Lou Allstadt wasn’t always sitting on divestment panels or rallying politicians to support a fracking ban. A little less than a decade ago, Allstadt simply wanted to retire to Cooperstown, New York, where he had owned a home since the 1970s. But even in the small, relatively isolated village of Cooperstown, the oil and gas industry had a way of catching up with him.
For 31 years, Allstadt worked for Mobil, managing the oil company’s exploration operations in Canada, the United States, and Latin America, and helping to organize the company’s merger with Exxon. So when oil and gas companies began making plans to frack near Cooperstown — close to Otsego Lake, the town’s water source — Allstadt’s friends called up the former oil executive with questions.
“They asked me about fracking, and what did I think about having wells very close to Lake Otsego,” Allstadt told ThinkProgress. “And I said, well, nobody would drill that close to the lake. And they said, it sounds like that is what they are going to do.”
Allstadt had been out of the oil business for a few years, but he had some background in drilling, and so he began looking into the process — and what he found startled him. The fracking process had “changed substantially” since he left the industry, with 50 to 100 times more fluids and chemicals being used. He also felt that the industry’s practices were too lax, as were the regulations that the state of New York was proposing. And so Allstadt started giving talks about the dangers of fracking — first to communities around upstate New York, and then to state politicians. In 2014, the state officially banned fracking.
EPA admits that fracking can contaminate drinking waterThe Environmental Protection Agency has concluded that hydraulic fracturing (fracking) can affect drinking water. In…thinkprogress.orgBut along the way, Allstadt came to realize the real fight was for more than just clean water in Cooperstown, or even clean water in New York state — it was about the global impact of the fossil fuel industry.
“I think that people are starting to realize that it’s not just what you can see or taste in your water,” Allstadt said. “It’s what you can’t see that is going on in the atmosphere.”
So Allstadt turned to renewable energy, and spoke out about what it would look like for the world to transition to renewables. In the process, he sold off all of his shares in ExxonMobil, and invested that money into clean energy sources — becoming part of the divestment movement that has grown more than 100-fold since it first began four years ago.
According to a report released this week by Arabella Advisors, a firm that deals with philanthropic investing, investment funds worth a combined $5.2 trillion dollars have committed to divesting from their fossil fuel assets. And while the push for divestment began originally as a grassroots campaign on college campuses, the movement has gone mainstream, with 80 percent of the divested funds coming from commercial investment funds or pensions.
The report also notes that a record number of cities, from Sydney to Washington, D.C., have committed to divesting. In October, Cooperstown became the first town in the United States to divest from all three major fossil fuels — coal, oil, and gas. Allstadt, who serves as a trustee for the village, led the charge.
“It…has an impact on the Board of Directors, many of whom are not from inside the industry. When they see lots of foundations selling off the stock, they start asking questions.”
Divestment has been criticized as an empty protest, with detractors arguing that divesting from fossil fuels simply leaves those shares available for purchase, at a lower price, for an investor with fewer concerns for social responsibility. But Allstadt argues that fossil fuel companies are already in dire straits financially, squeezed by the low price of oil and gas and hampered by middling demand. Countries like India and China, which were expected to be the largest growth markets for fossil fuels, have motioned towards placing regulations on fossil fuels, from a tax on coal in India to a carbon pricing system in China. And as easy-to-reach fossil fuel resources become increasingly depleted, companies are left with high-cost, high-risk projects in areas like the Arctic or Canada’s tar sands.
Couple those market factors with a growing divestment movement, and Allstadt argues that fossil fuel companies will feel the strain.
“As far as divestment goes, I think it does two things,” Allstadt said. “One, it starts making it more expensive for the oil and gas and coal companies to finance their projects. By increasing their costs of financing, by driving down their stock prices, it starts to have some impact. It also has an impact on the Board of Directors, many of whom are not from inside the industry. When they see lots of foundations selling off the stock, they start asking questions.”
Divestment campaigners aren’t just urging groups to divest from fossil fuels, however — they are urging those groups to take that divested money and in turn invest it in renewable energy, a strategy they are dubbing “divest/invest.” It’s what Allstadt did when he divested his shares of ExxonMobil — and what $1.2 trillion in divested assets have down worldwide, according to the Arabella report.
Last year, investments in renewable energy totaled $286 billion, a record-breaking amount. The bulk of those investments were made in wind and solar, and most were made in China. As the Paris climate agreement comes into effect, experts expect that demand for renewables, and investments in the technology, will only increase. But beyond policy signals like the Paris agreement, renewable energy growth is driven by the fact that large-scale renewable projects have become cost-competitive in many places with dirtier sources of energy like coal.
“You’ve got movement in renewables all around the world,” Allstadt said. “The cost of renewables are coming down to the point where they are really disrupting the demand for fossil fuels.”
Under a Trump administration — which has promised to usher in a new era of unfettered fossil fuel extraction and is currently exploring how to withdraw from the Paris agreement — it’s difficult to say how some groups considering divestment might respond. If Trump’s energy policies cause a rise in demand for oil, gas, or coal, it could make maintaining investments in fossil fuel companies more appealing than it would have been otherwise. But May Boeve, executive director of 350.org, urged groups to continue pushing forward with plans for divestment.
“It’s more crucial than ever for our institutions to divest,” Boeve said during a press conference announcing the release of the Arabella report. “The financial community has the potential to emerge as a bulwark against Trump and his ilk worldwide.”