Op-ed: Divesting is a wise choice for the University
Responding to calls from students and faculty to have the school divest from companies that profit from fossil fuels, Chancellor Mark Wrighton of Washington University said, “our position has long been that our investment policy will not be…used to support political, social or other agendas.”
With all due respect to the chancellor, this is either a disingenuous or a less-than-thoughtful response. The current investment practices of the University clearly and distinctly support a political and social agenda. That agenda may have escaped his view because it has been polished smooth by decades of conventional practice, making it seem part of the natural order of things.
But it isn’t. Investment in fossil fuels has undeniable political and social consequences. Whatever its origins, its continuance today, given what we know about climate change, has three characteristics: It is rooted in a short-sighted pursuit of profit, it is unwise and it can be justified only by arguments that are grounded in physical and economic ignorance.
On all three counts, the current policies are inappropriate for a non-profit institution dedicated to the pursuit and dissemination of truth and learning.
As a chemist, Wrighton is no doubt aware of the physical reality: Use of fossil fuels inescapably releases carbon dioxide, a greenhouse gas, the imbalance of which in our atmosphere is making the planet less hospitable to all life, including human civilization.
Wrighton and the University’s investment policy committee may trust that the chimera of “clean coal” will redeem the continuation of current policy. It won’t. Burning coal to make electricity sends considerable quantities of energy into the economy, but it will also take considerable energy to capture, compress, transport and store the unavoidable carbon dioxide emissions that result. When those thermodynamic costs are subtracted from the energy that a coal-fired plant sends into the economy, the use of coal becomes less energetically advantageous. Biophysical economists have a concept that is relevant here: Energy Return on Energy Invested (EROI), which is just what it sounds like: the ratio between energy invested in getting energy and the amount of energy that is gotten. The higher the EROI of an energy harvest-and-delivery system, the more energy it makes available to us to accomplish our economic purposes. Coal has historically had a high EROI—but the EROI drops if carbon capture and sequestration are added to the process. Before pegging their hopes on “clean coal,” Wrighton and the board would do well to inquire into the theoretical and actually achievable EROIs of the coal-and-capture process. This information, generated by Washington University’s own researchers, is not widely available outside those labs. But if Wrighton and company can shake the numbers loose, I think they’ll find that the EROI of wind and solar compare favorably to the EROI of coal-with-capture-and-sequestration. Certainly with all its other negative externalities—high rates of environmental destruction, water pollution and worker deaths among them—carbon-sequestered coal with its lower EROI becomes a much less attractive option.
These physical realities tell us that investment in clean coal is not a neutral choice supported by rational cost-benefit analysis, but a choice made in service to a particular political and social agenda.
The economic reality is just as clear. The planet cannot absorb additional burdens of carbon dioxide emission. This means that the planet’s remaining endowment of that fossil fuel must be left in place, unburned. As a species we face a choice: fail to recognize this, which will result in our planet expunging our civilization from its face through climate change, or take action to sharply curtail the use of fossil fuels. If, as I believe would be the wiser path, we choose to limit fossil fuel use, those companies that own coal and oil reserves—Peabody Energy, Exxon Mobil Corporation and their peers—will experience a sudden loss in the value of their assets; the value of their stock will decline accordingly.
This means that divestment from those companies is both a wise and hopeful choice. Continued investment in fossil fuel companies leaves the University endowment vulnerable to sudden decline. Failure to divest is in effect a cynical bet on the continued inaction of humanity in the face of the largest (and entirely self-imposed) existential threat it has ever faced. That, it seems to me, is a social and political agenda that a wise educational leader would discourage his institution from endorsing.