Thanks to a robust and forward-thinking partnership amongst the Patrick Administration, Legislature, municipalities, environmental advocates and utilities, Massachusetts has taken the lead on combating climate change. By investing in clean energy and energy efficiency, we are showing the nation that we can reduce our impact on the climate while also creating jobs. Unfortunately, Washington hasn’t seen the wisdom of our ways. Our national energy policy is stuck in a debate about who can promote fossil fuels more.
Given that, we have more to do here in Massachusetts – but what more can we do? I propose we need to stop investing in oil, coal and other fossil fuels with our public pension funds. We need to follow the call of college students on campuses nationwide, the faith community, progressive cities and towns, and others by divesting from fossil fuels. I’ve filed legislation to do this (S. 1225) and I hope you’ll lend your support to make Massachusetts a leader in this effort.
Chapter 6, Verse 21 of the Gospel of Matthew says “For where your treasure is, there your heart will be also.” While, we are making historic investments in clean energy, energy efficiency and conservation, we have maintained major investments in fossil fuels. Today, fossil fuel companies represent two of the ten largest investments in the both the Public Retiree Investment Trust (PRIT) fund’s $9.4b domestic and $8.2b international equity portfolios. An additional $780 million invested across three other portfolios means the Commonwealth invests around $1.3 billion in state assets in fossil fuels.
At the same time, Massachusetts has invested nearly $2 billion in energy efficiency improvements through the 3-year efficiency plans and reached unprecedented levels of investment in incentives and credits to promote clean energy installation. We’ve been recognized by the American Council for an Energy Efficient Economy (ACEEE) as the top state for energy efficiency. We’ve hit our ambitious solar energy production goals (a 125X increase) 4 years early and have embarked on a significant new goal. However, our heart is split in two, because our wealth is split in two. Maybe more importantly, the success of our efforts around efficiency, conservation and clean energy is stunted, by continued investment of pension funds in companies whose profits depend on continued greenhouse gas emissions.
At some level, divestment of pension funds from the fossil fuel industry is imminent. No matter how stagnated, if not backward, the politics of climate currently are in Washington, the impacts of climate change – more severe, unpredictable weather events – will necessitate action. Bill McKibben & others have rightly labeled this the “Carbon Bubble.” For as long as we invest in fossil fuels and ignore the science of climate, we will enable the bubble to grow. It will pop and when it does, the pain it produces is entirely dependent on how fast we act.
Perhaps the most egregious part of our current investment in fossil fuels is this – they don’t need the money. In 2012, Exxon Mobil nearly set a company, and by extension world, record for profit. Earnings of $44.9 billion fell $300 million short of the 2008 record of $45.2 billion set by the company. Personally, I don’t begrudge them. We have failed to change our policy priorities to the degree necessary to combat climate change. Exxon Mobil is just responding to the market as it currently exists (while admittedly joining with most other fossil companies in seeking to keep it that way through political lobbying and influence peddling). That is why, more so than ever before, it is incumbent on us – those who care deeply about the future of our communities and this planet – to do everything in our power to change the market, the politics and the dynamic of our current debate about climate.
I, like many others, have watched the increased activism on climate since the 2012 elections with great hope and promise. Seeing 40,000 marchers of diverse backgrounds gather in Washington, D.C. to call on the Obama Administration to reject Keystone XL, along with countless other protests, has given me hope that our national leaders will no longer turn a blind eye to the challenge our of times. However, if we have learned anything from the recent past, it is that we cannot wait for Washington to act. That is why I chose to file this legislation. As Bill McKibben notes regularly in his recent speeches, at least now we will be able to tell future generations we did not go down without a fight. My hope is we will be able to tell them, this is where we started to stem the tide. I hope you’ll join me in this portion of that effort.
John Tehan says
I work in the solar industry, selling residential solar power systems. Pension funds would be better spent investing in clean energy – I’ll be urging my senator, Richard Moore, to support your bill and co-sponsor it.
kirth says
For example, Chelmsford is about to install solar arrays on the roofs of all its schools. This should be par for the course, not something unusual.
And yes, governments and pension funds should stop investing in fossil fuels.
jconway says
That a good sign. My aunt out there still has “lets pave the rainforest” bumper sticker on her Ford Excursion….
Christopher says
…Markey DID win over Lynch and there is definitely a progressive core there.
williamstowndem says
And this comes a day after the NYT tells us the world has crossed the 400 ppm Carbon threshold, something no other humans in the history of the Earth have experienced. We will have severe climate change, but for the sake of future generations we have to try to mitigate the damage. I’ve given up on Washington; we have to set the pace ourselves. Let Massachusetts lead the way … AGAIN! Thanks, Ben.
Trickle up says
I’m not convinced this is a useful tack to take.
