Divestment: the new weapon in the carbon war

Money is a great motivator. Divestment from fossil fuel industries may yet prove to be a game-changer. [17 September 2013 | Peter Boyer]


It’s true: money makes the world go round.

It puts the food on the table. It’s our ticket to survival. Even with plenty we’re biologically programmed to want more, because one never knows when things might go pear-shaped.

When the news came through last week that 70 workers at Caterpillar’s mining machinery plant in Burnie were to be made redundant, I felt for them. I what it’s like to lose your job.

A community down on its luck will get behind any prospect of employment. In hard times people quite reasonably tend to put their family’s welfare ahead of preserving the Tarkine or World Heritage wilderness, which is why these issues are getting short shrift in the North-West.

The pursuit of money is also hard-wired into governments, which is why all of them seem deaf to a rising chorus of anger about the impact of the new fossil fuel boom across eastern Australia.

As it happens some of the likeliest places to find coal and natural gas aren’t out in the sticks, but under our farms and even our towns. Not yet in Tasmania, which is a tiny player in Australia’s coal and gas industry, but it may yet consume us too.

Potential returns from fossil energy has prompted the Adelaide company Petratherm to seek a licence to explore for shale gas in the Southern Midlands and Central Plateau – an interesting twist in the story of a company that started out in carbon-free geothermal energy.

But the real action is in Queensland and northern NSW, where companies are starting to exploit some of the world’s biggest deposits of coal and gas, mainly for export to China and India.

There are two schools of thought about the future of this huge resource. One follows an analysis released this month by Citi Research, part of the Citi financial empire, which concluded that peak coal in China may be imminent with demand starting to decline some time between now and 2020. A market-driven decline in the global coal market would tend to suppress the argument that the coal and gas juggernaut is fuelling an upward curve in carbon emissions.

But the coal boom may endure longer than many think. Guy Pearse, coal industry analyst and co-author of the new book Big Coal, takes the view that while the price boom may be over, Australian coal and gas production is likely to more than treble over the next decade or so.

Pearse points out that global financial interests are investing heavily in Australian thermal coal such that its production is now rising at double the world average. Whatever happens to domestic emissions, carbon released from exported coal and gas when it’s burnt will be several times more.

But this is what governments like to see – ramped up production providing jobs and more jobs for the growing ranks of the unemployed. They find it convenient not to respond to the noisy anti-gas protesters, a cobbled coalition of environmentalists, farmers and residents of country towns.

“Lock the Gate” protests started in 2010 with the coal seam gas exploration boom in Queensland. Farmers determined to keep the drilling crews off their properties in defiance of laws which give property owners no say in the exploitation of mineral resources under their land.

The protest spread to coal in the Hunter Valley, where locals were having to contend with open-cut mines swallowing up farms and making towns uninhabitable. But the mines also offer employment and gifts of money for local activities. The effect is to divide communities into opposing camps.

As the mines give, so do they take away. In Queensland the prospect of local employment has sometimes turned out to be a mirage as mines opt instead for flying in their workers from capital cities. The result is a huge impact on the local economy, accommodation and social fabric.

Having relegated environmentalism to the bottom of the political barrel, down there with terrorism, most governments have ignored the protest movements. This is a mistake. The protests highlight some deep-seated issues about the future of coal and gas in Australia.

Paul Gilding, former Greenpeace CEO and now a Tasmanian-based sustainability consultant, says governments should see the protesters as allies, helping to prepare us for when fossil fuel industries begin an inevitable, terminal decline.

With governments unwilling to help, says Gilding, the Lock the Gate protesters are going direct to the market, using legal and other delaying tactics on each development, attacking the institutions lending money for drilling, and highlighting financial risks for the industry’s investors.

Gilding believes that the coal and gas bubble will inevitably burst, but the economy will better off if it happens sooner rather than later: “The less stranded infrastructure we have built, the fewer mines that have to close and miners lose their jobs, the less risky the broader economic impact.”

Reliable and sustained returns for investors, says Tas Ethical financial planner Stuart Barry, can’t be obtained from the fossil-fuel sunset industries. Their profits and share prices rely on cost-free pollution and exploiting large fossil fuel reserves into the distant future.

Barry points out that big corporations adjust strategies according to changing consumer preferences. Superannuation funds are becoming aware that more money is flowing into products that take environmental and social considerations into account, and will increasingly offer this choice.

The clincher is the bottom line. Barry says Australian share funds that avoid investment in fossil fuel and related business have significantly outperformed others over the past 10 years, providing investors with a 70 per cent better return than the average Australian share fund.

Gilding and Barry, with Dr Frank Nicklason (Royal Hobart Hospital) and Naomi Edwards (Tasplan chair), are speakers at a fossil fuel divestment forum in Hobart tomorrow evening, from 6 pm to 7.30 pm at UTas Medical Sciences Precinct, on the corner of Liverpool and Campbell Streets.

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