‘Efforts to cut ties with the fossil fuels industry are misguided’

A non-trivial question I still haven’t been able to get an answer to, is what exactly those ties between the University and fossil fuels industry are. There’s an obvious sense in which all of us have ties with the fossil fuels industry. Only 5.7 percent of Dutch homes did not use natural gas to heat their homes in 2019, according to the CBS. Our roads, water pipes, fertilisers, and even the eye glasses for the myopic, are petroleum derivatives. I suppose these are not the ties the protesters want to cut?

But what are they then? Why are they so bad? And, crucially for our problem: how does cutting these ties contribute to saving our planet? They might be trying to emulate the action of ABP, the Dutch pension fund pressured to divest from producers of fossil fuels. Divestment is a rehearsed tool for social change previously embraced by universities and said to have been helpful in dismantling Apartheid. But, in our context, the effectiveness of this move is contentious.

The argument for its effectiveness is that it makes the cost of capital for these companies more expensive. But this is only true if there’s no other investor willing to take over that position. The main argument against it is that the possibility to influence the company policy as investors is lost.

Furthermore, and crucially, the divestment strategy seems to ignore the simple fact that the oil and gas industry is now dominated by national oil companies and not the international oil companies targeted by this strategy. Saudi Arabia, the country with the largest oil reserves, probably doesn’t really care much if protesters in the west think oil extraction is immoral. Their economic development is at stake. And they may as well benefit if the international oil companies falter – they will have a larger market share. The efficacy of divestment or cutting ties is uncertain, at best.

So why focus on this uncertain strategy? Some argue that this is to expunge the social licence for these companies to operate. They see an example in the way the tobacco industry has been delegitimised. But this is silly. We legitimise the fossil fuels industry every single day: our subsistence depends on it. It’s also ridiculously unfair: the tobacco industry has brought us mostly sickness and death. By contrast, our prosperity has been made possible by the fossil fuels industry. Our own welfare state was largely built on the revenues of gas, coming from the discovery of a field in Groningen in 1959 by the NAM, a joint venture between Shell and ExxonMobil. Until 1994, all the gas revenue went on to finance the government budget; in 1995 the Fonds Economische Structuurversterking (FES) was established, directing 41.5 percent of the revenues to this fund, for long-term investment projects.

Everyone else has the same ambition. Some, like the Dutch, have been able to profit from it directly. Saudi Arabia discovered oil in 1939. And in the last fifty years, as crown prince Mohammed bin Salman has put it, the kingdom went ’from mud houses to world standard modern cities, modern infrastructure, a country among the G20, among the top 20 economies around the world, a lot of things’.

Others have been less fortunate. There are still one billion people who lack access to electricity. Another three billion do not have access to clean cooking fuels. While we here in Ken-and-Barbie-land can envision  solar and wind replacing our energy sources, more than forty percent of the world’s population would dream of gas infrastructure that allows them not to have to burn wood, charcoal, crop waste or cow dung to cook. The energy transition looks radically different depending on where you happen to live.

A strategy for combating climate change that ignores this complex reality, namely that we all, to greater or lesser extents, depend and will continue to depend on the fossil fuels industry for a long time to come, is necessarily taking the easy way out. There is no energy transition that does not involve the fossil fuels industry. So, to ‘cut ties’ is just a way to pretend that we are no longer part of the problem because we are taking some symbolic distance. Instead, we should be asking ourselves how to be part of the solution. That solution inevitably involves the fossil fuels industry. We’re better off cajoling it into supporting our efforts.