Economics

So fossil fuels have a lot of downsides, but the money must make up for it, right? Fossil fuel companies would like us to think so, promising hefty returns with their high stock prices. But much of this value is based on the assumption that these companies will profit from fuel reserves burned ten or more years down the road. In reality, these reserves are five times larger than what we can burn if we have any hope of keeping the planet’s warming under 2°C. Essentially, fossil fuel companies have pumped their prices full of air, creating a “carbon bubble” that’s ready to burst.

However, as we begin enforcing international limits on carbon emissions and moving toward cleaner sources of energy, fossil fuel companies will be forced to leave reserves underground, drastically decreasing their stock value. Suddenly, these holdings become “stranded assets” for their owners, paying much lower returns than originally expected. Nothing sparks panic like the thought of losing money-- increasingly, fund managers are assessing their portfolios for exposure to climate risk, and fossil fuel free mutual funds are popping up everywhere.

For coal, however, the chance to avoid losses is long gone. Reuters reports that coal stock prices have fallen by 50 percent since 2011, and as we shift to renewables and move to cut emissions, those stocks will continue to plummet. Even China’s notoriously high coal consumption fell in 2014 alongside a commitment to cap its use. Meanwhile, Northwestern continues to cling to these crumbling investments, losing millions that could go to scholarships and other resources. Come on, NU-- it’s time to clean up that dirty money.

TL;DR

Fossil fuel stock prices are worth much less than they seem, failing to account for the limited amount of fossil fuels we can burn if we hope to address climate change.
Coal prices have already tanked, and the longer Northwestern invests in them, the more money it loses for the university.