Black Gold

The Minerals Council of Australia has released a critique I wrote on the fossil fuel divestment campaign.

Matthew Stevens at the AFR sums up the report as follows:

The coal disinvestment campaign is built on false scientific and economic sophistication and fuels what is little more than a series of illegal secondary boycotts of fossil-fuel companies.

That, at least, is the comforting conclusion of an independent analysis prepared by Melbourne academic Sinclair Davidson of the ­hydra-heading global campaign to blackguard the coal industry.

Now before all you disinvesting environmentalists climb even higher on your horses, I say “comforting” only because Davidson’s unquestionably high-level analysis of their efforts was paid for by the Minerals Council of Australia. And since last year’s takeover of the Australian Coal Association, the MCA has been the father of coal advocacy in Australia.

Oh, and for the record, Davidson is professor of institutional economics at Melbourne’s RMIT University and a senior fellow at the Institute of Public Affairs. And that is the sort of intellectual pedigree that means his thoughts were not sought to convince coal antagonists that they have got it all wrong.

Davidson’s critique of the coal disinvestment campaign is, nonetheless, black gold.

The paper highlights the obvious fragilities of an investment thesis that is demonstrably more likely to hurt the disinvestor than the disinvested.

I also have an op-ed at the AFR and the AFR runs the issue in another story too.

A campaign to force banks and fund managers to pull capital from the coal industry could be in breach of the law and cost the economy billions, according to the mining lobby.

A paper to be released on Monday by the Minerals Council of Australia says the campaign “may contravene the letter or the spirit” of the Corporations Act, and calls on the corporate watchdog to assess the potential breach.

The council commissioned Sinclair Davidson, a professor of institutional economics at Melbourne’s RMIT University, to write the paper, in its most aggressive push-back to the anti-coal collective’s urging investors to sell shares in coal companies.

“To the extent that stigmatisation deliberately causes investors to make valuation errors and consequently rebalance their portfolios away from fossil fuel stocks, a violation of the ­Corporations Act has occurred,” Mr Davidson writes.

The campaign rested on “false premises and unsubstantiated claims”, and would cost the economy from $29 billion to $36 billion a year if it succeeded in shutting down the industry, he said.

Twitter, of course, has gone wild. Apparently deliberately causing valuation errors and participating in secondary boycotts constitute principled free speech.

Please download the paper from the MCA – have a read. Enjoy.

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36 Responses to Black Gold

  1. H B Bear

    First smokes and now coal. The only way Snic could get any worse would be marrying Gina Rinehart.

    There isn’t any truth to those rumours?

  2. Gab

    And Sinclair eats drowned kittens for breakfast and his godfather is Rupert Murdoch.

  3. Craig Mc

    People are free to make poor investments with their own money. No problems with BDS there. Markets were created to separate money from such people.

    It’s when they deliberately do it with other peoples’ money that it’s a crime.

  4. Rabz

    And Sinclair eats drowned kittens for breakfast

    Just like this notorious figure.

  5. Rafe

    No he eats the kittens live.
    You can see why is just about to leave the country:)

  6. pete m

    Tobacco, coal, Bombers and baldness – is there no end to his evil ways?

  7. Gab

    No he eats the kittens live.

    He used to, Rafe. But since he’s accumulated 20 foreign workers (he pays them $1 per day, collectively) they drown them first so there’s none of that annoying mewling and wriggling which causes indigestion. You’ll see if you catch up with him in the US for breakfast.

  8. Sinc is satan’s spawn, I knew it!

    I fully expect the path to his front door to be bordered with impaled fluffy bunnies in various stages of death.

  9. Gab

    Sinc is satan’s spawn, I knew it!

    True, true. And this is where Sinclair currently resides.

  10. entropy

    Tobacco, coal, Bombers and baldness – is there no end to his evil ways?

    Also a resident of Victoria.

  11. .

    What happened to that little prick who spread a false story about Whitehaven Coal?

  12. gabrianga

    Send a copy to the Chairman of the Asset Owners Association, John Hewson, who is pushing the “increase in Global Warming” to try and raise money for the alternatives.

    link

    What is it about the seat of Wentworth which elects excellent Labor Leaders as Leaders of the Coalition?

  13. Gab

    What happened to that little prick who spread a false story about Whitehaven Coal?

    He’s been removed from society and imprisoned in the dark, cold, damp dungeon waaay below the offices of the IPA where he’s forced to watch Hell Comes to Frogtown, which is on a continuous loop, with the volume on loud while popcorn is happily popped 24/7 but is not within his reach. And Sinclair is the only person to have the key to the dungeon.

  14. johanna

    .
    #1356701, posted on June 23, 2014 at 12:47 pm

    What happened to that little prick who spread a false story about Whitehaven Coal?

    He pleaded guilty, and is on bail awaiting sentencing to a severe finger-wagging.

  15. entropy

    What happened to that little prick who spread a false story about Whitehaven Coal?

    He’s been removed from society and imprisoned in the dark, cold, damp dungeon waaay below the offices of the IPA where he’s forced to watch Hell Comes to Frogtown, which is on a continuous loop, with the volume on loud while popcorn is happily popped 24/7 but is not within his reach. And Sinclair is the only person to have the key to the dungeon.

