California pension funds such as the California Public Employees’ Retirement System and the California State Teachers’ Retirement System may be required to sell their investments in companies that generate at least half of their revenue from coal mining after a bill passed a California State Assembly committee by a vote of five to one on June 24. The bill will go to the California Assembly Appropriations committee, and if it passes, it will head to the Assembly floor.
With a bigger push toward environmentally friendly forms of energy, the pension funds have been under pressure to move away from such investments.
According to Reuters, CalPERS’ coal mining investments are valued at $100 million to $200 million, and CalSTRS has around $40 million in coal investments as defined by the bill.
While the boards of the pension funds should be able to have a final say regarding where they can and cannot invest, moving away from coal investments may be in the retirement systems’ favor. The United States is beginning to turn away from coal toward more efficient and less expensive energy sources.
According to NPR, coal has dropped to about 40 percent of the nation’s power, while natural gas now accounts for nearly one-third. And when solar or wind power can’t do the trick, natural gas can fill the gaps.
As President Obama pushes his climate change action plan, the country will be required to cut carbon emissions by 30 percent from 2005 levels by 2030. Natural gas produces about half the carbon emissions that coal does when it is burned.
“The writing is on the wall. Our policies, our technologies, and global markets are moving in concert away from coal as an energy source,” said the author of the bill, Kevin de Leon, to the committee prior to the vote.
According to Reuters, neither pension fund has a position on the bill.
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Zoë Wolff is a reporter with Institutional Real Estate, Inc.
