken divestment actions, have now tightened their thresholds to keep up with the trail blazed by the Norwegian Parliament.

This briefing provides a “snapshot” of how the world’s largest coal divestment action (was progressing by 2016). To this end, we have analyzed the GPFG’s holdings list from December 31st 2015 as well as the implementation guidelines laid out by Norway’s Finance Ministry. Although the divestment action is not due to be completed until the end of 2016, we wish to draw attention to some weaknesses that could diminish the scope and impact of the Storting’s decision if they are not addressed.

Read the text (PDF).

Norway’s Largest Pension Fund Divests from Coal

By Beverly Bell - Fossil Free, November 19, 2014

Disclaimer: The views expressed here are not the official position of the IWW (or even the IWW’s EUC) and do not necessarily represent the views of anyone but the author’s.

Norway’s largest manager of pension funds, KLP, has decided to sell off all its investments in coal companies. KLP executives will instead invest half-a-billion kroner (around USD 75 million) in renewable energy ventures.

KLP manages the pension funds for the majority of Norway’s public sector employees. With its total assets of nearly NOK 500 billion ($84bn/€67bn) its clout in the investment world ranks second only to the Norway’s huge sovereign wealth fund, known as the oil fund.  Today’s decision sets an important precedent for the Oil Fund which is due to announce a decision on its investments in fossil fuels later this month!

Today KLP’s CEO Sverre Thornes announced that: “We are divesting our interests in coal companies in order to highlight the necessity of switching from fossil fuel to renewable energy.”   KLP has decided to invest NOK 500 million more in increased renewable energy capacity.

After a query from one of its local municipal clients, the township of Eid in the mountainous Norwegian county of Sogn og Fjordane, KLP said it has “assessed whether it is possible to contribute to a better environment by pulling investments out of oil, gas and coal companies” without affecting future returns on its investment portfolio.

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