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Don't start a moral campaign against fossil fuel companies

To the editor: Bill McKibben wants the major California pension funds to get out of their investments in fossil fuels. He presents the argument first as a way to actually improve the financial performance of the funds, which lost $5 billion in oil, natural gas and perhaps coal last year. ("Bill McKibben: Being carbon-foolish cost CalPERS and CalSTRS $5 billion," Op-Ed, Aug. 18)

Selecting results based on one year's performance is fatally biased.

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McKibben's real aim is to use divestment as a tool to eventually lock these fuels, unused, in the ground. His argument is basically a moral one. Fossil fuel use is immoral: "It's wrong to wreck the planet."

Be cautious. Moral campaigns can be corrosive to sound policy; they make enemies out of potential allies. The great lift for climate policy is to find ways to challenge and engage intellectual capital to successfully take on the very hard work of managing greenhouse gas emissions.

The thousands of workers in the fossil fuel industry are not immoral and are not the enemies of sound, effective climate policies.

George Sterzinger, Houston

The writer is executive director of the Renewable Energy Policy Project.

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To the editor: A more substantial analysis of California's two major pension funds indicates they are right to focus on the long-term value of holding the investments McKibben wants them to divest.

McKibben focuses on the performance of these energy assets over a single year — a year in which underlying commodity prices dropped by 43%. Divesting from fossil fuel stocks because of one bad year would be like divesting from high-tech stocks after the 2001 dot-com bust — a mistake, since many of those stocks have since grown dramatically in value.

As found in an academic study I plan to release this month, over a 20-year period, excluding oil, gas and coal-related securities from several major institutional investors' portfolios would result in expected losses of 23 basis points per year on average relative to equivalent non-divested portfolios, adjusted for differences in risk.

This kind of long-term evidence about fossil fuel securities is what investors should focus on.

Bradford Cornell, Pasadena

The writer, a professor of finance at Caltech, is a senior consultant and advisory committee member at the economic consulting firm Compass Lexecon.

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