02 October 2014
Rockefeller Foundation abandons oil
On Monday, September 22, the Rockefeller foundation announced its plans to divest (i.e. sell shares) from fossil-fuel stocks in light of climate change. The Rockefeller foundation is not alone in this endeavour seeing as many universities have already started divestment movements of their own. Although divesting is not a new concept, it is rare to see a organization like the Rockefeller foundation divest from the same recourse that it was built upon. For this reason, some believe this is a turning point in the battle against carbon emissions and that many other investors will follow suit and also divest from fossil-fuels.
But how hopeful should people be? Altogether, this movement has accrued $50 billion in divested funds, which will apparently be used to develop renewable energy sources. for 2015 the global oil and gas market value was estimated to be about $3.7 trillion, which makes a withdrawal of $50 billion seem like an insignificant amount. First of all, the Rockefeller foundation and others who have divested are hoping to bring down the stock price of oil, hopefully reducing the level of investment for oil production. But this is not true since at lower stock-prices other investors would buy back the shares, just at a lower price. Even though the divestment of $50 billion may not be effective in reducing carbon emission, the reinvestment of that money could be. For example, if the Rockefeller foundation put this money towards making renewable energy cheaper than fossil fuels, then the goal of the movement can be reached.
An alternative solution to reach the goal of reducing carbon emissions is for somebody to ‘own’ the atmosphere. Future polluters would then be forced to pay compensation for their carbon emissions, since the atmosphere would be a privatized good. Currently, the government has already implemented this concept with certain industries, but may not be allocating the funds efficiently. As with the Rockefeller foundation, it depends on what is done with the money that is extracted from the oil industry.
Bottom Line: Carbon emissions will be reduced once renewable energy resources are cheaper than producing oil.
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