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About this blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and we lived for nearly 30 years in the Duveneck school area. Our children went to Paly. We moved ...  (More)

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Letter to Council: Finding Common Ground on Addressing Climate Change

Uploaded: Feb 6, 2015
I appreciate and share the concern of councilmembers Berman, Burt, Holman and Kniss and of the faith leaders with respect to the importance of vigorously addressing climate change.

I have been trying to find a way to address their concerns with my conviction that Divestment is not an effective response.

I propose the following for everyone's consideration.

The focus of the resolution be shifted from Divesting in fossil fuel companies to INvesting in companies pursuing alternatives, all within prudent financial analysis and that the city public employees be surveyed for their preferences since it is their retirement funds we are discussing.

I know that emotions are high around these issues as evidenced by some strong language about the motives of fossil fuel companies and their investors including city employees and all of us who have mutual/index funds with these companies included.

I share three concerns not yet given a lot of attention and ask the faith leaders to consider them in good faith.

My largest concern is that limiting domestic oil production or oil production controlled by stock companies will shift the power over world oil production to governments in countries like Saudi Arabia, Iran, Iraq, Venezuela, Russia and Libya.

These countries have poor records on human rights, freedom and empowerment of women and I would have thought faith based organizations would be displeased with ceding economic power to such regimes.

There are also economic (think our improving trade position) and national security reasons (think of our increasing independence from needing oil from these countries) for preferring domestic production (which can be regulated) WHILE WE WORK TO REDUCE FOSSIL FUEL DEPENDENCE.

I find the Divestment debate divisive while I believe the INvestment in alternatives approach would bring people together.


 +  Like this comment
Posted by curmudgeon, a resident of Downtown North,
on Feb 6, 2015 at 3:08 pm

"My largest concern is that limiting domestic oil production or oil production controlled by stock companies will shift the power over world oil production to governments in countries like Saudi Arabia, Iran, Iraq, Venezuela and Libya."

I concur. That's where the power has been for decades, and is right now. Those producers are waging economic warfare on our relatively expensive domestic shale oil production capability by keeping world oil prices low in order to kill our industry, re-establish their monopoly, and teach us upstarts a lesson.

 +  Like this comment
Posted by bill hilton, a resident of another community,
on Feb 6, 2015 at 5:02 pm

Should anyone invest now in costly oil shale production, they're likely lose big time until many of the drilling/producing companies go belly up and/or are acquired by the likes of Exxon and Chevron.

 +  Like this comment
Posted by stephen levy, a resident of University South,
on Feb 7, 2015 at 1:16 pm

stephen levy is a registered user.

How about having a study session on the divestment issue? There seem to be voices on both sides and a lot of emotion.

It could be at 6 pm rather than late at night when this agenda item will come up Monday if at all. Council often has study sessions on topics of interest and is having one Monday on train noise, which is one reason I think the divestment memo will come up very late if at all and certainly not at a convenient time for calm discussion.

Perhaps this is what the council members offering the memo have in mind, just as the council members in favor of increasing the minimum wage want to study the issue before taking action.

If that happened it would be helpful I think if the discussion focused on divestment pluses and minuses, not whether climate change is real (I think it is) and not offering stock advice to the council as some posters have chosen to do.

 +  Like this comment
Posted by Divest or Die, a resident of another community,
on Feb 7, 2015 at 3:04 pm

Hi Steve,

I'm really glad you are continuing this conversation, though I disagree with your current views that:
1)divestment doesn't work
2)forcing divestment is immoral

Please clarify if I've misunderstood your basic positions.

I very much appreciate the concept of fiduciary responsibility (I don't think that it is a holistically positive model, but that it is the current structure of much of our economy). Like a corporation (corporate person), the bottom line profits for share holders is primary, everything else, including following laws and the opinions of the larger society are secondary, and only followed if profitable. This of course shows that there is an inherent amorality tied up in this debate.

Fine, many feel Laissez-faire is the only moral compass that should guide society. I disagree strongly, and think you may be somewhere in between. Extreme capitalism is great for those with capital. But history tells us that eventually its proponents lose as the dominant opinion when things fall apart, and then more socialistic ethos gain the mainstream dominance, and cyclically corporate interests gain again like a pendulum. Well the New Deal has now waned to the point of near collapse, with the hyper wealthy nearing their peak again. Being rich in a poor world eventually undermines itself.

So while you may now find it hard to comprehend the justice of limiting investments based on morality, perhaps this new generation will think that is a central requirement. No problem. Culture changes, and then the laws change.

But to argue that divestment doesn't is where I have a great disagreement. It does work, and is working. But before I make my case, let me ask you:

IF it was shown that divestment DOES work, would you then support it?

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Posted by stephen levy, a resident of University South,
on Feb 7, 2015 at 3:22 pm

stephen levy is a registered user.

