Divestment Isn’t the Answer

From electricity to central heating and air to refrigeration technologies, harnessing the power of fossil fuels makes modern life possible. Despite that fact, environmental activists across the globe are calling on the financial and energy sectors to divest from investments in fossil fuels. Doing so could roll back the economic progress American has made over the past two centuries, endanger American competitiveness, and increase consumer prices by suppressing energy supply.

While divestment activists center their efforts around climate change, their vision in shortsighted. Low-cost energy helps undeveloped economies modernize and provides third-world nations a chance to rise out of poverty. Reducing investment in low-cost, reliable energy sources only deepens the divide globally between the developed and undeveloped world. It also increases the chance that communities in poverty will resort to inefficient and environmentally harmful sources of energy such as wood-burning.

The fact of the matter is that the preferred solution of divestment activists – solar and wind power – aren’t capable of fully powering American industry or providing the level of reliability homes and businesses in the U.S. demand. Consider that fossil fuels provide a whopping 82% of global energy production. Renewables simply cannot match that record of production.

Drew Faust, President of Harvard University, recently pointed out a “troubling inconsistency in the notion that, as an investor, we should boycott a whole class of companies at the same time that, as individuals and a community, we are extensively relying on those companies’ products and services for so much of what we do every day.” President Faust is right on target. When we call for divestment, we are calling for a return to something less than modern life.

Worldwide, 3.5 billion people lack access to reliable energy. This has deadly results. In fact, every year energy poverty takes the lives of more than four million people around the globe, lives that could be saved by proper access to energy. This energy poverty has broad implications for global stability and human health. The truth is that the risk of inadequate access to energy is just as dangerous as the consequences of climate change – maybe even more so. And, unlike climate change, we know there is a solution that will make a difference: deliver energy to the people who need it.

Low-carbon technologies that fuel over 40% of the world’s electricity access are the answer to eliminating global energy poverty. For every one person that obtained basic energy access through renewables over the past twenty years, thirteen gained access from low-carbon coal technologies. Despite the gains made by unconventional energy source such as solar and wind, fossil fuels remain the backbone for lifting the world out of energy poverty. Embracing existing resources and cutting-edge technology is the answer. Divestment isn’t.