OK, perhaps not interesting to all but it is to me. What would actually happen here in the financial markets if this were to be done?
We demand that at this year’s forum, participants from all companies, banks, institutions and governments immediately halt all investments in fossil fuel exploration and extraction, immediately end all fossil fuel subsidies and immediately and completely divest from fossil fuels.
We don’t want these things done by 2050, 2030 or even 2021, we want this done now – as in right now.
Ending the subsidies I’m fine with, obviously. They’re grossly overestimating what those are but it is still true that there’s some $500 billion a year spent on directly subsidising consumption. And there shouldn’t be.
True, they’re difficult to get rid of as Iran recently found out. Those riots and shouting recently were because the government there decided to do the right thing. Stop subsidising the consumption of fossil fuels and instead supply the same amount of money directly to people as cash. Entirely the correct move but as we can see somewhat difficult.
The $5 trillion number they quote is nonsense. Things like the righteous carbon tax not paid is a subsidy – nonsense.
But, more interesting to me, what then happens? So, all institutional holders divest. OK, that makes the sin portfolio of oil stocks look very attractive indeed. Because there’s still going to be, whatever else is done, a 30 to 40 year run off from investments already made. And if no one else is buying them then we’d see very tasty indeed yields from such stocks.
Then to the one I’m not sure about and would welcome thoughts upon. Just roughly, I seem to recall that Shell spends $25 billion a year on investment. And we all do know that the value of reserves the company has for 20 or 30 years out is about zero percent of the company’s stock price.
So, not investing $25 billion a year and instead paying that out to investors – would the stock price rise at that point? Efficient market theory (not quite the EMH) suggests no because if it did then they would already be doing it. But, well, I’m not entirely certain. I do have this sneaking feeling that someone could go out and spend $500 billion or whatever buying one of the oil majors, only invest in care and maintenance and completely kill off exploration and new field investment and come out ahead.
Actually, perhaps we should ask St Greta to lead the fundraising, she might actually be able to get enough people to chip in $100 each to make it happen. We being the capitalist exploiters that we are would treat the $100 as a donation and keep the equity returns for ourselves.
Leaving aside that bit of financial prestigitation though I do wonder whether the base idea would actually be viable. Asset stripping an oil major in effect.