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.

Declining world oil and coal prices make these energy resources a better buy for average Australians. But if you are rich and trendy who cares?

Wattle, you're just so wrong in your assumptions.

The cheapest energy just happens to be carbon free or carbon neutral; like cheaper than coal thorium and connected to micro-grids, for around half what you'd pay for hydro?

And quarter, as homemade biogas, converted onsite via ceramic fuel cells, the latter being endlessly sustainable; as is the free hot water that comes as an equally endless bonus.

And usually rubbished by the hopelessly ignorant; [and if the cap fits,] or those with a vested interest in the status quo, which given current outcomes, may include far too many pollies?

Even so, my principle destination for any spare investment funds, given it's nigh on impossible to lose money investing in energy, but particularly the cheapest forms!

However, and a sad day for the investing and or privatization community, (prevaricating pollies) that remains very local publicly provided thorium energy; or the aforementioned personal Waste> biogas> ceramic fuel cells> personal/household models!

And thorium power connected to very localized micro grids, is a must do, if we are to ever resuscitate our manufacturing sector; and essential, if we are to end our over reliance on the terminal mining industry!

Which arguably provides much more benefit to price gouging/tax avoiding foreigners and foreign economies than us!

Every western style economy rests on just two support pillars, energy and capital!

And in both cases we rely almost exclusively on the (nonexistent) goodwill of foreign capitalists/investors for both!?

And only possible due to self serving pollies, (twiddle dumb and twaddle dumber) who arguably put everything else ahead (including rank self interest) of the true national interest!?

Even as we move almost inexorably towards a future that sees us tenants in our own land, and totally beholden to foreigners/foreign interests, or he who must be Obeid, for our right to live and or breathe!?

And make no mistake; it just doesn't have to be that way; as opposed to the abject asinine assertions of the current crop of less than useful, (er, um, well, well it's all the opposition's fault or responsibility) endlessly prevaricating/blame shifting/do nothing pollies!?
Rhrosty.

Visionaries like Curtain and Chiefly understood that we were far too reliant on coal, so embarked on visionary alternative energy projects so large, they recreated our economy into one far larger with greater wealth/wealth creating capacity, and the numbers benefiting from it!

They understood as no pollie before or since, why you need to not only diversify, but that it becomes part of a continuing process of expansion; and as a public model; because with all its perceived flaws, it far and away, delivers the least expensive energy!

And for a while our manufacturing arm grew on the back of that lowest costing energy!

Now they're packing up, even the most high tech operations, and the brightest entrepreneurs, and heading towards the exit sign, killed off by the power bill!

And only because our own version of the tea party have gotten their decidedly dumb hands on the levers of the economy, and think they can fix things by pricing energy out of the reach of not only the masses, both huge swathes of Australian small business as well!

Must we ape Britain and force over a million families to live in the dark!



Where would we be today if visionaries like Curtain and Chiefly had been followed by an even more visionary, pragmatist Le Kwan Yu!

Arguably, there would have been no self defeating privatizations under that LEADER; but rather, more corporations/enterprises added to the (increasingly rich) nation's portfolio!

We just don't need to divest, but rather acquire; and as simple as replacing the blinkered sad sack no can do's, with can do pragmatists, with more that just one single straight jacket idea!

An economy is very much like a Cathedral; it must be built on a solid foundation by master builders, from the ground up, and with enduring cemented in properly aligned and expertly placed, symbiotic building blocks!

However, it will survive only as long as hypothetical sand castles, if it is trickled down from above, to fall where the forever fickle winds of change take it!
Rhrosty.

This push to shut down coal & oil prematurely is very dangerous.
The need to build an alternative energy regime is becoming urgent but
we need coal and oil to build the new energy regime no matter what it is.
The Energy Return on Energy Invested in coal and oil is falling with
oil the first to become uneconomic. The tight shale oil in the US was
not taken advantage of to get us building the new regime.
Solar and wind will not do the job so we have to build something else.
The ERoEI of solar and wind is just not good enough to run an economy
anything like what we now have.

Rhosty you will note has a number of suggestions, some of which are in
trial in many parts of the world and I believe the Indians are having
a go at Thorium reactors but it will all take a lot of time.
In the meantime do not cut our own throats before we get the change
done and get our new system built.

