Divestment movement to help wind


March 6, 2015

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Were you busy on Valentine’s Day?

Our readers are a romantic bunch so we imagine you started with flowers, moved to dinner, and then… well, that’s your business…

Or maybe you were raising hell about fossil fuel investments at one of 450 events in 60 countries on six continents to mark Global Divestment Day. Confusingly, this took place on two days: 13-14 February. These days are part of a movement to tackle climate change by forcing major investors to divest from fossil fuels and move the funds towards renewables.

It may sound like a hippy movement, and in some ways it is. But it is also achieving some major successes, and that is likely to result in more funding coming into wind, particularly operational schemes. If new investors want to get into wind then they are likely to start by investing in working wind farms that offer stable returns.

This would be good news for the utilities and developers that are looking to sell out of operational projects so they can raise capital to support expansion in emerging markets. Only last week we wroteabout large numbers of projects up for sale, and investors who are divesting from fossil fuels could be among potential buyers.

We are, after all, talking about some significant numbers

Go Fossil Free, the group behind Global Divestment Day, says so far it has persuaded 180 institutions including local authorities and universities to sell investments in coal, oil and gas worth a total of £33bn. It is now gaining traction among institutional investors.

First, hundreds of thousands of investors in six Danish pension funds, worth a combined €32bn, announced this week that they are to vote on whether to divest investments in 100 of the largest coal companies by the end of 2018. They are due to vote in April.

Second, the Bank of England warned the insurance sector on Tuesday that insurers would suffer a “huge hit” if their investments in fossil fuel firms are rendered worthless due to action on climate change. This is an argument for those firms to consider divestment.

And third, the Norway’s €850bn oil fund, the world’s largest sovereign wealth fund, said in February that it was set to dump investments in 32 coal companies on environmental grounds, and was looking at making further fossil fuel divestments in future.

The divestment movement is an exciting one, and we are starting to see the fossil fuel and renewable energy industries starting to compete for the same capital. We are still in the early stages, of course, and it would be naive to think renewables has significant investment muscle yet. Even so, we do expect to see more large institutions showing more interest in wind.

We don’t agree with everything this movement stands for, though.

It may be attractive for activists to argue that fossil fuels are bad and renewables are good, but we shouldn’t lose sight of the fact that both can be part of a healthy energy mix.

Also, we must accept that there will be fossil fuel investors who keep doing what they do regardless of the activists.

But this movement will encourage some major institutions with significant financial clout to put some of their capital into wind. For that, it is a movement with a lot about it to love.

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