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A $28 million investment by the Berkeley Foundation in Highfields Capital, a Boston-based hedge fund, links Cal to Alberta's Athabascan tar sands, among the most environmentally destructive fossil fuel operations in the world. Highfields Capital disclosed in an SEC filing last month that it holds, on behalf of its limited partners (such as the Berkeley Foundation), stock in Canadian Natural Resources worth $855 million. Canadian Natural Resources is in the early stages of mining billions of barrels of bitumen in the northern reaches of Alberta.
Though UC's money appears to be tied up like a Gordian knot with oil, natural gas, and coal through countless investments, UC Berkeley professor Daniel Kammen said the university's financial ties to the fossil fuel industry aren't as extensive as they at first seem. "Exposure of the UC's portfolio to the 200 biggest fossil fuel companies is actually rather small — like 2.6 percent of total assets — or $2 billion out of $80 billion," said Kammen. "It's not a large exposure."
As the founder of the Renewable and Appropriate Energy Laboratory, and with faculty appointments in both UC Berkeley's Energy and Resources Group and the Goldman School of Public Policy at Cal, Kammen's full-time job is studying the scientific and political problems posed by climate change, and advancing solutions.
Kammen supports the divestment campaign as one logical part of a broader movement to reduce carbon emissions and transition to renewable energy. "If UC Berkeley or Harvard or Stanford pulls out of a company, it reverberates," he said. "It totally changes the tenor of a conversation. The companies will say to themselves, 'We have two choices — we can keep doing this, or we can actually readjust what we do.'"
Kammen thinks that if companies such as Exxon, Shell, and BP are confronted by a wave of public institutions financially divesting from them, they will step up their efforts to adjust their businesses, eventually abandoning fossil fuels and transforming themselves into green-energy developers. "We don't need fossil fuels — there's plenty of sun, wind, geothermal, and biomass," he said. Kammen backs his opinion up with data; his laboratory runs models showing that it's possible to run California on a renewable, low-CO2 emissions energy base.
"I don't think the big oil companies should go away. They should take all those smarts and capital and invest them in these new energy sources," said Kammen. Divestment by the UC would be one powerful prod to show the oil companies in which direction they should move.
For the past century, the biggest energy companies have moved squarely toward oil, natural gas, and coal. And ever since the fossil fuel industry set up shop in the East Bay in the 1880s, the UC has worked with Big Oil to expand the extraction and consumption of dirty energy.
In 1872, just four years after the founding of the University of California, a petroleum prospector named Robert S. Baker paid the UC Regents $750 to secure 120 acres of land in the hills north of Los Angeles. Wells drilled on this claim, and nearby patches, produced significant flows of crude, so Baker and his business partners set up the Star Oil Works. Star was eventually bought by the Pacific Coast Oil Company in Alameda, where much of Southern California's oil was transported for refining.
At the Pacific Coast Oil Company's East Bay lab, a young UC Berkeley-trained chemist named Eric Starke invented several methods for refining California's smoky crude oils. By mixing and heating kerosene with sulfuric acid, he was able to make the fuel burn brighter, with less smoke, allowing California oil to compete with the clean-burning eastern distillates. The patent for this invention, along with a growing number of oil claims, the refinery in Alameda, and California's rapidly expanding market for fuels, prompted the Standard Oil Trust of New York to buy Pacific Oil in 1900. By the 1920s, California was one of the biggest oil producing states in the nation.
Standard Oil (which eventually became Chevron) always had strong ties to the UC, as did California's other big oil companies, such as Union Oil and Associated Oil. The profitability of research — such as Starke's sulfuric treatment — led the oil companies to fund academic studies at the UC and other state schools, leading eventually to the establishment of the department of petroleum engineering at Berkeley. In his history of oil, The Prize, Daniel Yergin noted that California's oil companies were unlike the eastern and southern companies in that they retained college-trained geologists and relied on academic scholarship.
In the 1950s, Chevron sponsored faculty seminars for scientists from UC Berkeley, UCLA, Stanford, and other schools to share research. Oil companies routinely recruited UC faculty members to assist in engineering new drilling and refining techniques. And with the expansion of offshore oil drilling in state waters in the 1960s and '70s, the UC grew from royalties paid by the industry to the state, using the oil money to pay for dorms, labs, and classrooms.