Hi Divest or Die,

My position is a little more nuanced that your characterization but I am betting that if we sat down, we could find agreement on many issues.

Instead of divestment doesn't work (whatever "work" means) I am saying it has marginal effect on finding energy alternatives and is not needed to do so.

So I would be interested in what you mean by "work"--i.e.

Get oil companies to reduce production?

Injure their financial status?

Get them to invest in alternatives (instead of say Elon Musk)?

I do not say divesting is immoral. I do say there are moral concerns about divestment.

I certainly have no problem as I have said with personal investment choices even if I think the impacts could be negative. I am not the master of other people's investment decisions.

I do think this discussion has wandered from the best approach to address climate change to people's feelings about private companies and capitalism.

But the fact remains that most production and consumption decisions will be made in the developing world where stock ownership plays a minor role if any. Think China, India and the Middle East. I applaud the President's reaching out to China re climate change action.

I am happy to talk more but find it hard to believe there are not more effective and less contentious approaches to reducing fossil fuel use than divestment of stock.

But please elaborate on what the intent of divestment is--what does "it works" mean.

And I realize you do not live in PA (fine for the blog) but I am trying to get a calm discussion here and have suggested a study session. If you lived here, would you be up to meet in that venue and carry on our discussion?

 +   1 person likes this
Posted by Charles, a resident of Southgate,
on Feb 7, 2015 at 3:32 pm

Steve, as long as you avoid Gen IV nuclear, you are ducking the solutions. Divestment schemes are a red herrings, designed to avoid reality. You need to come up to speed on nuclear energy for electricity production.

 +  Like this comment
Posted by Fran, a resident of another community,
on Feb 8, 2015 at 5:24 am

If we do ramp up nuclear it should be in fusion, not fission.

 +   1 person likes this
Posted by Charles, a resident of Southgate,
on Feb 8, 2015 at 12:34 pm

The newer versions of fission nuclear solve many of the previous problems. We don't need to wait for fusion. We need to look to new technologies to help us with environmental problems. Solar will be part of it, but only nuclear can make a big punch now.

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Posted by Steve Levy, a Palo Alto Online blogger,
on Feb 8, 2015 at 9:37 pm

Steve Levy is a registered user.

Bills are being introduced this week in the state legislature to provide incentives for greater reduction in GHG emissions.

One of the several bills asks CalPERS to divest coal (not oil) company stocks--they represent 0.6% of the portfolio. The senate leader acknowledged that there would be a lively debate on this proposal.

My concerns as stated above are with divesting oil company stocks because I do not see that it is needed or particularly helpful to further investment in alternatives.

And I do see harm from such a move. Apart from ceding more control of world oil production to governments with bad human rights records, it seems like such a move might prompt a "thank you" from Putin and the Supreme Leader in Iran for helping their economies out of the current economic stress that I thought was in America's interest.

I think the divestment proposal is worthy of some extended careful discussion at a time convenient for both council and residents (and I am interested in hearing from the city employees).

 +   3 people like this
Posted by Divest or Die, a resident of another community,
on Feb 9, 2015 at 12:27 am

Steve, I?ll write further below but first I just like to lead with things I believe are a priority to share, hopeful and positive news items this week:

Clean energy investments increase 5-fold to $310b over 10 years, 16% in 2014
Web Link

Norway Divests most fossil fuels
Web Link

Also, an older (2013) but shorter version (13 minutes):
Stanford plan for 100% Wind Water and Solar for all global energy needs by 2030-2050
Web Link

Just so you know my assumed present position; my hopes:
? 2015 sees the start of a rapid ?run on the bank? of reinvestment of the $600B currently used to find new fossil fuels in the context of a carbon constrained world. We can only burn about 500 gigatons out of the 2500+ of known reserves and we never will burn it all; making these stranded assets and therefor lost investments, the scary status quo would have us burn through that budget in 15 years).
? 100% of all new global energy capacity is from wind and solar before 2020, after annual global clean energy investments raise from $310B (2014) to $1T. In 2014, 53% of new US electric generating capacity was wind and solar (although because solar and wind have production time averages of 20% and 35%, their contribution is only ~25% of actual output).
? Rapid electrification of transportation including electrolytic hydrogen for the remaining combustion needs (jets, some industry).
? This will have an immediately positive economic feedback due to immediate improvements in air quality, health care costs, work productivity, societal mood, etc.
? Investments accelerate as the economic no-brainer of dropping fossil fuels in favor of wind, solar and efficiency overcome politics, bringing us to 80% transition over 15 years (2030) and 100% before 2050.
? The best and least damaging geo-engineering may be needed. Sufficient energy resources could provide for machines that suck CO2 out of the air compressed into plastic bricks allowing us to avoid the cataclysmic methane pulse that would likely kill our species.

