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Fossil Fools: What’s Wrong With Fossil Fuel Divestment

Walter Russell Mead, The American Interest

Never underestimate the environmental movement’s ability to squander its resources. Today’s fossil fuel divestment campaign is the latest example of fecklessness, and yet another demonstration—as if we needed one—that greens don’t understand the problems they’re trying to fix.

John Gapper writes for the FT:

The [divestment] movement is an elaborate charade, which is too inconsistent and impractical to succeed. Even the campaigners admit they are not entirely serious — that their chances of shutting down ExxonMobil or Royal Dutch Shell are roughly zero, and that their own lights would go out if they did. It is a political campaign for carbon taxes and green laws in financial disguise. […]

Targeting Big Oil in this way is both too narrow and too broad. It is too narrow because there is no logic to blaming the producers of energy raw materials, rather than the companies and people that consume energy. Why should Exxon be a divestment target while others such as Apple, which runs energy-sucking server farms and produces millions of electronic devices, escape? […]

The second problem is breadth. The campaign is against a sector with a 2013 market value of about $4tn, according to Oxford university’s Stranded Assets programme. Its cash flow supports many pension funds and endowments…Even if some endowments divest, this would be a drop in the bucket, easily filled by less active and less socially conscious investors.

College students campaigning against fossil fuel investments might be best served by putting down their picket signs and enrolling in an Economics 101 course. People invest money to grow their wealth, and while a family like the Rockefellers may be wealthy enough to assuage its guilt for how it made its money by publicly divesting from fossil fuel holdings, the rest of us can’t afford that luxury.

Take the time to read Gapper’s piece in full. It gets to the heart of the problem with the divestment movement: its rampant inconsistencies. By taking on something as enormous as investments in brown energy, greens have not only set themselves up for failure, they’ve also started tallying up opportunity costs. Public appetite for green initiatives isn’t limitless, and neither is the funding or media attention these causes du jour receive.

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