Mixed Greens: Milne calls on Future Fund to dump coal investments

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Greens leader says Future Fund should divest ‘risky’ coal assets; Aust carbon price to fall below EU; CO2 Australia CFI milestone; more Tesla big talk.

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Australian Greens leader Christine Milne has called on the Future Fund to offload its fossil fuel investments, arguing that to replace them with “less risky” investments was not only possible but potentially more profitable. “Now that climate change denier David Murray has left the fund’s helm, the Board of Guardians should review investments in the coal companies driving global warming,” Milne said in a statement on Thursday. “Global warming is already increasing our risk of floods, bushfires, heat waves and dangerous storms, so why would we allow the fund to prop up the companies which make our future even more uncertain?”

Senator Milne says the Greens plan to lobby the Future Fund to dump coal the same way it did tobacco – the Fund announced in February it would sell off $220 million in tobacco shares. “I think that the Future Fund guardians now recognise that the community is interested in the investments they hold,” Milne said. “And I would be hopeful that the board …would consider very carefully this call to divest from coal company investments. …If we are to constrain global warming to less than two degrees, 60 to 80 per cent of current coal reserves will be unusable. That is, the share price of coal companies will be significantly less.”

Milne’s appeal to the Future Fund coincides with the presence in Australia of prominent American anti-coal activist, Bill McKibben, who is spearheading an international campaign that is pushing for fossil fuel divestment across the board. “There is a growing movement of Australians ready to leave fossil fuel investments behind, including many who have pledged to move their savings to banks that don’t invest in fossil fuels. The Future Fund should join that movement,” Milne said. “Our Future Fund should not be backing risky investments with taxpayers’ money.”

Australia’s carbon price to trade cheaper than Europe’s

The fate of the Australian carbon price might not be as closely tied to its European counterpart as has been widely predicted, according to analysis from carbon and energy advisory firm RepuTex, which suggests the local price will ‘go its own way’ – being mostly downwards – at the outset of trading in 2015, and might not match the European carbon price, which is currently trading at a near-record low of €4, until FY19 – far later than previously assumed. In a note to clients, RepuTex said it expected local factors – in particular the shape of local energy generation – to play a much bigger role in shaping the price of Australian Carbon Units (ACUs) than previously estimated.

The analysis predicts that decreasing electricity demand and emissions will lower demand for Australian companies to buy permits when the local market opens, and potentially lead to a surplus – depressing prices, minimising demand for EU allowances, and driving a greater spread between the Australian and EU carbon prices. “That surplus may be sustained over multiple years resulting Australian carbon price trading at levels well under EUA prices, despite the one way linkage,” the report says, adding that it would be highly unlikely to see prices climb to $A12 – the 2015-16 carbon price projected in this year’s federal budget – without significant market intervention.

In other news…

CO2 Group’s local division, CO2 Australia, has achieved what it describes as a “major milestone,” facilitating the issue of Australian Carbon Credit Units (ACCUs) for carbon sequestration for the first time in the local carbon market. The ACCUs were realised by Newmont Australia – one of Australia’s largest gold miners – through its Carbon Farming Initiative (CFI) reforestation projects in WA and NSW, part of its portfolio approach to climate change.

Elon Musk has again made the news, this time with the prediction that his EV company Tesla Motors could make its cars efficiently enough to achieve a gross profit margin approaching that of Porsche. The Telsa CEO told investors on Wednesday that Tesla has set a goal of attaining a 25 per cent gross margin this year.

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