Hollywood Joins the Fossil Fuel Divestment Movement

I published an op-ed in the Philadelphia Inquirer recently challenging the mindsets of student activists lobbying to force college administrators to purge coal and oil stocks from their investment portfolios.

Now, reportedly, but not surprisingly, Leonardo Di Caprio and a few other left-leaning Hollywood personalities are jumping on the divestment bandwagon. He, along with some like-minded individuals and organizations spearheaded by a shadowy special-interest group called “Divest Invest”, apparently believe (with fervent faith in “green” energy shared and perhaps envied by Pope Francis) that their actions will save the planet from destruction by greedy capitalists.

Insofar as today’s environmentalists adhere to a religion claiming humankind to be doomed unless something is done to lighten our collective carbon footprint, I may be on dangerous theological ground. But I am happy that Mr. DiCaprio is a least putting his money in his own proverbial mouth. Owing to the shale “fracking” revolution of the past decade, stocks in fossil fuel producers have fallen sharply. The divesters therefore stand to sustain capital losses on the equity shares they sell now or in the foreseeable future.

On the other hand, while climate-change believers see the environmental benefits of solar and wind farms once they are in place, they studiously ignore the rather substantial carbon footprints of manufacturing wind turbines and solar panel cells as well as of disposing of them at the ends of their useful lives.

Are wind-turbine factories powered by wind, or are solar-panel factories (many of which are located on China’s mainland) sun powered? I don’t think so. Moreover, some of the components of solar panel cells are toxic. One cannot simply bury them in the local landfill once worn out, even if that is 20 years in the future. In 2012, wind turbines killed 573,000 birds and 888,000 bats in the United States alone, according to a study published in the Wildlife Society Bulletin.

So, where do the stock divesters draw the line in the green energy supply chain? At the manufacturing stage, or at an earlier one at which the steel, aluminum or other critical inputs necessary to produce windmills and solar panels are made? At the mine, where iron ore and other mineral ores are extracted using fossil-fuel powered capital equipment? At the stage when factories are built and brought online? At the Middle Ages, when all humans were short-lived locavors? Or at the Garden of Eden?

Hollywood types and college students seem to think that wind turbines and solar panels are created out of thin air. They plainly are not conceived immaculately. Because renewable energy sources are not yet economically viable on commercial scales and would not be so even on more modest scales in the absence of taxpayer-financed subsidies, Mr. DiCaprio and his fellow divesters are posing as saviors of the planet, while ignoring the production processes for their pet environmental solutions for global warming or other contributors to so-called climate change.

Although I am pleased that the divestors are paying personally to indulge those discriminatory preferences, as everyone in a free market must do, I question Mr. DiCaprio’s motives, among which is to sell tickets to the soon-to-be-released Revenant, to curry favor with fellow guests at Hollywood cocktail parties and to be invited to testify before starry-eyed members of congressional committees.

Assuming that Divest Invest and the managers of college endowment portfolios hold enough shares in oil and gas companies to matter, dumping them will lower share prices and create opportunities for non-politically correct investors to get back into the market on favorable terms. But remember that my investment advice carries with it no guarantee of positive future returns!