What Does Fossil Fuel Divestment Mean For Texas?
“I think it is worth asking ourselves as a society how much longer we think we need to have an oil economy.” — Michael Webber, UT Energy Institute
This week in New York, the UN Climate Summit is underway, and the Rockefeller Foundation made news with the announcement that it will divest close to a billion dollars from fossil fuels. Here in Austin, University of Texas President Bill Powers gave his State of the University address. But in contrast to the news from New York, Powers thanked “heavens” for the oil wealth provided to UT by its land holdings, and celebrated the fracking revolution as “good news” for the University.
The disconnect between the two messages leads one to wonder about the role of the divestment campaign in oil-rich parts of the country. Could divestment in other parts of the country grow to the point where it disrupts Texas’ fossil fuel economy? By contrast, could divestment ever catch on here?
We called Michael Webber, Deputy Director of UT’s Energy Institute, to talk about all that and more.
It should be noted that the Institute receives funding from industry and from UT, which, as President Powers noted, is no stranger to the oil business. (StateImpact Texas has also been sponsored by the Energy Institute on special projects. These disclosures seem all the more important in a blog post about how deeply intertwined the fossil fuel industry is with many aspects of the life in the state.)
StateImpact Texas: Could divestment shake up the Texas economy?
Michael Webber: I think Texas has a stake in what’s going on with the oil sector for all sorts of reasons. So yeah, Texas should take notice of what’s going on with divestment. I don’t think Texans needs to feel at risk yet. The oil sector is very profitable. It’s still a powerful sector. But I think it is worth asking ourselves as a society how much longer we think we need to have an oil economy.
Q: The divestment movement is especially popular on college campuses. Any chance it will take hold at Texas Universities?
A: What if UT tries to divest? It’s hard to imagine because UT has so much oil money and so much wealth generated from oil and gas on its lands that have been generating revenue for 100 years. So it’s a harder question for us to contemplate divestment. We’re so wrapped up in it. And we are potentially one of the losers from divestment as a state unless we adapt, and modify and adjust to the new reality.
I think it’s safe to say that you’re not going to see the divestment movement from oil happen in Texas the way it’s happening elsewhere. Now I wouldn’t be surprised if you see a push for divestment from coal. We are a major coal-consuming sate; but we are not a major coal-producing state.
“How do you divest from something that’s everywhere?” – Michael Webber
Q: What makes the fossil fuel divestment campaign different from other divestment movements?
A: Divestment from fossil fuels is a different kind of beast than other kind of divestment strategies around tobacco or South Africa.
Tobacco products are pretty isolated. They’re very particular producers. South Africa, not a major world manufacturer. So it was pretty easy to pull out of investments in South Africa, pretty east to pull out of investments in tobacco. But I’m not sure how you pull out of investments in fossil fuels.
Any company you invest in will have made its product or moved its product using fossil fuels. So the divestment movement itself is actually a lot more tricky to achieve. How do you divest from something that’s everywhere? Tobacco’s not everywhere and South Africa is not everywhere. So those were easier to execute.
Q: What impact could the announcement from the Rockefeller Foundation have on the future of fossil fuels?
A: So this is a family that made its fortune, made its name off the oil and gas business, now seeing they don’t want any part of it. So it’s really symbolic more than practical.
At the same time, if a lot of people do it, you have few buyers for the people who are selling. And anytime you have fewer buyers, prices might come down. So the capitalization terms might shift a little bit. I don’t think we’re there yet. I don’t think we’re anywhere close. But if this is a movement that gains steam, perhaps that will happen someday.
The symbolism is interesting, it makes for a good headline. [But] because our society is so dependent on fossil fuels, a true divestment means no longer investing in society as a whole. And I don’t that’s quite what the sponsors of this movement really have in mind.
This interview has been edited and condensed for clarity.