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A drop in the ocean: why Stanford’s divestment from coal doesn’t matter

World Coal,

Sam Dodson explains why Stanford University’s decision to cease investments in coal companies will not only prove ineffective, but also shortsighted.

The student-led organisation known as Fossil Free Stanford claims it has secured a major victory against the global coal industry, following the announcement by the university’s board of trustees that the US college will no longer make direct investments in coal mining companies. However, any such claims should be taken with a pinch of salt, as industry representatives say the decision to divest from coal will have no financial impact on the industry at all. Nor will it curb the growing demand around the world for coal-generated electricity.

Of Stanford’s US$ 19 billion endowment, only a small fraction of it is invested in companies operating within the coal industry. According to associate vice president for communications at Stanford, Lisa Lapin: “A small percentage is still a substantial amount of money.” It may seem a substantial amount of money to one of the university’s indebted students,1 but to the global coal industry, Stanford’s decision will only ever be a drop in the ocean.

Luke Popovich, a spokesman for the National Mining Association, said of Stanford’s decision: “It strikes us as a politically expedient course of action rather than a rational response.” Even if more universities decide to follow suit, there will be no material affect on coal companies. Of the US$ 450 billion in university endowments recorded at the end of 2013, only 5% is invested in energy, including everything from coal to solar.

Popovich claimed coal is simply too cheap, too abundant and in demand to be affected by university divestitures. Moreover, it seems little thought has been given by the Fossil Free Stanford students to the 3.5 billion people on the planet living in energy poverty. These people “certainly won’t have access to the electricity and energy they need in their lifetimes, unless coal generates it,” Popovich said.

Divestment from coal is not the answer

A similar opinion is held by Milton Catelin, CEO of the World Coal Association, who explained that, when people around the world “lack any form of access to energy, we should be balancing the urgent need to address global warming alongside the need to alleviate energy poverty. Divestment campaigns are not solutions to either of these challenges.”

Where the money divested away from coal will be invested instead is anyone’s guess, since Stanford’s investment portfolio is private. The decision to divest therefore strikes as less of a victory against climate change and more of an opportunity missed. Rather than campaigns against all coal, Stanford students would have had a more positive impact by petitioning the university’s board of trustees to ramp up investments in clean coal technologies, the benefits of which could prove to be far more effective at curbing carbon emissions than student divestment campaigns.

According to the World Coal Association, from data obtained from the International Energy Agency (IEA), if all coal-fired power plants were brought up to modern efficiency standards of 45%, global CO2 emissions would be reduced by 2.4 billion t annually – more than India’s total annual CO2 emissions.2

Not only is it false for students to claim its divestment campaign as a victory, it is also shortsighted. Catelin explained: “It is simply not effective to focus only on one aspect of energy policy.” The world “needs a balanced future energy policy, which considers climate change concerns alongside the very real need for affordable, secure and reliable supplies of energy.”

Not to invest in clean coal also appears at odds with Stanford’s reputation as an institute of research. As Popovich noted, “If the challenge in the near future is to eliminate the CO2 from coal combustion, then where can we look for leadership in this field unless we’re looking at institutions like Stanford?”

This is a sentiment echoed by Brown University president, Christina Paxson, who, in October 2013, explained that Brown would not divest from coal. "Divestiture would convey only a nebulous statement — that coal is harmful — without speaking of the technological and policy actions needed to reduce the harm from coal — actions where Brown can make real and important contributions, through teaching and research," Paxson wrote in a letter.

Other universities, including Harvard and Washington University, have followed Paxson’s suit and rejected similar student proposals. Harvard president, Drew Faust, explained that a university’s endowment was “a resource, not an instrument to impel social or political change.”

Stanford claims that the coal industry exhibits practices that create substantial social injury. Yet is it the case that social harm from coal is so grave that divestiture is warranted? Coal is the source of approximately 40% of the world’s electricity, and provides energy needed by millions across the globe. In many regions, there are serious technological impediments to transitioning away from coal. In addition, coal is used in the production of other products, such as cement and steel, which are central to the economies of both developed and developing countries. Unlike say, tobacco, which arguably has no social value and causes substantial social injury, a cessation of the production and use of coal would itself create significant economic and social harm to countless communities and individuals across the globe. Divesting from coal is not a step into a more enlightened future: it is a step into the dark.

Notes and sources

1. Students and graduates in the US owe a total of US$ 1.08 trillion. Undergraduate students attending Stanford pay just shy of US$ 58,388/year.

2. International Energy Agency, Coal Industry Advisory Board, “Power Generation From Coal: measuring and reporting efficiency performance and CO2 emissions”, January 2010.


LAPIN, L., “Stanford to divest from coal companiesStanford News, May 2014.

PAXSON, C., “Letter to the Brown Community, Brown University Press Online, October 2013.

SULLIVAN, J., K., “Stanford raises undergraduate tuition, Stanford News, February 2014.

WEISS, D., “Student loan debt $1 trillion and could impact economy Liberty Voice, March 2014. 

Written by Sam Dodson

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