This article originally appeared in the National Review Online on February 13, 2015.
"Kick it while it’s down,” say proponents of fossil-fuel divestment. That’s the new slogan, drilled and refined recently in the wake of plunging oil prices. Since fracking matured to economic competitiveness, the price of oil has been cut in half. In the last six months, the S&P 500 Energy Index has lost more than 20 percent of its value.
Today kicks off Global Divestment Day, a two-day climate-action extravaganza at colleges, universities, city halls, and public parks. At Rutgers, students are staging an “oil spill die-in.” Swarthmore students have arranged a divestment teach-in. Grandparents will gather at a hospital in Wisconsin, asking the health-care center to “divest for a grandkid.” Smith students have planned a Valentine’s Day party asking the college to “break up with fossil fuels.” One theater in Belgium will host an “action speed-dating event” for people to find fellow “rebel friends” to join in civil disobedience later that evening.
GDD was proclaimed by sustainability guru Bill McKibben’s organization 350.org, which has been spearheading the rapidly proliferating fossil-fuel-divestment movement. The movement has penetrated the financial market, but its stronghold is on college campuses, where it emerged (at Swarthmore) in fall 2010. McKibben ignited the movement two years later with a coast-to-coast speaking tour, “Do the Math.” The math, according to McKibben, is that to stop global warming at 2 degrees Celsius, fossil-fuel companies need to leave 80 percent of their reserves in the ground.
Tulane University will save energy by celebrating GDD and Mardi Gras all at once. Students have prepared a banner for the carnival parade begging administrators to do their part to “Keep New Orleans A-float.” Activists at the University of California–Santa Cruz offer “some theatre, cake and engagement” at the “unholy matrimony” of the university and its “long time beau, Fossil Fuel Industry.” Presumably the groom will be looking slick.
Some institutions recognized GDD early. The New School announced a week ago plans to divest its $340 million endowment from all holdings in fossil fuel. It will also revamp its curriculum around a global-warming-inspired common core, with the goal of making all students “fully aware, service-oriented climate citizens,” according to Michelle DePass, dean of the New School’s Milano School of International Affairs, Management, and Urban Policy. In that light, the New School has held off on the GDD extravagance of some of its peers. “Climate citizens” don’t need such gimmicks.
Divestment activists are trying to play the oil glut to their advantage. Naomi Klein, McKibben’s colleague and, as Stanley Kurtz has written, one of the architects of the divestment movement, instructed students in a GDD training session that “it can be a really, really good time to get off fossil fuels.” For years, divestment activists have chided us about the possibility of “stranded assets,” the oil reserves that factor into oil companies’ value but might, at some point after hundreds of divestment victories, get stuck in the ground if Congress passes strict carbon regulations. Now, Klein argues, the capitalist system is killing itself, as competition forces companies to pull back on production and leave their reserves in the ground. “This is a moment,” she says, to be capitalized on — perhaps the only form of capitalism of which Klein approves.
This, just a few short years after “peak oil” was supposed to be the foolproof argument for divestment. Then, activists warned that fossil fuels would crash because we had too little of them. Everybody would be driven to solar panels and wind turbines and would wish they’d installed them sooner, as colleges like Middlebury did. Those who’d invested in fledgling renewable-energy markets would be raking in returns. But now that oil is cheap, renewable energy looks less and less competitive. The WilderHill Clean Energy Index has been slipping for months. Perhaps that’s partly why Louisville Seminary will commemorate GDD with a prayer vigil.
The divestment movement has been high on an explosive combination of youthful anger and optimism, but low on tangible victories. McKibben’s 350.org counts more than 500 active campaigns, but only 24 colleges and universities have committed to divest, 18 of them in the U.S. Repeatedly administrators have patiently listened to students’ arguments only to demur, because divestment is ineffective at combating global warming, and because oil stocks are valuable. The finance-committee chairman at Swarthmore, for instance, estimated that divesting the college’s $1.5 billion portfolio would cost more than $200 million over the course of ten years.
But now that fossil fuels are worth less, Klein claims the stodgy anti-divestment board members “have lost their best argument.” In fact, Klein forecasts in the fossil-fuel markets an opportunity to “create space to talk about nationalizing oil companies” — a theme she addresses at length in her best-seller This Changes Everything: Capitalism vs. the Climate. Government regulation of the oil industry is not enough; we need government management.
Of course, most investors prefer to buy low and sell high. With an energy renaissance in the U.S. and with turmoil in the Middle East, Russia, and Nigeria, prices might not remain low for long. Cheap energy, a boon to economic growth, job creation, and a rising standard of living, looks more and more attractive. Fossil-fuel investments make sense. Do the math.
© 2015 by National Review, Inc. Reprinted by permission.