The University of California announced Wednesday that is has sold off nearly $200 million worth of holdings in coal and oil sands companies. The news comes amid concerns that investments in coal and oil sands are becoming increasingly unsustainable for its $98.2 billion fund.
The decision was announced at a meeting of the the school system's regents' investment committee. According to a transcript of the meeting, as reported by the Los Angeles Times, Jagdeep Bachher, the University of California's chief investment officer, described "sustainability issues" when discussing the university's choice to cut ties with the oil sands industry. He added that "slowing global demand, an increasingly unfavorable regulatory environment, and a high threat of substitution pose insurmountable challenges to coal mining companies." As Reuters reports, Bachher also mentioned low global oil prices factor into the school's separating from companies developing crude oil from Canadian oil sands.
"It's a very powerful statement and it's starting the shift in the right direction."
Oil sands are found primarily throughout Venezuela, the United States, Russia, and Canada. An oil sand is a naturally occurring mixture of sand, clay, minerals, water, and bitumen. It is so heavy and viscous that it cannot be pumped directly from the ground, and must instead be mined, either with strip or open pit mining, controversial practices linked to leaving behind mass amounts of toxic waste. Bitumen can also extracted through underground steam heating, though that can require enormous volumes of water from nearby river basins and water supplies. Critics of oil sands extraction argue that the process releases more greenhouse gasses than conventional oil production, and that oil sands pipelines are more prone to undetected leaks as well. It takes about two tons of tar sands to produce one barrel of oil.
Such an institutional move has the power to change national and political dialogue around fossil fuels, says Jake Soiffer, a member of Fossil Free UC and a third year undergraduate student at the University of California–Berkeley. "Divestment is our way of calling that out, of going on the offensive," Soiffer says. "It's our way of saying that we're just not going to release reports anymore saying that climate change is real, we're not just going to recycle. All of that is great, but we have to actually keep the fossil fuels in the ground to actually make any headway on climate change."
While environmentalists are hailing the news, there are no official University of California policy changes when it comes to divesting from coal or oil sands companies, meaning its Wednesday announcement may not be permanent. The university also remains invested in oil and natural gas resources.
"If the UC thinks that just by stopping coal extraction and stopping oil sands extraction we can stop climate change, then they don't understand the urgency of the problem," Soiffer says, adding that full divestment from oil and natural gas industries would be ideal. "But I think it's a very powerful statement and it's starting the shift in the right direction."
The university's decision comes on the heels of another major statewide divestment announcement. Last week, California state legislature passed a bill legally requiring the two largest public pension funds in the nation, CalPERS and CalSTRS, to divest from coal mining companies as well. CalPERS alone invests in 30 coal companies valued at nearly $167 million, according to State Senate Democratic Leader Kevin De Leon, who authored the bill. Should Governor Jerry Brown sign the bill, California would become the first state in the country requiring public pension funds to partially divest from fossil fuel holdings.
At least in California, people are finally thinking about divesting for our future.