    Which explains the trip to Disneyland, where the evvil sinc will secretly tape the soundtrack to the children’s water ride that goes “it’s a small world after all”, after which he will bring it back to play in the dungeon in an endless loop.
    If he wants to be really nasty, for a break from ‘Hell comes to frogtown’ he will make a secret video of the voyage down the small world river, and play that in ultra HD (only the evvil IPA can afford it) on continuous loop.

  16. Ubique

    Tobacco, coal, Bombers and baldness – is there no end to his evil ways?

    Every time Sinc kills a kitten, a hair falls out.

  17. .

    He’s been removed from society and imprisoned in the dark, cold, damp dungeon waaay below the offices of the IPA where he’s forced to watch Hell Comes to Frogtown, which is on a continuous loop, with the volume on loud while popcorn is happily popped 24/7 but is not within his reach. And Sinclair is the only person to have the key to the dungeon.

    Popcorn? You’ve been watching A Boy and His Dog again, haven’t you?

  18. entropy

    He pleaded guilty, and is on bail awaiting sentencing to a severe finger-wagging.

    I can imagine if he has the right judge he might not even get that!

  19. gabrianga

    If not the right Judge then appeal to the French (Robert) High Court?

  20. gabrianga

    Cue John Hewson, Chairman of the Asset Owners Association who totally disagrees with the concept that investing in “alternatives” is just blowing in the wind.

    Bankruptcy be thy cause?

  21. Cynic

    I’m sure those pushing divestment would just claim they are providing “general advice” only….. just to avoid any trouble.

  22. entropy

    The last person on the planet anyone with a brain would be seeking investment advice from would be Hewson, given his work experience.

  23. entropy

    Actually Hewson’s boondoggle is called the “Asset Owners Disclosure Project”

  24. Mk50 of Brisbane, Henchman to the VRWC

    Delicious, delicious coal. Fabulous stuff. Our weekender is down near Vales Point power station. You can hear it humming all night, and it’s a magnificent sight at all times. Underneath the lake is the great coal mine that feeds it, providing cheap power (until the greenfilth buggered it up) reliably to all.

  25. .

    Da da da dum…(Dragnet music…)

    http://www.climateinstitute.org.au/asset-owners-disclosure-project.html

    Background

    Oct 30, 2013 – 4:00pm
    The Asset Owners Disclosure Project (AODP) was originally developed in 2008 as an initiative of The Climate Institute.

    Today the two maintain a close working relationship but the AODP is an independent global not-for-profit organisation aiming to protect people’s retirement savings from the risks posed by climate change. It does this by helping funds to redress the huge imbalance in their investments between high-carbon assets (50-60 per cent of a portfolio) and low-carbon assets (typically less than 2 per cent) and realigning the investment chain to adopt long-term investment practices.

    The AODP has two key initiatives: an annual survey of the world’s 1,000 largest asset owners, to find out how they are handing their investments in light of risks posed by climate change; and a grassroots social media campaign called The Vital Few, encouraging members to pose the same question to their funds directly.

    Okay…but what climate change?

  26. entropy

    If I was on the board of any one of those ’1,000 largest assets companies’ I would take Hewson’s survey and put it where the sun don’t shine. Let him lobby the shareholders.

  27. johanna

    Why TF have so many people got their Lawrence of Arabia outfits on tonight, and become experts in something that has baffled Europeans for centuries?

  28. 3d1k

    Good work, timely and of surprising importance. If the stranded assets movement achieves momentum it would be of enormous damage to the global economy. The hypocrisy of the proponents knows no bounds – happy to utilise all the accoutrements of modern life, most of which in some way owe something to fossil fuels, happy to travel business class to the latest co2 gabfest or on promotional tour advocating divestment of fossil fuel positions…

    Ian Plimer has a new book out, Not For Greens. Read it.

    http://www.connorcourt.com/catalog1/index.php?main_page=product_info&products_id=285

  29. johanna

    Whoops, wrong thread – but yes, dot, it’s certainly an improvement on the standard line of “I am a father to my people”, which was often literally true.

  30. AP

    Why the fuck do I care if these ignorant arseholes pull their money out? Ultimately, Australian shareholders fund three tenths of fuck all of coal mining investment. But then the whingers complain about “spreading the benefits (of the boom)”. If all these parasitic wankers pulled their money out it would make about zero difference, because ultimately 95% of equity investment is funded by global mining houses or offtakers (and, indirectly the end consummers – yes, if you drive a Japanese or Korean car, that’s you).

    What I’d love to see is any arsehole who advocates divestment actually live without coal in their lives. That means, give up every skerrick of steel or anything made using steel or cheap coal fired power. If only we could force them to live a life without contradiction.

  31. AP

    For anyone who cares to argue with morons who say “we don’t need coal”, making steel is like making a cake. Just as you need butter and flour for a cake, you need iron ore and coal to make steel. Carbon is a vital ingredient which gives steel strength.

  32. johanna

    OK, someone has to say it.

    Texas Tea!

  33. nerblnob

    That’s oil, that is, johanna. Not coal.

  34. kelly liddle

    Sinclair
    I read your article in the Fin and am curious about this talk about corporations law and secondary boycotts. Sorry but seems like a load of garbage to me. As an investor I can invest where I want. Freedom of speech should cover if anybody happens to offer an opinion on any investment sector.

    I can invest where I want and offer any opinion I want. I have some views about big energy companies that supported the carbon tax and I did express those views here previously. Maybe I should be locked up according to your ideas.

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