The term “fossil fuels” keeps popping up in the news. Just this week, environmentalist groups petitioned the Pope to divest from fossil fuel stocks. But divesting from fossil fuel is not as easy as signing petitions and getting the Pope on board. Bloomberg New Energy Finance released a report this week estimating that oil, gas and coal companies have a combined stock market value of $5 trillion. The report said divestment from these stocks could be painful:
Fossil fuels are investor favourites for a reason. Few sectors offer the scale, liquidity, growth, and yield of these century-old businesses vital to today’s economy.
“Fossil fuel” is not exactly an obscure term. Most people have the basic understanding that fossil fuels–coal, oil and natural gas–were formed from the buried remains of ancient plants and animals, submerged under heat and pressure for hundreds of millions of years. But, just because they’re formed by the same process, doesn’t mean they are all one and the same. Here is a simple breakdown of the three major fossil fuels and their differences:
Coal: A solid fossil fuel, coal is the most abundant of the three. It is composed of carbon, nitrogen, oxygen, hydrogen and sulfur in varying amounts, which results in three types of coal–anthracite, lignite and bituminous. Coal is used to create energy, but burning it releases a considerable amount of greenhouse gasses, making it the least “green” of the fossil fuels.
Oil: Oil is found in liquid form underground, where it was trapped along with natural gas as the earth shifted over hundreds of millions of years. Once extracted, oil is refined to create gasoline, asphalt, kerosene and more. Oil can vary widely in its composition, which is why it requires considerable refining. As convenient as it may be, burning oil releases carbon dioxide and other greenhouse gasses, a fact that inspires the search for cleaner energy.
Natural Gas: Usually found hanging out in the same spots as oil, natural gas is the lightest of the fossil fuels. It is composed mainly of methane, which is highly flammable. Burning natural gas produces half the greenhouse gas emissions as coal, contributing to its growing popularity. Some consider natural gas a “bridge fuel” that could help countries lower greenhouse gas emissions while they make the slow transition to renewable energy. But methane is a greenhouse gas in itself, so leaking large amounts of natural gas in the extraction process could still hurt the environment. To release the oil and natural gas trapped in small pockets in shale rock, many companies are turning to fracking, which comes with its own set of questions.
Fossil fuels come in many shapes and sizes or, more accurately, many molecular compositions. While they vary in usage and the amount of greenhouse gases they release into the atmosphere, the one thing they do have in common is they won’t last forever.