 +   5 people like this
Posted by Divest or Die, a resident of another community,
on Feb 9, 2015 at 2:12 am

Thanks Steve.

I would be honored to join you in any personal/ public discussion, debate, or brainstorming session; though I live in a neighboring county, so up to you. I agree non-violent communication is needed. I?ll just say that calm is not always an appropriate constraint in a debate, and since first weeping from my deepening understanding of the threat before us, I can only do my best to awaken others? emotions. Again, I am grateful you have twice in a row written on this topic, and I am happy to add to the energy of the discussion.

I am convinced that the investors and managers of CALpers and many other significant entities/establishments will sense not only the science and economics quickly, but their personal role in leadership positions.

Due to the delay in our civilization?s recognition of the seriousness of the issue, we are now entering a stage of rapid approach towards irreversible runaway global warming. Melting of the Arctic sea and land ice, darkening the land and water, absorbing even more heat that normally would reflect back into space, is underway. Estimates are for an ice free summer 2-15 years from now. This will accelerate the thawing and melting of up to trillions of tons of methane frozen under the Arctic sea shelf and within the tundra. When a large enough fraction of this total enters the atmosphere, there?s nothing we can do in reductions that would be more than the methane released, raising the average global temperature perhaps 20 degrees Fahrenheit over decades, not centuries.

If industrial systems breakdown quickly, the 400+ nuclear energy reactors around the world become endangered of melting down, making life for large and complex animals like ?wise? humans unlikely. Even the hyper wealthy and top government planners would have trouble in this scenario, though they must somehow plan for it. Wall Street is finally sobering up to the problem that extinction is bad for business, and is also rapidly switching to wind and solar. The poor will suffer most first, and then the less poor.

There is hope this will radically shift this year. All 600+ billion dollars that is currently invested in the search for new fossil fuels reserves should switch to safe energy (wind, water, solar, using electricity for everything besides hydrogen for some combustion, like jets and some industrial processes). As I mentioned, $310 billion was invested in these technologies last year, $150B into solar, $100B into wind, $40B into system efficiencies like storage and smart grids. One trillion per year is what the Ceres Fund estimates as needed to remain under 3.6 degrees Fahrenheit (2 degrees Celsius) of warming.

There are now enough actual consequences of fossil fuel pollution to overcome the improper and immoral incentives of discounting externalizations (healthcare from pollution costs ~3% of the US GDP).

And thankfully there is now undeniably cost effective technology enough to solve most of this problem.

Just as whistle blowers in business or government, churches have a moral duty to speak out, as do students, as do consumers, as do investors, as do all citizens, and all people. This is everyone?s concern. And people should be ashamed to profit from something that hurts others, and that hurts all. It?s unholy and shows an ignorance of the golden rule, and a willful misbelief that there is no karma for our thoughts, words and deeds.

I?m glad you are greatly concerned enough to speak with conviction, but I am frightened by the many comments in this blog that dismiss the urgency, or advocate policies of further harmful energy systems. We really might blow it, and already everyday species go extinct and ecosystems are dying. A healthier world is possible, but unlikely unless people pitch in sufficient numbers and effort.

?There is such a thing as being too late?. We have so little time, and Armageddon is a possible death wish within the human psyche. There is a cruel spirit in the destruction of life and the supports of life; a death culture afraid of itself and in embarrassed denial.

I do cry and I do pray, and I hope all people have happier lives. How can there be faith, when we see ourselves as separate from each other? A near emptiness of compassion for future generations is reflected in the bottom lines of the corporate obligations to profit. Average workers are pulled into this tragedy through desperation for jobs regardless of their sustainability, let alone their morality. These are the forces that deceive about the crises they create, that fool others they are heroes, when they are heartless.

We shouldn?t invest, or be silent when others invest, in the unnecessary ruin of our grandchildren?s world. What else really matters as much as leaving a better world for others? You can?t take it with you. And leaving a pile of wealth is a cruel and meaningless substitution for a livable planet.

Luckily, the people are changing. I hope we do it fast enough.

 +   2 people like this
Posted by resident 1, a resident of Adobe-Meadows,
on Feb 9, 2015 at 8:42 am

Steve - thank you for postings on this topic.

Anyone who is following the OIL business will note that the oil companies in other countries - which we have no control over - are heavy players here.
They tend to have less control over events in their countries - note today in the WSJ - 'Kurdistan Oil Earnings Prove Elusive" - Islamic State Militants tend to get in the way of smooth operations. Kurdistan is sitting on a large amount of oil - on land - which is far more accessible than the Norwegian off -shore oil fields which are at this time played out.

Canada and Mexico have large oil companies that are not on the US stock exchange for American companies. British companies control a huge amount of resources in Europe.

The American companies on the stock exchange that are being targeted are the most efficient and technologically responsible and spend the most on research and development to upgrade their processes. It is the foreign, private companies and private, wild-cat type companies that fall under the radar and cause the most problems.

