Dear Climate Activists: Please Take the Oil Money!
I recently heard a prominent climate investor say he would not take money from a leading company servicing the fossil fuels industry. This is consistent with what I hear from the vast majority of climate-tech investors. I can think of few more irrational or counterproductive stances (well, maybe throwing paint at classic artworks, but that’s a separate blog post).
Our entire economy runs on fossil fuels, and no one can possibly imagine turning it off tomorrow. So the best use of these profits is to reinvest them into a green future in which we can wean ourselves off fossil fuels without destroying our standards of living.
The world economy advanced at a snail’s pace for thousands of years. Then the industrial revolution — significantly propelled by fossil fuels — transformed our entire way of life and increased humanity’s standard of living fantastically. Fossil fuels were basically the disruptive technology of their time, giving us energy, food (fertilizer), transportation, materials and countless other innovations that allowed us to reduce drudgery and inefficiency and pave the way to our modern way of life.
I recently read a book called “What We Owe The Future”, arguing for us to make choices valuing the many billions of humans who may live in the future as highly as we value those alive today. While the entire premise is debatable, even if we accept it I would ask this: if you were in the year 1800 and knew what fossil fuels would bring, would you rather forego all that progress to prevent having to confront today’s climate challenge? My firm answer: absolutely not. Humanity did not have the tools at that time to build a green economy of the scale and breadth we have today, and so we would have toiled away in misery, tens of billions of inhabitants of planet Earth over the last two centuries having way worse lives. Alternatively, we could enjoy the fruits of the industrial revolution and then in the 2000s use our newfound knowledge in physics and biology and our super-advanced computing power to develop a green economy to power the next centuries of growth.
Climate leaders are currently debating what responsibility developed countries owe to the poorest economies to mitigate the impacts of climate change. Before we even get to wealth transfers, a simpler question is this: is it fair for us to deny societies living on a carbon footprint a fraction of ours the ability to use cheap energy so they can also improve their standards of living? It seems more reasonable for us to curb our emissions, and to offer less developed economies cost-effective green solutions which we must develop and scale on our dime. The capital for this undertaking is enormous and will need to come from both the public and private sectors. Regulations and incentives will play a big part in pushing forward this transition, and hopefully some of those will result in oil companies having to internalize financially the negative externalities of fossil fuels (carbon taxes and carbon pricing should help us align market forces with the goal). In the meantime, having them fund the energy transition from oil profits is the least they can do, so why not let them?