After all it doesn't matter whether global warming is real or not.
The falling ERoEI of oil and coal means that we have a limited time
to use them and we need what is left of them to do the energy rebuild.

In the 1980s and 1990s, the world imposed economic and other sanctions against the government of South Africa because of its apartheid policies. The result, after that govt fell, has been two decades of significant poverty for the vast majority of black South Africans. So the moral imperative to force the minority-rule South African govt to change to a majority-rule govt has caused untold death and suffering to ordinary black South Africans.

Today, we are being urged on moral grounds to disinvest our investments away from fossil fuel producers. To the rich, comfortable, middle class people at whom this campaign is being targeted, there are almost no downsides to their selling of shares in oil and coal companies. But look 10 or 20 years into the future when the campaign may have succeeded and most electricity will be produced by renewables.

My crystal ball tells me that only wealthy, developed countries, societies or individuals will be able to afford the higher prices needing to be charged for the production and storage of renewable energy, resulting in most of the world's poor forced to do without the cheap electricity obtained from fossil fuels. In other words, the moral imperative which motivated the disinvestment movement will consign 100s of millions of people to a continuing life of poverty.

Bernie – your crystal ball might be faulty. I would not call Vanuatu or Solomon Islands wealthy countries. Both are moving away from fossil fuels by constructing power stations fuelled by renewable and semi-renwable sources to generate all their electricity needs. In the very short term, this is costly but operating costs are very low and each country is saved millions in foreign exchange spent on importing fossil fuels.

India imports massive quantities of fossil fuels to generate electricity for its cities but is moving to curb expansion by providing solar-power electricity to villages and smaller towns for lighting, cooking and smart phones. A 750 MW solar power station is expected to be completed within 12 months and other similar schemes are underway or on the drawing-board. Again, this saves India foreign exchange whioch can be used for importing health and educaional materials and new technology.

Agnostic, Vanuatu and Solomon Islands have to import their fossil fuels at very high cost so for them to move to renewables makes sense, as it does for isolated mines and towns in Australia and other countries. But fossil fuels remain the cheapest way to produce electricity at present and, for the world's poor, they will remain attractive. India may well be saying that it's moving towards renewables but I won't hold my breath. They have 1.1 billion people to look after and will provide electricity to them in the cheapest and easiest way possible. They are developing their own coal resources much more aggressively than in the past, so on balance I think they will continue to rely more on fossil fuels than on renewables for new electricity generating capacity. Time will prove whether you or I are correct.

Solar & wind combined could not generate enough power to run the 12 volt lights on my yacht, even in the tropics, in the trade wind belt. On ocean passages of more than about 3 days, I would have to run a diesel generator to keep the navigation lights shining. Still 2 or 3 hours of light is better than none for islanders.

Vanuatu and Solomon Islands have the rainfall & the geology to give some clever people small home hydropower, by some very ingenious means, but will not run a village shop if it requires refrigeration.

To run a 20th century home, let alone a 21St century one comfortably requires mains power. Having to catch or kill that which you wish to eat tonight does get bloody tiring. City greenies would be amazed how much one can want a fresh tomato sandwich, a month after the last copra boat called, & a month before the next.

My brother in law, the engineer, just sold his great property, & bought a less great one. Why? To get the hell off a mixture of wind, solar, kerosene, gas & diesel supplying his energy needs. Grid is great is his new religion.

Some day, someone, somewhere will develop a power generation system that actually works as well as the grid does. The only thing we currently know about it is, it will not be any of the Mickey Mouse stuff greens want to jam down our throats today.

The upshot is we have no available system that using solar and wind
plus the magic box that can store electricity efficiently and not
drag the ERoEI of the system down into the useless levels.

It just does not exist yet.
The problem is that solar and wind are so poor to start with any backup
or still night system has to be very very efficient and not have any
effect on the total ERoEI, in other words it needs to be cheap and
have an ERoEI over about 30 to 50.

Until that storage is invented we are up the well known creek in a
wire net canoe.

Bazz, you ignore the power of wishful thinking!

Yes indeed, well there is so much of that about that it is obvious.