If you have listened to the public comment sessions at Regents meetings posted on this blog, you will have heard statements from a student group pushing the Regents to divest its pension and other portfolios from “fossil fuels.” By this demand, the group – which is part of a national movement – appears to mean not just oil-coal-gas producers but also at least some major utilities. We have noted that there are problems with using other peoples’ money to favor or disfavor particular political/social causes, partly involving the esoteric elements of finance and returns to the portfolio, but also the questions it raise about whose causes get reflected in the decisions. See
For the Regents, the issue is complicated especially by the fact that UC is a public institution. Yes, the state has various policies trying to restrict emissions of greenhouse gases. In fact, UCLA (and other campuses) have to buy “allowances” under the California “cap-and-trade” program. UCLA generates about 70% of its electricity in its own $150 million natural gas plant (see the photo). While the plant is said to be efficient, green, etc., it does burn fossil fuel. We have posted about these emissions in the past:
An excerpt from that earlier posting:
The following is the amount of greenhouse gases emitted in 2011 by UC campuses covered under the AB32 cap-and-trade program. The emissions are displayed in units of metric tons of carbon dioxide equivalent.
UCLA – 205,299
UCLA – 205,299
UC San Diego – 160,579
UC Irvine – 69,979
UC San Francisco – 68,566
UC Davis Medical Center – 63,693
UC Davis – 62,259
The original posting cited a news article but the primary source of the data was:
|UCLA’s co-generation natural gas plant|
There are some background issues. One is that despite the state’s green leanings, California is a major oil producer and at one time was even more so. Clicking on the video link at the very bottom of this post and looking at the old photos will give you some idea of that history. However, we don’t need to go back into deep history. Here are latest (July 2013) monthly oil production figures by the top-4 producing states (barrels produced):
Texas: 81,362,000; North Dakota: 27,108,000; California: 16,818,000; Alaska: 15,282,000
You have undoubtedly heard about “fracking” in which more oil can be squeezed out of seemingly used-up wells. Gov. Brown very recently signed a bill – to the great displeasure of environmentalists – to permit fracking (under regulation). He is undoubtedly thinking of what will happen to the state budget when the Prop 30 taxes expire. Deals could be cut to tax what might be a renewed oil boom for the state. Note that for the governor to get to sign a bill, the (heavily Democratic and liberal) state legislature had to pass it. In short, taking an anti-fossil fuel position may not be where the political establishment – that provides funding for UC – is going.
Another background issue is the slippery slope problem. The Regents have divested from tobacco and guns (after the Connecticut elementary school shooting). Those moves were not out of step, however, with the state’s political establishment. But the more you move toward divestment-for-political-reasons, the more you raise the possibility of other divestments which could collide with politics. There was controversy not long ago about the election of the latest student regent (student-regent-elect) because of her activist position favoring anti-Israel divestment. [http://www.youtube.com/watch?v=3LxXT8ocax4] That issue is a political landmine the Regents really don’t want to step on.
Finally, this past week Harvard University’s president announced that Harvard would not divest from fossil fuel. Excerpt from media release:
Climate change represents one of the world’s most consequential challenges. I very much respect the concern and commitment shown by the many members of our community who are working to confront this problem. I, as well as members of our Corporation Committee on Shareholder Responsibility, have benefited from a number of conversations in recent months with students who advocate divestment from fossil fuel companies. While I share their belief in the importance of addressing climate change, I do not believe, nor do my colleagues on the Corporation, that university divestment from the fossil fuel industry is warranted or wise.
Harvard is an academic institution. It exists to serve an academic mission — to carry out the best possible programs of education and research. We hold our endowment funds in trust to advance that mission, which is the University’s distinctive way of serving society. The funds in the endowment have been given to us by generous benefactors over many years to advance academic aims, not to serve other purposes, however worthy. As such, we maintain a strong presumption against divesting investment assets for reasons unrelated to the endowment’s financial strength and its ability to advance our academic goals.
We should, moreover, be very wary of steps intended to instrumentalize our endowment in ways that would appear to position the University as a political actor rather than an academic institution. Conceiving of the endowment not as an economic resource, but as a tool to inject the University into the political process or as a lever to exert economic pressure for social purposes, can entail serious risks to the independence of the academic enterprise. The endowment is a resource, not an instrument to impel social or political change…
Full release at http://www.harvard.edu/president/fossil-fuels
In short, oil is currently “up” in California: