Slight contradiction here .... fossil fuels are doomed, don't let fossil fuels remain dominant. The problem with divestment is that some other investor then gets the good returns. You may feel warm inside but your super fund now under performs.

Another contradiction...if renewable power is so cheap how come it needs quotas and subsidies? The author says renewable power is arriving with a whoosh but statistics say Australia got 1.5% solar electricity in 2013 and 2.9% wind power. Perhaps some of the author's assumptions need to be questioned.

Why divest? Because fossil fuels have recently become politically-incorrect and anyone invested in them could face retribution from government and its Church of Climate-Change.

In 16th century England, the question was whether to divest Catholicism or Protestantism. It was clear that one of those is likely to cost you your head, but it wasn't clear which one.

The author writes of these renewable power sources that are cheaper than fossil fuel but doesn't mention what they are. Electricity can be generated from coal for about 3 cents per KWH, for 24 hours a day and this can only be matched by CSG, nuclear or dams.

Having the the world powered entirely by wind and solar is a wonderful idea except these energy sources can only survive with massive subsidy and ignores the obvious question of what to do at night or when the wind doesn't blow.

Taswegian – Thanks for your comment

Not really a contradiction. The problem for shareholders/investors is knowing when to divest. For example over the next 5-10 years it is likely thatthe value of coal mining companies will decline as power generation shifts from coal to renewables.

Shareholders may be right in thinking “all is well”. Indeed it is – at present – but for how much longer? The value of their investment is threatened by advances in technology and policy changes.

Should you divest now and move to another profitable company which offers similar yield but has less exposure to risk? Or would it be prudent to ignore growing risk associated with fossil fuel production and divest now?

You can not really wait until your shares start to loose value because if you do, you will simply be “joining the crowd” and pushing down the value of your shares even further.

Wattle - yes and no. You seem to be saying that the way things are at present, our best bet is ongoing coal-powered electricity generation which meets demand 24/7. You are right – at present. And if nothing changes – you will be right in the future too.

Policy of the Abbott government favors continued use of coal but that policy is very likely to change under a different government. Technology does make advances and is stimulated to do so more and more rapidly by the financial gains of doing so.

The world we live in is far from static and changes are occurring. Those changes increase the risk that fossil fuel mining companies will decline over time and be replaced by the best that technology can provide – provided it is better and cheaper.

Investors need to judge how quickly change will start to affect the value of their investment and when to pull out. Some investors think that time has come (eg. ANU, others will hang on to their investments until they feel it is too risky to do so.

No wonder our economies are is such bad shape when any economist can actually get so far from reality as this piece.

Get government regulation & subsidies out of the power industries, & not a windmill would still be turning within a year. None of them could actually earn their maintenance costs in an open market.

Don't look now Mike, but I think that rope that tied you down, to keep your feet anywhere near on the ground snapped a few years back.