Ever since a big climate change bill died in the Senate three years ago, concerned states and cities have had to do what they could in the absence of a strong federal effort to fight global warming. Some have passed requirements that increasing percentages of their electricity come from renewable sources. California has even set up its own system to put a price on carbon dioxide emissions, the pollutants behind human-caused warming. Now there’s a growing effort to encourage big institutional investors — such as city and state retirement funds — to divest from companies in the fossil-fuel business.
We sympathize with those frustrated at the political system’s delinquency on climate change. But divestment is a feel-good policy that would accomplish little, except possibly denying the city’s retirement funds investment returns. The council, and others considering it, should reject the idea.
Divestment wouldn’t harm energy companies enough to change their behavior. Profitable oil firms wouldn’t have a hard time finding other investors. The most likely effect of forcing pension funds to sell, then, would be to reduce the options fund managers have to support pension programs, university endowments and other socially useful institutions dependent on investment income.
Activists respond that they are trying to revoke companies’ “social license” to produce and sell dirty fuels, which would rally public support behind a breakthrough climate policy in Congress.
But singling out fossil-fuel companies wouldn’t result in the revolution in public thinking the activists aim to effect. The problem is not that people aren’t sufficiently upset at Big Oil. The problem is that enough people aren’t willing to change their own behaviors or pay to support an aggressive anti-emissions program right now. That’s not simply because of oil-company lobbying. It’s because fossil fuels are cheap. They are abundant, energy-rich and easy to transport. Consequently, they are practically everywhere in the economy.
The fossil-fuel business is not like the firearms industry or apartheid in South Africa, objects of divestment movements in the past. The immediate abolition of those evils was worth seeking. Fossil fuels are a more complicated case. Modern society utterly depends on them now, and at the moment there’s no silver-bullet technology that will change that reality in a snap — or even a decade. The world, therefore, must wean itself off dirty energy, even with the best anti-emissions policies in place. As it does so, it will need firms to reliably deliver fuel to prevent economic dislocations and human suffering.