My divestment from fossil fuels

This post covers recent choices I've made to reduce my exposure to fossil fuels, including practical steps that can be taken by Australians and generally applicable lessons.

I recently read Naomi Klein’s This Changes Everything, which deeply influenced me. The book describes how the world has been dragging its feet when it comes to reducing carbon emissions, and how we are coming very close to a point where climate change is likely to spin out of control. While many of the facts presented in the book can be very depressing, one ray of light is that it is still not too late to act. There are still things we can do to avoid catastrophic climate change.

One such thing is divestment from fossil fuels. Fossil fuel companies have committed to extracting (and therefore burning) more than what scientists agree is the safe amount of carbon that can be pumped into the atmosphere. While governments have been rather ineffective in stopping this (the current Australian government is even embarrassingly rolling back emission-reduction measures), divesting your money from such companies can help take away the social licence of these companies to do as they please. Further, this may be a smart investment strategy because the world is moving towards renewable energy. Indeed, according to one index, investors who divested from fossil fuels have had higher returns than conventional investors over the last five years.

It’s worth noting that even if you disagree with the scientific consensus that releasing billions of tonnes of greenhouse gases into the atmosphere increases the likelihood of climate change, you should agree that it’d be better to stop breathing all the pollutants that result from burning fossil fuels. Further, the environmental damage that comes with extracting fossil fuels is something worth avoiding. Examples include the Deepwater Horizon oil spill, numerous cases of poisoned water due to fracking, and the potential damage to the Great Barrier Reef due to coal mine expansion. Even climate change deniers would admit that divestment from fossil fuels and a rapid move to clean renewables will prevent such disasters.

The rest of this post describes steps I’ve recently taken towards divesting from fossil fuels. These are mostly relevant to Australians, though other countries may have similar options.

Superannuation

In Australia, we have compulsory superannuation (commonly known as super), meaning that most working Australians have some money invested somewhere. As this money is only available at retirement, investors can afford to optimise for long-term returns. Many super funds allow investors to choose what to invest in, and switching funds is relatively straightforward. My super fund is UniSuper. Last week, I switched my plan from Balanced, which includes investments in coal miners Rio Tinto and BHP Billiton, to 75% Sustainable Balanced, which doesn’t directly invest in fossil fuels, and 25% Global Environment Opportunities, which is focused on companies with a green agenda such as Tesla. This switch was very simple – I wish I had done it earlier. If you’re interested in making a similar switch, check out Superswitch’s guide to fossil-free super options.

Energy

While our previous energy retailer (ClickEnergy) isn’t one of the big three retailers who are actively lobbying the government to reduce the renewable energy target for 2020, my partner and I decided to switch to Powershop, as it appears to be the greenest energy retailer in New South Wales. Powershop supports maintaining the renewable energy target in its current form and provides free carbon offsets for all non-renewable energy. In addition, Powershop allows customers to purchase 100% green power from renewables – an option that we choose to take. With the savings from moving to Powershop and the extra payment for green power, our bill is expected to be more or less the same as before. Everyone wins!

Note: If you live in New South Wales or Victoria and generally support what GetUp is doing, you can sign up via the links on this page, and GetUp will be paid a referral fee by Powershop.

Banking

There’s been a lot of focus recently on financing provided by the major banks to fossil fuel companies. The problem is that – unlike with super and energy – there aren’t many viable alternatives to the big banks. Reading the statements by smaller banks and credit unions, it is clear that they don’t provide financing to polluters just because they’re too small or not focused on commercial lending. Further, some of the smaller banks invest their money with the bigger banks. If the smaller banks were to become big due to the divestment movement, they may end up financing polluters. Unfortunately, changing your bank doesn’t give you more control over how your chosen financial institute uses your money.

For now, I think it makes sense to push the banks to become fossil free by putting them on notice or participating in demonstrations. With enough pressure, one of the big banks may make a strong statement against lending to polluters, and then it’ll be time to act on the notices. One thing that the big banks care about is customer satisfaction and public image. Sending a strong message about the connection between financing polluters and satisfaction may be enough to make a difference. I’ll be tracking news in this area and will possibly make a switch in the future, depending on how things evolve.

Transportation

My top transportation choices are cycling and public transport, followed by driving when the former two are highly inconvenient (e.g., when going scuba diving). Every bike ride means less pollution and is a vote against fossil fuels. Further, bike riding is my main form of exercise, so I don’t need to set aside time to go to the gym. Finally, it’s almost free, and it’s also the fastest way of getting to the city from where I live.

Since January, I’ve been allowing people to borrow my car through Car Next Door. This service, which is currently active in Sydney and Melbourne, allows people to hire their neighbours’ cars, thereby reducing the number of cars on the road. They also carbon offset all the rides taken through the service. While making my car available has made using it slightly less convenient (because I need to book it for myself), it’s also saved me money, so far covering the cost of insurance and roadside assistance. With my car sitting idle for 95% of the time before joining Car Next Door, it’s definitely another win-win situation. If you’d like to join Car Next Door as either a borrower or an owner, you can use this link to get $15 credit.

Other areas and next steps

Many of the choices we make every day have the power to reduce energy demand. These choices often make our life better, as seen with the bike riding example above. There’s a lot of material online about these green choices, which I may cover from my angle in another post. In general, I’m planning to be more active in the area of environmentalism. While this may come at the cost of reduced focus on my other activities, I would rather be more a part of the solution than a part of the problem. I’ll update as I go – please subscribe to get notified when updates occur.