OAKLAND, Calif. — The head of California’s Senate plans to introduce legislation to require the state’s public pension funds to get rid of their investments in coal equities.
State Senate President Pro Tem Kevin de León (D) said yesterday that he would introduce a bill next month targeting the state’s pension funds, including the California Public Employees’ Retirement System, or CalPERS, the largest state pension fund in the country, with $295 billion in total assets.
“Coal is a dirty fossil fuel,” he said. “We generate very little electricity in California from coal. … I think that our values should reflect who we are as a state.”
Speaking to reporters, he said he was still working out the details of the legislation but that it would focus only on divestment from coal, not other fossil fuels.
“We’re talking about it in a way that’s smart and intelligent, not in a way that hurts sound investment strategies,” he said. “It’s not a visceral, emotional reaction, but rather I think it’s a sound reaction to what’s happening in regards to climate.”
De León was speaking at an event put on by billionaire political activist Tom Steyer, whose NextGen Climate super political action committee contributed tens of millions of dollars to races around the country in this year’s election cycle in support of action on climate change (E&ENews PM, Nov. 19).
CalPERS did not respond to a request for comment. A representative of the nation’s second-biggest public pension fund, the California State Teachers’ Retirement System (CalSTRS), which has $187 billion in investments, said it would work with the Legislature.
Seeing a ‘low-carbon future’
“Right now, the economy is tilted toward carbon assets, and for any investor our size, those carbon assets are a substantial component in our portfolio of investments,” said spokeswoman Gretchen Zeagler. “However, we are moving toward a low-carbon future.”
CalSTRS announced earlier this year that it would increase its investments in low-carbon generation and technologies to $3.7 billion within five years, up from $1.4 billion today, and could invest even more if a “meaningful” price on carbon is established (ClimateWire, Sept. 22).
“CalSTRS considers our investment in coal an important component of our review of sustainable investing and risk management,” Zeagler said. “We look forward to working with the Legislature in developing a balanced approach toward evaluating our investments in coal.”
Climate activists have increasingly been pushing for large investors to divest from fossil fuels. Stanford University announced in May that it would rid its $18.7 billion endowment of any direct investments in coal-mining companies (ClimateWire, May 7).
At yesterday’s conference, one environmentalist cited the potential market clout of California, the world’s eighth-largest economy.
“If we could get the state of California to divest in a responsible way away from the dirty energy economy, it really could be a game-changer,” said Ann Notthoff, director of California advocacy for the Natural Resources Defense Council, which earlier this year developed an index of large public corporations that excludes fossil-fuel companies (EnergyWire, April 30).
Steyer praised de León’s announcement. “One more brilliant idea from Kevin de León,” he said.
Renewed push to extend cap and trade to vehicle fuels
Yesterday’s event also functioned as a rally for the state’s climate policies, which have been under attack in the state Legislature from lawmakers worried about the potential economic effects of the state’s cap-and-trade system for greenhouse gases, authorized by the 2006 law A.B. 32. Republicans introduced a bill earlier this month to block the system from expanding in January to cover transportation fuels, in addition to stationary emissions sources like manufacturers and utilities (ClimateWire, Dec. 1).
Steyer said gas prices should not rise significantly as a result of fuels’ inclusion under the cap. A state-commissioned analysis in July said cap and trade would likely raise fuel prices by 10 to 12 cents per gallon (ClimateWire, July 8).
“The oil companies’ $70 million lobbying campaign over the last six years has included trying to fool Californians into believing A.B. 32 is a bogeyman that will cause gas prices to soar,” he said. “If we see gas prices spiking on January 1, I really hope our leaders in Sacramento and Washington, D.C., will take a hard look to discover the true cause and stand up for Californian consumers.”
The leader of the state Assembly agreed, exhorting businesses to publicly support the state’s emissions program.
“We need a coordinated response that makes clear there is no gas tax in A.B. 32,” said Assembly Speaker Toni Atkins (D). She said that gas prices might eventually increase on the order of “a few pennies, maybe,” but that the rise would be dwarfed by the economic benefits from the auction of carbon permits, which have generated more than $800 million so far.
Separately, an advocacy group for low-income and environmentally disadvantaged Californians unveiled a website yesterday aimed at publicizing “the benefits of our state’s clean energy policies and the dangers posed by polluters’ attempts to weaken those policies.”
The Greenlining Institute’s website, UpLiftCA, features stories from residents who have benefited from state programs like solar installer internships funded by the California Solar Initiative.
The campaign was primarily funded by a grant from the San Francisco-based Energy Foundation. Bruce Mirken, a spokesman for Greenlining, wouldn’t reveal how much it cost, but said: “Our budget for this thus far is pocket change compared to what the WSPA [Western States Petroleum Association] has been spending.”