Why are we investing in coal?

The World Wildlife Fund have today revealed that over $1 billion of New Zealanders’ pension and accident insurance money is invested in companies directly mining for coal, oil, and gas — companies who’s future profitability depends on burning fossil fuels that have to stay in the ground if we are to avoid runaway climate change.

coal fired plant

Is it ethical to be investing in and profiting from an industry that threatens the very future of our planet?

Of course not. A smarter investment of the $1 billion currently invested in dirty oil and coal can instead be invested in clean energy alternatives – alternatives like solar, geothermal, biofuel, and wind power which are good for the environment and create green jobs.

Investments in renewable energy create three times more jobs than the equivalent investment in fossil fuels and have huge export potential for New Zealand, especially in the case of geothermal power technology, or have huge import-replacing potential, in the case of biofuels.

The writing is on the wall for the coal and oil industries; its both ethical and smart to now divest from them.


23 Comments Posted

  1. Jim Salinger says that Australia electing Tony Abbott is bad news for the climate and small Pacific nations:

    And one of the reasons for this is that the Australian Carbon Tax wasn’t sold well, so it received a lot of unfair blame:

    For example, voters punished the Labour Party for high petrol prices even though the carbon tax isn’t applied to motor fuel purchases. Our Green Party should heed this lesson.


  2. “Adam Smith explained the benefits of specialisation about 240 years ago.”

    Problem is, of course, that the quite brilliant Mr Smith was writing for the world of 240 years ago. He is worth reading, but his argument that globalisation is an impossibility, in particular, marks him as being a poor guide for today’s world.

  3. At least that is if you follow the precept that we should not specialise. You will, if you follow that precept, have to give up using computers unless you construct them yourself, and that would mean building your own chips, not just assembling some already built bits.

    I can conn a ship, fly a plane, design a car, program a computer, cook a meal, swab a deck, sew my shorts, build a house and many more things besides.

    However; taking a general principle to the limit you just did is a bit ridiculous.

    My meaning should be crystal clear to anyone who is here. New Zealand is currently and for the most part, a two-commodity economy. It has sheep and it has milk. We export commodities and get back products. We build stuff all ourselves and have over the past 30 years divested ourselves of the means to build things that we consume.

    I personally have to provide the skills and production the rest of the world wants from me if I intend to be paid, but I ALSO need to NOT spend money getting things done that I CAN DO MYSELF. The more I can do the less money I spend on getting it done. Same goes for the society. It needs to export the things it can most easily produce, but it also needs to retain skills and manufacture goods for consumption here.


    Now calm down and consider whether you are a worker ant in a colony or a human being. Specialization is for insects.

    Hmmm…. probably COULD build a small airplane.

  4. “THE age of renewable energy is upon us. Within three years, the amount of electricity generated worldwide from wind, solar and hydro energy will exceed what is made using natural gas, according to the latest projections from the International Energy Agency.

    The IEA also predicts that green power will provide double the electricity of nuclear plants – and outstrip every other electricity source except coal – by 2016. If all goes well and current national energy plans come true, coal could be overtaken shortly after 2035.

    The growth in renewables isn’t yet enough to stop dangerous climate change. Green power is on the rise, but so is our appetite for energy, so new coal and gas-fired power stations are in the pipeline.

    But the good news is that renewables are the fastest growing power source. Already, they account for one-fifth of global power generation, and the IEA believes that will rise to 25 per cent by 2018. Between 2012 and 2018, renewable energy generation is predicted to increase by 40 per cent, with over a third of this growth occurring in China. Renewables are on the rise in most regions with only Russia lagging behind, says Adam Brown of the IEA in Paris, France.

    “Over the last few years there’s been a big step forward,” he says. “The technologies are well-developed and costs have come down.””

    From New Scientist. http://www.newscientist.com/article/mg21929244.500-rise-of-renewables-starts-climatechange-fightback.html?#.Ug7y5G1N65w

    Now if we swapped the present subsidies oil enjoys? such as the trillion a year, the USA spends on military operations to ensure cheap oil.

  5. bjchip.

    Do you really mean the last ridiculous sentence in your 6.15pm post?
    If so I can only assume that you will no longer be posting to this, or any other, blog.
    At least that is if you follow the precept that we should not specialise. You will, if you follow that precept, have to give up using computers unless you construct them yourself, and that would mean building your own chips, not just assembling some already built bits.
    No more travel of course, unless you are going to walk. I assume of course you don’t know how to build and aircraft, a car, or even a bicycle.
    Adam Smith explained the benefits of specialisation about 240 years ago. He is a very enjoyable read and the examples and arguments, although dated, are very easy to understand.

  6. A reasonably self-sufficient local economy is a better idea than globalization. I don’t insist that we make everything, but we have to make enough of what WE consume to be able to live without some of those “major trading partners”. In part for the very reason you sort of cited.

