The White House just gave a boost to the growing fossil fuel divestment campaign that has spread to over 300 colleges and universities and more than 100 cities, states and religious institutions across the country.
Here's what happened. In a thoroughly boring Department of Energy report on the energy-efficiency of microwaves released last week, the agency announced that it would be using a higher "social cost of carbon" in its calculations. Instead of calculating the social harm that comes from pumping carbon-dioxide into the atmosphere at $22 a ton, the government will now be using the figure of roughly $36 per ton.
That's actually quite a dramatic increase. Put another way, the government just increased the harm that carbon dioxide poses to our society by 60 percent.
What does this mean for the fossil fuel divestment movement? As students and organizers across the country have been making the case for divestment across the country, they're often told by administrators or city officials that while climate change is a "serious issue," the cost of divesting from fossil fuels is just too high.
Activists have been able to push back on that argument by showing that, actually, divesting from fossil fuels doesn't dramatically increase portfolio risk and that in many cases an endowment or pension would be better off staying out of fossil fuels. A couple of weeks ago, a study commissioned by the Associated Press came to the same conclusion, showing that by one measure, an endowment that divested from fossil fuels ten years ago would be much better off today than an endowment that stayed in the industry.
What these new numbers from the White House remind us, however, is that the real question isn't the cost of divesting from the fossil fuel industry, but the cost of staying invested in an industry that is trashing the planet.
Look at a company like ExxonMobil. In 2012, according to their own records, Exxon emitted 125 million tons of CO2 equivalent. At $36 ton, that means that the carbon dioxide emissions released by Exxon alone are costing society roughly $4.5 billion a year. By 2050, when the government estimates that carbon will be costing society about $71 a year, the costs go up to nearly $9 billion a year. (And that doesn't include little mess-ups like the recent Mayflower Spill in Arkansas).
You can also break the numbers down for specific facilities. Take the Chevron refinery in Richmond, California, which is the largest source of carbon dioxide emissions in the state at a whopping 4.8 million tons of CO2 equivalent a year. Last month, the Mayor of Richmond announced that she was supporting fossil fuel divestment, in large part because of the health and environmental costs that Chevron was imposing on her community. Now, she has a number for that expense: $172,800,000 a year. To be fair, those are costs not just born in Richmond: while low-income communities and communities of color are often bear the brunt of pollution and climate impacts, none of us can escape all the costs of global warming. On the other hand, residents in Richmond also get to deal with additional costs, like those from a 2012 refinery fire that sent 11,000 people to the hospital.
Just across the bay from Richmond and the Chevron Refinery, the City of San Francisco Retirement Board is now considering fossil fuel divestment after the city's supervisors voted unanimously to support the move. The city currently has over $60 million invested in Chevron. The real question on the table, then, is should a fund that is designed to provide for the long-term well being of city employees be investing in a company whose local facility is causing $172.8 million a year in social damages and whose total emissions, at 56.3 million tons of CO2 a year, are costing society $2 billion a year today and upwards of $4 billion a year by 2050. That's an especially relevant question for a city like San Francisco, where sea level rise could put over $62 billion of shoreline development at risk by the end of the century.
The concept of a social cost of carbon isn't new, but to the fact that this $36 a ton figure is coming from the White House is significant (In fact, there's a lively debate about whether or not the White House figures are accurate. In 2012, one academic paper pegged the real cost of carbon at 2 to 12 times as much as the original government figures. You can read more about it all here).
No matter where you live, it's clear that there is an enormous social cost to letting the fossil fuel industry continue to operate business as usual. As Bill McKibben has said before, either the fossil fuel industry has a healthy bottom-line or we have a healthy planet, we can't have both. These new numbers from the White House make the message even clearer: it's time to divest from fossil fuels.
For more analysis on the importance of the news from the White House, check out Brad Plumer's blog over at the Washington Post, Dave Roberts at Grist, or David Turnbull at Oil Change International).