The coal industry responded with a collective sigh this week when Stanford become the first major university in the nation to announce that its $18.7 billion endowment fund would get rid of investments in coal stocks.
The move came in response to pressure from environmentalists and students who think it is inappropriate for the school to invest in an energy source known to contribute mightily to global warming. The private university does not divulge details of its investments, but National Mining Association spokesman Luke Popovich said it doesn't matter how much money is involved, or whether other schools are inspired to follow Stanford's lead.
The 3 billion people on the planet with crappy or no electricity “won't have electricity anytime soon, certainly not in their lifetimes unless coal generates it,” he said. Coal accounts for around 40% of domestic power generated in the United States and, if anything, is still edging up.
“Coal has been the fastest-growing major fuel in the world for the last decade and it's expected to surpass oil as the world's largest energy source,” Peabody Energy spokesman Vic Svec told National Public Radio. Peabody is the world's largest coal business.
The university decision came after 78% of students voted for divestiture in a referendum earlier in the year. Michael Penuelas, a student organizer of Fossil Free Stanford, told the Stanford Daily that the referendum “was generally symbolic but it showed that students were united about something in a way that they don’t usually get united. It was really powerful because it took student voices and magnified them to the institutional level.”
No timetable was set for divestment, but it won't be done overnight. Stanford will be getting rid of coal stocks and any mutual funds that invest in them. One consideration in the pacing may be the current price of energy stocks. Peabody Energy has dropped 5.7% since the start of the year, Arch Coal is off 1.8% and Alpha Natural Resources is down 40.5%.
Coal is not only one of the world's largest energy sources, it's the dirtiest. It produces more carbon per British thermal unit than any other fossil fuel. That was one of the reasons given by the board of trustees for divesting coal but not other similar fuels. Deborah DeCotis, the chairwoman of the board’s special committee on investment responsibility, told the New York Times other criteria included the availability of alternatives to coal and the university's own lack of reliance on coal and coal-derived products.
Around 11 small universities have already elected to curtail their fossil fuel investments, but none are nearly as large as Stanford. Stanford has the nation's fourth largest endowment behind Harvard University ($32.3 billion), Yale ($20.8 billion) and the University of Texas system ($20.4 billion). After Stanford and Princeton ($18.2 billion) there is a big drop-off to Massachusetts Institute of Technology ($11 billion).
Harvard rejected divestment last Fall and President Drew Faust wrote at the time, “The endowment is a resource, not an instrument to impel social or political change.” Stanford Board of Trustees Chairman Steven Denning didn't see it that way. “We believe this action provides leadership on a critical matter facing our world and is an appropriate application of the University’s investment responsibility policy,” he told the Stanford News Service. Yale and Brown have also formally rejected dumping fossil fuel stocks.
California's San Francisco State University, Pitzer College, Foothill-De Anza Community College and Peralta Community College District are among small schools that have voted to sell fossil fuel stocks.
One school that might not be in a big hurry to divest is Washington University in St. Louis. Seven students were arrested there last week during a protest demanding the resignation of board trustee Gregory H. Boyce for not supporting divestment. He is chairman and CEO of Peabody Energy.