What Is Fossil Fuel Divestment?

Divestment, as a general term, means pretty much the exact opposite of investment. Investment is the practice of putting money, time or other resources into a practice or business in order to attain greater gains at a later date. Divestment, then, is the removal of these resources in order to avoid losses at a later date.

When it comes to fossil fuel divestment, the subject revolves around environmental sustainability. Activists concerned about the state of the Earth and the how the continued pursuit of fossil fuels may damage it beyond repair have been campaigning for fossil fuel divestment for years. Basically, they wish for institutions, businesses, pensions, governments and councils to stop pouring money into the fossil fuel trade in an effort to break its monopoly on energy production.

Carbon Tracker Initiative (CTI) Report

The movement for fossil fuel divestment was first given a global audience due to the release of a report from CTI several years ago, which detailed the extent of fossil fuels remaining in the Earth and the percentage of these which can safely be mined without exacerbating climate change.

Now, the CTI has released a new report intended to give helpful advice to businesses which rely upon fossil fuels an alternative method of sustaining themselves. With no one really sure how much longer we can depend upon fossil fuels for all of our energy needs, there is a clear requirement to diversify and find other methods of survival.

The report is unique in that it calls for diversification at a time of low oil prices – such diversification normally takes place when prices are high. It also discourages against investing heavily in ultra-deep water drilling, tar sands or the Arctic. Interestingly, the report also advises that companies plan for unpredictable and unprecedented events, such as a global cap on emissions.

Will it Work?

Traditionally, oil companies have shrugged off such advice. However, with oil prices at an incredible low – down from £75 a barrel last June to around £39 a barrel now – and with the Bank of England warning investors away fossil fuels, the time could be right to sit up and pay attention to CTI’s advice.

Meanwhile, there is mounting that evidence that clean, renewable energy may also be the smart solution to the looming energy crisis – and not just for the environment. The article Green Technology vs Fossil Fuels. Which Is Better for Our Economy? looks at the startling advances in the renewable sector and how these could prove to make green energy a safer bet than the traditional sources, for the bank balance as well as the environment.

For those interested, the full company blueprint provided in CTI’s report can be downloaded here.