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
UC San Diego – 160,579
UC Irvine – 69,979
UC San Francisco – 68,566
UC Davis Medical Center – 63,693
UC Davis – 62,259
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:
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