If the students at Stanford University believe they sent the coal industry a strong message this week, they should think again. The school's decision to eliminate coal from its portfolio did not send shock waves through the industry. In fact, representatives say it will have no financial impact on the industry at all. Nor will it curb the growing demand around the world for coal-generated electricity.
"It strikes us as a politically expedient course of action rather than a rational response," says Luke Popovich, a spokesman for the National Mining Association. Even if more universities decide to follow suit, it won't have a material effect on coal companies, he says.
University endowments commanded nearly $450 billion last year, according to the National Association of College and University Business Officers. Of that, only about 5 percent of the money is invested in energy, including everything from coal to solar.
Popovich says coal is simply too cheap, too abundant and in demand to be affected by university divestitures. There are 3 billion people on the planet living with little or no reliable electricity, he points out.
"They won't have electricity anytime soon, certainly not in their lifetimes unless coal generates it," Popovich says.
Beyond that, Stanford's decision isn't contributing to a real solution to the underlying environmental problem, he argues.
"If the challenge in the near future is to, if not eliminate entirely the CO2 from coal combustion, then where can we look for that sort of leadership unless we're looking at institutions like Stanford?" Popovich says.
That is a sentiment echoed by Brown University President Christina Paxson, who, last fall, explained the university's decision not to divest.
"Divestiture would convey only a nebulous statement — that coal is harmful — without speaking to the technological and policy actions needed to reduce the harm from coal — actions where Brown can make real and important contributions, through teaching and research," Paxson wrote.
Indeed, other universities, including Harvard and Washington University in St. Louis, have considered and rejected similar student proposals. Last fall, Harvard President Drew Faust wrote, "The endowment is a resource, not an instrument to impel social or political change."
Coal is also a big moneymaker and is allowing more people in the developing world to access power, says Vic Svec, a spokesman for Peabody Energy, the world's largest coal business.
"The world continues to turn toward coal," Svec says, and the use of coal globally is gaining steam, not losing it.
"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," Svec says.
There is plenty of demand for coal stocks, another industry spokesman explained. When universities divest their shares, someone else simply turns around and buys them.