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Capping the Well

For more than a century, the University of California has maintained extensive ties to the fossil fuel industry. A coalition of students, alumni, and climate scientists is trying to sever those bonds.


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Finally there's Bachher, the UC's chief investment officer. The UC hired Baccher from the Alberta Investment Management Company (AIMCo), the government pension fund and endowment of the Canadian province. Alberta is like a snow-capped version of Saudi Arabia. Its economy is based heavily on oil, but in Alberta's case, the oil is in fact much dirtier than Middle East crude. A lot of Alberta's oil is mined from tar sands deposits. In addition to strip mining vast expanses of the earth, obtaining oil from tar sands also requires enormous CO2 emissions to refine the bitumen and transport the oil to markets, mainly in the United States. AIMCo invests heavily in fossil fuel companies, particularly those based in Alberta. For example, AIMCo holds $154 million worth of stock in TransCanada Corporation, the company behind the controversial Keystone XL Pipeline.

In 2011, Bachher wrote a paper titled "China, India, and Alberta," in which he called Alberta a "veritable bank vault of natural resources," focusing on Chinese and Indian investments in Canada's oil and natural gas industry, and Alberta's economic future as an exporter of fossil fuel products.

But Bachher also has strong ties to renewable energy companies. He previously served on the boards of two wind turbine makers and a biofuels manufacturing firm. He also has won praise for making alternative energy investments a priority.

When the UC regents convene next week in San Francisco to discuss divestment, all these intimate ties to the fossil fuel industry — research grants, business partnerships, past careers, and of course the existing investments by the regents, both of their personal fortunes and the UC's wealth — will be hovering over the board. Even so, proponents of divestment are confident that momentum is on their side. After all, support for fossil fuel research in the UC is matched by the growing support for renewable energy research. Alongside oil stocks and bonds, the UC's portfolio also includes investments in solar and wind companies. And the UC's faculty members today have extensive ties to companies and organizations trying to build the post-carbon energy future.

"We don't see any reason why divestment from coal can't be a decision that's made by December," said Fernandez. She pointed out that, in May, Stanford's trustees decided to drop coal from its $18 billion endowment. "It's a no-brainer at this point," said Fernandez.

"It's laughable that we're still debating this in California," said Kammen. "We pay a significant cost for pollution. It's municipal governments that pay for lost water, health costs."

But the debate goes beyond economics, explained Kammen. "This is an environmental justice issue. Oil refineries get located in poorer towns. It's immoral to expose the poor to this pollution. Each reason is a slam dunk by itself, but altogether it's a no-brainer."

Barnhart hopes the regents are paying attention to how other schools have approached the issue of divestment. "We've been in touch with Pitzer College's trustees," said Barnhart. "They've divested totally from fossil fuels. The head of their investments committee told us that they went about divestment from point of view of, 'How can we make this work?'"

"First they decided to do it," said Barnhart. "Then they figured out how to do it."

"I think some of the [UC] regents really get it: This is the issue of our time," added Fernandez. "But I think they feel that they have these other obligations like fiduciary duty. That's why student input is so important. The regents are operating at a very different level, but our generation will experience climate change and disruption more intensely. We have much closer proximity to the issue."


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