Will New York divest from coal before New Zealand does?

New York City is going the way of California, Vermont, Massachusetts, and Connecticut by moving to divest from coal and reconsidering its investments in oil and gas.

New York City Mayor Bill de Blasio this week called on his city’s $160 billion pension fund to divest from coal. Divesting from coal posed little risk to the fund’s returns, his office said.

Earlier this month, California passed a new law that requires the state’s pension funds to sell their investments in coal companies. The state of Massachusetts has introduced a bill that goes a step further, divesting from all fossil fuel companies, including those involved in oil and gas, within five years.

The Green Party has a similar divestment bill set to be debated in Parliament in November. The Climate Change (Divestment from Fossil Fuels) Bill will, if passed, direct the managers of public funds like the Superannuation Fund and ACC Fund to divest from companies directly involved in the exploration, mining, and production of fossil fuels within five years.

The main argument to divest from fossil fuels is ethical – it’s the right thing to do if we want to live in a world with a habitable climate. However, the economics of coal has also been changing dramatically. In the USA for example, the Dow Jones coal sector index is down 76 percent in the last five years, compared to the Down Jones Industrial Average which grew 69 percent over the same period.

A deadly industry is becoming more and more financially risky; it’s time our Government woke up to it.

– James

9 Comments Posted

  1. Embedded storage is more effective than embedded generation at reducing the risk of blackouts under fault conditions because it can be on-line and “up to speed” continuously at little cost whereas embedded generation using non-renewable resources consumes those resources to stay on-line. A combination is even better, with the storage able to meet the immediate load requirements after a fault while the embedded generation fires up and comes on line to take over.

    I am fully aware of the need to avoid relying on non-dispatchable renewables. However in the short term they are useful for reducing the amount of fossil fuels needed for generation and to keep the water in the hydro lakes. Eventually the oil and gas will run out and if we are still dependent on oil and gas then blackouts will be a certainty, not a risk. We need to learn how to integrate the renewables and manage the risks through techniques such as demand side management and storage.

    New Zealand is well placed to lead the way with our range of renewable resources and good hydro storage.

    Trevor.

  2. Trevor Please read the history of blackouts in New York. Large load centres need embedded generation to minimise the risk. Your “solution” would condemn them to repeat the unreliability. Relying on non-dispatchable renewables compounds the risk.

  3. New York (state) and Massachusetts are not ideally placed for renewables. The solar resource is lower than in the south and western states, and the geothermal resources available are low temperature. I haven’t looked into their wind resources but I would expect a reasonable off-shore wind potential. The really big rivers are further north, so it isn’t surprising that they import hydro electricity. They COULD generate all their electricity from renewable resources but it would be more expensive than in those states with more renewable resources. The most cost-effective way to power these states from renewable resources may involve long transmission lines from states with cheaper to harness resources as well as local wind and solar generation.

    Trevor.

  4. James Shaw is new to the political game and he would do well not to fall into the same mistakes that Gareth Hughes makes with wild assumptions and no fact checking (remember the undersea vacuum mining ban in Namibia, among others?) . James is going to get is reputation shot down, with wild assertions and no research to backup the claims, before he can make a mark in Parliament and as a Greens leader of some positive repute.

    Lets see about Massachusetts. Sure they are trying (has the bill passed?) to divest out of fossil fuel company ownership.

    But, but, but. They are 80% reliant on fossil fuel for electricity generation plus 30% reliant on oil for home heating (there is a large conversion and expansion project underway to LNG so the total could well be higher). Of the non fossil fuel 20% generated electricity, 5% is nuclear, leaving just 15% from sustainable renewable resources. They also hide other resources for supply as the third largest electricity supplier is imported electricity under the heading “Net Interstate Flow Of Electricity”. Who knows what resources are used to generate that electricity (coal, nuclear, gas, oil, wind, hydro?)

    http://www.eia.gov/state/?sid=MA

    Now when we look at all these fancy divestment bills (are any yet enacted? – cant find one) they have a interesting clause added

    Once the phase-out of fossil fuel stocks begins, if the total pension funds’ earning drops by even 0.5 percent of their original value, divestment will stop.

    http://insideclimatenews.org/news/11062015/mass-lawmakers-propose-5-billion-pension-fund-cleansing-divestment-oil-coal-gas

    So if the federal pension fund managers cannot find investment to equal to the fossil fuel companies rate of return then no divestment. These divestment bills are then nothing but the liberals hedging their bets by using the old smoke and mirrors trick.

    Oh, look over here, we are doing something, but don’t look over there for you still want a pension and we cannot risk your pension fund by not investing in the best returning public companies.

  5. Gerrit
    It is more hypocritical than you wrote. According to the US EIA, most of Ney York’s electricity comes from Natural gas, mainly supplied by fraccing from Pennsylvania. So despite there being a ban on doing it in NY, they are quite happy to use the stuff as long as it isn’t theirs NIMBY? And because so much power is NG, all those power stations have to be able to burn fuel oil, so that consumption is about half that of coal’s.
    Coal has gone out of favour because fracced gas is so cheap, not because of renewables. There is no significant steel production in the state so no great demand for non-electricity use. Most of their renewables are hydro, dominated by Niagara Falls which first generated over 100 years ago.
    Oh, their power price is about 50% more than the US average so there is a price to pay for their policies.

  6. Divesting from coal posed little risk to the fund’s returns, his office said

    Given whats happened to the coal price over the last few years (Solid Energy, anyone?), its hardly surprising there is little downside from junking this commodity.

    There is still much re-balancing of supply and demand in the coal industry to go,

  7. There is a bit missing in that message. Sure coal accounts for only 14% of the total New York State electricity supply and zero for New York city.

    But, but, but, Fossil fuel usage for electricity is a staggering 97% for New York city and 67% for New York state.

    http://www.nyiso.com/public/about_nyiso/importance_of_reliability/powering_new_york/index.jsp

    So New York getting rid of fossil fuels to generate electricity?

    Nah. No matter how liberal a New Yorker might be, they are still apron string tied to fossil fuels.

    The decision to divest the coal company shares the state or the city has makes sense for it has no dependency upon it.

    New York state is 14% dependent upon nuclear power and as such the possible change of investment to nuclear power companies would make perfect sense.

    So please do some fact checking before sounding the trumpet, New York state or city is no model for sustainable and renewable electricity generation. Still at 34% (including nuclear) non fossil fuel for the state is progress but take the nuclear option out as per Green’s wants, it would be 80% reliant on fossil fuels.

    And as for New York city? Basket case for using fossil fuels.

  8. As a “New York Liberal” I’d actually expect this result. New York is not so naturally conservative in its politics as the Wall Street mob and banksters, might fool us into thinking.

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