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Worried About Falling Oil Prices? Divest and Re-Invest

10/22/2014 05:21 EDT | Updated 12/22/2014 05:59 EST
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Oilsands Refinery

A recent plunge in oil prices as been driving a steady stream of commentary from leading economic voices across the spectrum in Canada calling for everything from outright panic to 'stay the course'. With oil hovering just north of $80 per barrel, many are starting to question the future of pipelines, tar sands and other resource intensive extractive projects. Others claim that this sort of fluctuation is just a part of the game when it comes to oil prices. While this sort of thing has happened before, oil is a boom and bust commodity after all, it has never happened at a time like right now.

Earlier this year Carbon Tracker, the U.K.-based research group behind the Carbon Bubble concept warned that since "oil sands are high-cost, high-carbon projects, being proposed at a time when both costs and emissions are under pressure to shrink...they should immediately hit an investor's higher-risk screen." Today a range of factors combined with falling oil prices is putting a strain on extreme energy projects and raising concerns in a year that has already seen tar sands projects from Shell, Total, Statoil and Suncor cancelled.

At the same time more and more political, cultural and economic leaders are begin to grapple with the implications of the global carbon bubble, questioning the fundamental logic of investing in high carbon energy projects. Just last week Bank of England head Mark Carney added his voice to the chorus, telling a crowd at World Bank event that if the world is to take climate action seriously, the "vast majority of [fossil fuel] reserves are unburnable."

Carney was considered by many in Canada's economic establishment as the steady hand that kept Canada from being hit by the worst impacts of the global economic crisis of 2008-2009. It was Carney, as the head of the Bank of Canada, who hedged Canada's bets on energy and resource investments during the crisis, but those investments that half a decade ago were considered floats are now turning into anchors.

This current drop in oil prices sends an important message that no fossil fuel project, especially the most carbon and capital intensive, is inevitable. The writing on the wall has already been made abundantly clear that carbon constraints pose a major threat to business as usual for fossil fuel companies and their investors, and this current price drop is just a taste of what could be to come. It makes sense then, to pause on the panic button and instead look at what we can do to get out from under the uncertainty of fossil fuel investments and re-invest instead in communities and today's climate solutions.

Last month the Rockefeller Brothers Fund announced that it would be divesting from fossil fuels because claiming that if John D. Rockefeller were alive today, he would invest in clean, renewable energy. This came at the same time as over $50 billion was calculated to have already been divested, or pledged to be divested by investors around the globe. Since then, Glasgow University, the Australian National University, one of Sweden's national pension plans and a host of other groups have announced plans to divest and instead hedge their bets on solutions instead of dirty energy. Divestment is making it more and more into the mainstream and showing that not only is it possible to divest, but it actually just makes plain sense.

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