Comment

07.01.19

Fracking: divest to invest

Source: PSE Dec/Jan 2019

Deirdre Duff, divestment campaigner at Friends of the Earth, takes a look at local authorities’ role in fracking.

The fossil fuel industry has five times more fossil fuels than we can use if we are to prevent climate chaos. Despite this, with government backing, it continues to explore for more.  

The industry itself spends vast sums lobbying politicians from across the political spectrum in a bid to obstruct the transition away from fossil fuels. The industry’s efforts to promote the myth that natural gas can be part of the solution to climate change are concerning. In reality, gas use must be phased out, not increased, to meet the Paris Climate goals.

But the industry’s lobbyists are winning political support for the construction of new gas infrastructure. Projects like the construction of liquefied natural gas terminals to receive fracked gas, or building gas mega pipelines, continue to be greenlighted.

We’ve seen at the site at Preston New Road, Lancashire, how opposed local people are to fracking. It was devastating for the community who fought so hard: the local council’s vote against the decision to frack was overturned in the government’s determination to do it at all costs. And Cuadrilla isn’t covering itself in glory with its reaction to the earthquakes that have happened since it started fracking.

Recent research has shown that UK councils invest over £9bn in fracking companies through their investment in council pension funds. Out of all UK local government pension funds, the Greater Manchester Pension Fund invests the most in the global fracking industry – almost £1bn. Lancashire council has the 10th largest amount in fracking: it invests £187m in companies with fracking operations.

Other councils with the highest percentage of their pension funds invested in fracking are Dumfries and Galloway, and the London Borough of Merton. Each have about 6-7% of the total fund invested in fracking companies.

More positively, Waltham Forest, Southwark, and Islington pension funds have committed to divest all fossil fuel investments from their portfolios. In Scotland, Wales, and Northern Ireland, fracking has been effectively halted, but councils there still oversee pension funds that invest heavily in fracking companies. This money supports companies like BP and Shell, global mega-frackers who have been mired in human rights controversies.

Contrastingly, fossil fuel divestment offers hope. We can use divestment to weaken political influence and build political will for legislation to restrict the industry and accelerate the renewable energy transition.

Over $7 trillion worth of funds have now committed to divestment. Local government pension funds, New York City, universities, health organisations, churches, and Ireland are just some who have realised that investing in fossil fuels doesn’t make sense.

It’s remarkable that the price of renewables has dropped so dramatically over the last few years. A renewable-powered world can be safer, cleaner, and more equitable.

Ethical arguments aside, it doesn’t make financial sense to invest in fossil fuels today. In recent years, investments have dragged down portfolio returns. The future risk that fossil fuel investments pose to investors is serious; the governor of the Bank of England warned that climate policies consistent with limiting warming to 2°C would render the majority of oil, gas, and coal reserves “literally unburnable.” Recent modelling has shown that some fossil fuels will become stranded assets even in the absence of new climate policies; the transition to a low-carbon economy will reduce fossil fuel demand.  

The appalling wildfires – even in the arctic circle – and record temperatures this summer made the impacts of climate change starker than ever. Neither local communities nor our climate can afford for the fracking industry to win.

Any council support for damaging fracking must stop. It’s time to divest.

Top image: John Stillwell, PA Wire

 

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