    They are relying on unsustainable energy sources.

    This cannot continue. One way or another the crutch they are leaning on will break, either as warming consequences come home or as the availability of the resource reaches some critical limit. When that happens they WILL collapse.

    What happens to the NZ economy then? Specialization is for INSECTS, not for humans, and certainly not for national economies.


  7. BJ – I haven’t actually studied windflow a great deal, except to say if I choosing a country to start up a company to manufacture wind turbines for the world, few countries in the world would have more disadvantages than NZ.

    If you sink coal mining, you effectively sink China – it runs on the stuff (obviously I’m talking on a world-wide basis here) And if you sink China, you’ll make the global financial crisis look like small change compared to the global damage you’d do to manufacturing and every other sector.

    BJ says “I’d also make it policy to buy local where possible and reasonable, and the government would go back into the power generation business…”

    But in your world it was reasonable buy from Hillside to get wagon contracts, even though
    1/ it was a MILLION dollars subsidy PER worker to keep their job, only in the short term
    2/ they couldn’t complete the contract in the time frame needed.
    3/ they weren’t even second in the preferred tenders, or third or fourth or fifth – they were sixth.

    My business policy is to buy local as long as I don’t have to pay more than 10% higher prices.

    But it’s a quick way to become totally uncompetitive and go bust if you start paying 50% more than your competitors for a large amount of your supplies.

    And finally, the government ARE still in the power generation business. Even after all the asset sales go though, they’ll still own over half of Mighty River, Genesis, Meridian, and own shares in Contact and Trustpower.

  8. Photonz, I would go with Windflow, and that is pretty cheap for a share of it, but my other points about making money from money always apply. Always remember Photonz, that the money divested from Coal would be followed by (if I were running this) a Tax on Carbon that’d sink the coal market into a hole deeper than any failed mine.

    I’d also make it policy to buy local where possible and reasonable, and the government would go back into the power generation business… then the basis of our monetary system would change… and then I wouldn’t own shares in anything any more.

  9. When will the Greens stop banging on about ‘climate change’ and get onto more substantive environmental issues? The world is not warming, CO2 emissions are up, the Arctic is not melting and none of the other catastrophes predicted by those beloved of scaring the public are happening either. You ask for ‘action on climate change’ but never define what this is to be or what effect on the climate such action will have. This scam has the power to taint all who subscribe to it so the sooner you get over it the better.

    The public no longer believe the scare campaign – as Dr Judith Curry, an atmospheric scientist at Georgia Tech in the US, says: ‘What rational people are able to to do is to identify BS. Overconfidence, failure to present evidence that does not support your thesis, dismissal of skeptics and skeptical arguments, appeal to consensus, advocacy, etc. all can act to trigger someone’s BS detector. Its about trust; without trust, expertise does not equal credibility.’

  10. and the investment and value proposition can’t be right until the understanding of the negative value of the coal is improved

    Whilst not disagreeing with the sentiment, there is no real way to do this; the positive value of coal (and oil, and gas) use is measured in apples, and the negative value is in oranges, and there is no exchange where apples and oranges can be traded.

    That’s when clever thinkers try to game the apple marketplace, usually by imagining some trade-able value for oranges expressed in apples. Or by governments giving away free apples, apples they have taken off the people.

    The problem is that the whole mess is dishonest, and like all lies, eventually the truth will out. And then the mess has to be unwound. And that is what is happening now. For example, the solar industry was a lie based on subsidies. ETS is seen as having a bad impact on business. In the world in which we live, where we see “the free market” as generally being a good thing, these gaming techniques are clearly wrong.

    But even if we put that clock back today, and dump all the stupidity, we are still left with an oranges problem, one to which we have no realistic solution. And we know that one day we will be overwhelmed with oranges.

    Whereas we cant do much about the supply end of the problem, there is good news at the demand end; we are more energy efficient than we once were, and continue to improve in this respect year on year.

  11. Trevor says “:Russel wasn’t suggesting investing in green tech start-up companies.”

    The New Energy fund I was talking about has it’s biggest stakes in companies like Johnson Contols Inc which has 170,000 employees and has been into green tech for, wait for it…… 125 years.


    It’s largest stake in is Novozymes – a biotech company that started in 1920, second largest in Nextera Energy – a renewable energy company started in 1925, and third largest in Johnson Controls mentioned earlier.

  12. BJ says “If I had some coin to spare I’d put a chunk into our local wind generator company, ”

    Which one?

    The one whose shares have plummeted over 90% from more than $1.00 down to 7 cents, (NZ Windfarms)OR
    the one whose shares have plummeted over 90% from over $3.00 down to 20 cents? (Windflow Technology).

