There has been a movement to divest, or remove investment money, in fossil fuels on a global scale. Be it at the G-20 Summit in Russia or on the steps of the Massachusetts State House, the divest movement is gaining traction.
The Group of Twenty Finance Ministers and Central Bank Governors, or G-20, is a group of world leaders and central bank leaders who represent the 20 major global economies. The G-20 Summit was created as a response to the financial crisis of 2007–2010. On September 6th world leaders met at the 2013 G-20 Summit. Many issues were discussed, lavish parties were held, and some decisions were made. One decision was to phase out “insufficient” fossil-fuel subsidies and the use of hydro fluorocarbons.
The first portion of this agreement is to build a methodology and establish a peer review system for existing subsidies. The result of this will be presented at the next G-20 Summit in 2014. Such actions that were agreed on would cut $500 billion in annual governmental expenditures and reduce global greenhouse gas emissions 10% by 2050. This is a win for the Obama administration that has staunchly supported an alternative fuel development agenda.
So what is a fossil fuel subsidy anyhow? A fossil fuel subsidy is any government action that lowers the cost of fossil fuel energy production, raises the price received by energy producers, or lowers the price paid by consumers. The term “subsidy” is vague and intentionally so, coming in as everything from direct and indirect tax breaks to straight-up handouts with the promise of bringing in jobs.
Subsidies and those that support subsides are a major part of the divest movement. The goal of the ever progressing divest movement, when it comes to fossil fuels, is for institutions to remove investments that have been made in fossil fuel companies. Essentially this is voting with your wallet on a grand scale.
Voting with your wallet is a term used to describe a consumer’s behavior based on external and often moral principles. For example, if you disagree with the labor conditions used by Foxconn in the plant that manufactures the iPhone – then you don’t buy the iPhone. If you donated to Obama’s presidential campaign because you liked his alternative energy policy then you voted with your wallet. You are now seeing you vote and dollars’ worth with the results of the latest G-20.
On a more localized level Massachusetts could become the first state in the nation to divest its fossil fuel holdings. A bill is working its way through the state legislature that would divest over five years $1.4 billion in pension investments in oil companies, mining companies, and refiners. Why? Well, those that manage the fund see that fossil fuels might not be that good of an investment for the state’s pension plan in the future as more alternative fuel sources take over the market. Already many New England based Universities have divested in fossil fuels including Harvard, Brown, and UMass.
The politicians who are spearheading this bill were put in power by the people they represent. These people donated to their campaigns because they believed in the issues that these politicians proposed and supported. This is a localized example of voting with your wallet. These Massachusetts citizens voted with their wallets and now are getting a positive, and potentially historical, return on their investment.
Overall the divestment in fossil fuels is happening; the results are not going to be seen overnight but you can be an active member in the change. Voting with your wallet works, whether you choose to buy one brand over another or support a new politician over an incumbent, voting with your wallet it is a great way for you to get involved and to ultimately force social change on issues that are important to you.
Andrew Meggison was born in the state of Maine and educated in Massachusetts. Andrew earned a Bachelor’s Degree in Government and International Relations from Clark University and a Master’s Degree in Political Science from Northeastern University. Being an Eagle Scout, Andrew has a passion for all things environmental. In his free time Andrew enjoys writing, exploring the great outdoors, a good film, and a creative cocktail. You can follow Andrew on Twitter @AndrewMeggison