I have to question the educational and vocational background of church leaders to wade into this topic. Sorry - no confidence in their technical background to make good decisions with other people's money. I also question why they think they have a moral imperative that is greater than everyone else who is already invested in these activities. They are not in their wheel house regarding the every day situations at the technical level.

Jerry Brown is under fire for expediting permits for fracking in an area where HSR will be initiated so we can assume that the under ground financing for HSR gets integrated into the fracking business of private wild-cat companies. Jerry does not have a technical educational background which gets in the way of water issues.

I am not a fan of coal - China has horrendous problems in that area and appear to have little desire to modify their energy goals. But that is China.

Anyone who follows the energy issues understand that all attempts are being made to develop better forms of energy production. Those are emerging markets which will be focused on as they produce good results. You have to have a workable product to take over the energy functions. The vision starts you off but it takes a lot of resources and knowledge to produce results. Russia and Japan have had big issues concerning nuclear which have proved problematical for them, as well as for us as the Japanese nuclear disaster is flowing in to us in measureable quantities on the west coast.

There is a lot of work being done, a lot of improvements being accomplished but targeting American Companies on the US stock exchange serves no purpose, and in fact debilitates the US contribution to developing cleaner fuels.

 +   1 person likes this
Posted by resident 1, a resident of Adobe-Meadows,
on Feb 9, 2015 at 10:25 am

On the topic of divestment the PCUSA divested HP, Motorola, and Caterpillar in 2014 at their General Assembly - that is on their web page. The divestment was due to some issue with the Israeli - Palestine actions they did not agree with.

Let it be noted that any corporation that does business with the US Government - which they do - goes no where in a sensitive foreign situation without the approval of the US Government and State Department - from which the export licenses are approved.

Given the timing that would have been under Ms. Clinton's watch. So - if you all did not care for that action than blame Ms Clinton - she approved it. Also the government agencies associated with that conflict. You can discount her for the Democratic Presidential election - that is divestment at its highest form.

That gets you back to the educational and vocational knowledge base of the people who are making these calls. There is no depth of knowledge on these topics from which they are working.

 +   9 people like this
Posted by Investment = Not Divesting, a resident of Old Mountain View,
on Feb 12, 2015 at 10:15 am

The arguments against divestment are hilariously wrong:

1) "Removing companies whose main revenue streams are based on the production of fossil fuels will significantly damage the portfolios of CalPERS."

Really??? Are you an investment professional??? Sorry, not just a professional, but a competent one? Obviously not. Competent analysts in the financial sector could certainly build a portfolio that would mimic the performance of the fossil fuel stocks to an extremely close degree. (Using gold is one simplistic example, which tends to track oil prices.)

2) "Oil companies are doing everything they can to build alternative energy solutions."

Again, this is complete business. They are doing EVERYTHING??? If that were so, then why do they produce dividends for their shareholders, rather than piling that money back into R&D? Here is an article that discusses the rapidly declining investment by oil companies into clean alternatives:

Web Link

It seems that these companies only invested in clean alternatives when they were extremely flush with cash AND they received big tax credits. In other words, for every dollar they invested, they wanted most of that dollar back from the tax paying public!!! So, who is paying for this anyway? Not the oil companies...but us! There are other reasons outlined in the article.

3) "Divesting from oil companies would hurt them and prevent them from discovering cleaner alternatives".

Well, as we learned from point #2, they only research alternatives when it is zero cost to them or it is going to be highly profitable. (As solar cells came down in price, they got out of the solar market--not enough profit! They prefer highly profitable near-monopolies.)

However, if it is true that divestment would hurt oil companies, then it would follow that investment in oil companies would HELP THEM!!! So, another way to look at this is people who are against divestment are actually arguing for us to SUPPORT FOSSIL FUEL COMPANIES! Why the heck would we do that? We should be providing MASSIVE SUPPORT for alternative energy solutions, but most of our support goes to fossil fuels. That makes absolutely no sense.

4) "Sure, fossil fuel companies are damaging our environment, but if we divest, then they will be controlled by foreign countries, who aren't as environmentally sound as we are."

Wow. What an apologist viewpoint. That's like saying we should employ $1.00/hour children in our remaining factories making shoes. (Bring back sweatshops.) You see, by making these practices illegal, we are allowing these shops to flourish in other countries where there are fewer safety regulations. By bringing back sweatshops to America, it will hurt overseas operations. Ridiculous argument, right? Well, that's what the anti-divestment people are arguing.

(Similar arguments might include those made by the southern plantation owners who were opposed to the abolition of slavery, but we know that argument would be censored, so nevermind.)

Now that we have demonstrated the fallacies by the anti-divestment crowd, hopefully CalPERS will do the right thing and DIVEST!

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