  13. The other reason that subsidies for renewable generation in the EU are being cut back is that the EU isn’t really a good place for much of the renewable generation. Wind farms there have capacity factors around 30%. In New Zealand, they are over 40% because we simply have more wind. Even in the land of the long white cloud, we tend to have more solar insolation than most of Europe too, partly because we are nearer the equator. And we have more geothermal resources than most of Europe too.

    We should use these resources more.


  14. Investing in companies that design and build wind turbines isn’t necessarily going to result in a large return. However that doesn’t mean that wind turbines aren’t profitable. Most of our power generation companies are investing or at least looking at investing in their own wind turbines, because the real return on wind turbines comes from selling the electricity generated by them over a long period or time – at least a decade. The same also applies to solar power, geothermal power and other renewable energy resources.

    Russel wasn’t suggesting investing in green tech start-up companies.


  15. If I had some coin to spare I’d put a chunk into our local wind generator company, but we as a nation aren’t doing a good job at this. Not even vaguely related to the needs we actually have.

    Right now the money is in the extraction industries, and they are keeping hold of it as long as they can. National is happy to serve them but they know that any government that includes Greens won’t be, and that is one of the reasons they foster so many lies about us.

  16. Which is why the carbon tax comes AFTER the divesting.

    Y’all not familiar with Willie Sutton’s apocryphal remark that he robbed banks “because that’s where the money is”.


    Willie himself claims he never said it, but the saying is worth its weight.

    ,,,and the investment and value proposition can’t be right until the understanding of the negative value of the coal is improved.


  17. Perhaps the answer to the lack of investment in Green Technology is answered here


    Two weeks ago, the Czech government decided to end all subsidies for new renewable energy projects at the end of this year. “The reason for this law amendment is the rising financial burden for electricity consumers,” Prime Minister Jiri Rusnok said. “It threatens the competitiveness of our industry and raises consumers’ uncertainty about power prices.” In recent years, almost all EU member states also have begun the process of rolling back and cutting green subsidies.


    Europe’s manufacturers are rapidly losing ground to international competition. Instead of putting money into the energy-expensive EU, investors are pouring money into the US, where energy prices have fallen to one-third of those in the EU, thanks to the shale gas revolution.

    my emphasis added


    Europe’s strategy was founded on two fears: first, that global warming was an urgent threat that needed to be prevented imminently and at all costs; and second, that the world was running out of fossil fuels, which meant oil and gas would become ever more expensive. Both conjectures, however, turned out to be wrong.

    The result of a fear-driven gamble with the Continent’s industrial future is a costly shambles that threatens to undercut Europe’s economic and political position in a world that is sensibly refusing to follow its lead.

    Well worth an educational read in full.

  18. Oh – and if green tech is the smart investment you say it is, how come it seems that not a single Green MP has shares in a green tech company,
    (despite your six figures salaries putting you all in the most well paid 1% of Kiwis).

  19. Russel says “A smarter investment of the $1 billion currently invested in dirty oil and coal can instead be invested in clean energy alternatives….”

    1/ This figure is misleading. In fact it’s outright wrong.

    That’s because to get the $1b figure, WWF have added the total investment value in companies, even if coal is only a tiny part of their business (which is the case in some of the biggest investments).

    2/ A smarter investment??? Perhaps if you want everyone to LOSE money.

    To get an idea of how global green tech companies are doing, have a look at BlackRock New Energy – a fund that includes dozens of the worlds leading green tech companies across around 20 countries.

    These companies would have to double in value just to get back to the value they were at years ago.

    Similarly if you’d invested in NZs top green tech companies when they issued shares, you’d have lost ALMOST ALL (around 90%) of your money by now – i.e. Windflow technology, NZ Wind Farms, Energy Mad.

    The problem with investing in green tech is R&D is very expensive, so it takes years of sales to break even, but many products are obsolete before that.

  20. Why?
    Because they can then kidnapp the whole country…
    and because, my guess is probably Key’s mates and family have shares for those wonderful companies.
    I am so in disbelief (again) how this govt can get away with killing NZ by systematically bankcruping our economy and murdering our environment…

  21. The question is here:

    I’m not sure where the response is, that bjchip is referring to.

    I think that return matters, as well as jobs.

    If there will ever be effective action on climate change, then the fossil fuel companies are over-valued (modulo the coal companies which are already going broke because of the China slowdown), because they are sitting on stranded assets.

    Wind turbines have turned out to be much harder than they might have been, because of NZ’s semi-broken electricity market, and I have not yet had a return that fully repays my investment in them.

  22. It WOULD be good to divest and THEN put in the Carbon Tax that kicks the value of the investment into a proper perspective, rather than the other way around. 😉

    As to why they invest there now?

    Willie Sutton’s supposed answer as to why he robbed banks is instructive.

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