Getting a grip on fossil fuels
It’s a well-known fact^ that when you squeeze a piece of coal as tight as you can it could turn into a diamond. So what happens when you take a dead plant and squeeze really tight? You get fossil fuels…in a manner of speaking.
Fossil fuels such as coal, oil (petrol) and natural gas are formed over long periods of time from organic matter like plankton, plants and other life forms. Over time, sand, sediment and rock buried the organic matter and it eventually formed large quantities of fuels.*
What’s all the fuss about?
Fossil fuels aren’t a problem (its byproducts on the other hand…)
When you drive your car, switch on a gas heater or turn on a light, energy is being produced from the burning of fossil fuels. Fossil fuels power our cities, homes and lives. But the hidden by-products are certain gases labeled as greenhouse gases (cue dramatic music). Excessive greenhouse gases from man-made sources have the potential to change the earth’s climate dramatically, contributing to what is known as the greenhouse effect.
The Intergovernmental Panel on Climate Change (IPCC), under the auspice of the United Nations, has predicted that the most likely impacts of climate change (if nothing changes) include:**
• Risk of death, injury, ill-health, or disrupted livelihoods in low-lying coastal zones and small small islands, due to storm surges, coastal flooding, and sea-level rise
• Risk of severe ill-health and disrupted livelihoods for large urban populations due to inland flooding in some regions
• Systemic risks due to extreme weather events leading to breakdown of infrastructure networks and critical services such as electricity, water supply, health and emergency services
• Risk of mortality during periods of extreme heat, particularly for vulnerable urban populations and those working outdoors in urban or rural areas
• Risk of food insecurity and the breakdown of food systems linked to warming, drought, flooding, and precipitation variability and extremes, particularly for poorer populations in urban and rural settings
Fossil fuels aren’t the solution (they used to be)
The industrial revolution of the 18th century not only brought forth technological advancement, but marked the beginning of our dependence on fossil fuels. Since then, technology has grown, and now in the 21st century, alternative forms of energy are emerging to rival the dominance of fossil fuels. While no one resource will ever be likely to replace fossil fuels, a competitive energy market will likely reduce its market dominance – and financial value.
Not only is burning fossil fuels linked to man-made climate change, it’s also an 18th century technology, still dominant in a 21st century world (for now).
Does Christian Super invest in it?
Fossil fuels, like alcohol and tobacco, are not inherently evil, but in the context of their production and consumption, they can either have a positive or negative affect on society. Greenhouse gases aren’t inherently evil either, but their existence in excess can harm our planet.
As such, Christian Super has chosen to avoid investment in companies earning more than 20% of their revenue from activities associated with the highest levels of greenhouse gas emission. This includes:
• Mining thermal coal
• Exploration and development of oil sands
• Liquefaction of coal
• Exploration and development of oil shale (not to be confused with shale oil or shale gas)
• Brown coal (or lignite) fired power generation
Christian Super will continue to monitor and revise this position to ensure that the types of activities and fossil fuels covered by the summary position keep pace with technological and environmental developments. When cleaner fuel sources and methods of energy production emerge, the position will be adjusted accordingly. At the same time the Fund will also review the 20% revenue threshold, to ensure appropriateness, with a view to reducing it towards 10%.
This position is available here
Why or why not?
While there is definitely a need for more clarity around the issue of climate change, the scientific evidence is pointing more and more to a causal link between man-made greenhouse gases emissions and climate change. As such, solutions must be realised at every level of society, from government and business, to individuals, and yes superannuation funds.
Our society will always need energy and energy is essential to alleviating poverty. However while the combustion of fossil fuels has served us well in the past, it will unlikely continue serving us in the same capacity into the future. Climate change doesn’t just present an ethical risk in investing but a financial risk as well.
The earth is God’s magnificent creation, entrusted to us to care and cultivate it in a responsible manner. The issue of climate change is complex; the solution even more so, but Christian Super is making sure that members’ retirement savings are invested in creating positive changes for future generations.
^This is actually not a well-known fact. Coal is impure and will produce very impure diamonds; you’re better off squeezing graphite. Please do not attempt to squeeze either coal or graphite at home.