Don’t get me wrong, I am an environmental extremist and I hate to rain on anybody’s tactic. But just what exactly is this supposed to accomplish?
The strongest case that can be made, as far as I can see, is that a divestment campaign gives people an organizing handle and a way to oppose injustice, such as apartheid. It could, the story goes, launch a wave of campus activism.
Okay. But the SA campaign had meaning and power insofar as it fit into a strategy. It had great symbolic power precisely because it was not merely symbolic: it was depriving an oppressive government of needed capital and (with other boycotts) isolating the Union of South Africa on the international stage.
Divesting from Exxon, however, simply means transferring ownership of the company (or a slice of it) from investors with scruples about global warming to those without. It does not deprive Exxon of capital, which the market provides.
So while it does give people an opportunity to voice displeasure at injustice, stupidity, and greed, it does nothing to stop it. Divestment campaigns and global warming can coexist without interfering with each other in any way.
Is there a strategy that this helps? What is it?
senatorbendowning says
My reason for offering this and supporting divestment campaigns at other levels is not that I think it will bankrupt the fossil fuel industry. I do think it will inconvenience them. I do think it will be a bother, but I don’t think it will solve the problem, writ large. In other words, I think its necessary but not sufficient.
The broader strategy it does fit into is one of raising awareness. In this way, fossil fuel divestment is more similar to tobacco divestment of the late 1990s. I don’t pretend its the perfect tool or one that gets at the core of the issue, as South Africa did. However, I do believe its important for governments and institutions to say that if allowing climate change to continue is wrong, so is profiting from the process.
Trickle up says
I believe that people of good will should band together. We certainly need to do things that build a grass-roots movement, which is very challenging since the problem and its solution has a global scope.
The absence of a strategy should not stop us from doing things, but I do deplore the absence of a strategy. Historically, victories for the environment rest on them.
For the antinuke movement of the 70s and 80s it was “cut the nukes off from the public money supply.” This worked because the nuclear industry was based on subsidies.
For many of the air-quality fights it has been “make polluters bear the costs of the pollution,” internalizing at least some of the externalities. This worked because industry will, ultimately, make rational capitalist decisions when markets give the right price signals.
If there are going to be divestment campaigns and boycotts directed at the fossil fuel industry, I suggest it would be wise to link those efforts to specific demands that the industry can meet.
Ending appartheid was an awfully tall order but did not demand the end of the South African state. “Stop making money by drilling and fracking” probably does mean the end of Exxon and thus may not be meet-able at all. (Still perhaps useful for rallying the troops as you suggest) On the other hand regulation can make some of Exxon’s activities uneconomic and unprofitable.
Christopher says
Fossil fuel companies make a ton of money and are thus among the best investments from a strictly financial standpoint. To divest from these companies is a way of publicly proclaiming that you feel so strongly about the environment you are willing to sacrafice that great return on investment in order to make your point.
daves says
The Commonwealth’s pension funds are not a piggy bank for pet projects or a vehicle for symbolic acts. These funds are necessary to meet huge obligations that we have collectively incurred to state and municipal employees, obligations that must be paid.
I can see the merit in not having our pension funds invest in certain industries: tobacco comes to mind, for example. However, if the legislature starts playing the role of amateur investment manager, the costs to the Commonwealth could be huge. A shortfall in pension returns will require added investment in the funds from general revenues, to the detriment of other programs. This is playing with fire. Massachusetts pension funds are already underfunded. The government has a fiduciary duty to the taxpayers and to the beneficiaries of the pension plans to manage the funds so as to to pay off the obligations in full.
Biblical quotes are nice (and to some people, inspirational), but they are not a substitute for a well thought out plan. There are more direct and effective ways of dealing with climate change: this bill is a symbolic act, and little more.
Christopher says
Since he is elected he is ultimately accountable to the people for his decisions. If the legislature restricts investments by law they too are similarly accountable at the ballot box.
Charley on the MTA says
but fossil fuels are not? Tobacco kills smokers; fossil fuels kill, well, everything.
Charley on the MTA says
If one state refuses to take part in the collective suicide of fossil fuel dependence, then not much changes — we’re all screwed. If many states do it, then the calculus may well change. Of course this has to happen on a variety of fronts — efficiency, clean fuels, public transportation, etc.
It’s simply inaccurate to claim that is an act in isolation. It’s one more front in the war. The kind of thinking that says, “Well, X measure doesn’t cure everything, therefore it’s not worth doing” is manifestly wrong. It means you need 1000x, not 0x.
And I have every confidence that Sen. Downing understands this full well. Onward.
Trickle up says
as you say upthread. I think you are just wrong about “if many states do,” but if a divestment campaign mobilizes political energy for other measures (as with tobacco) that does not matter.
petr says
… almost by definition =-)
While “investing” in fossil fuels often carries with it less risk of loss of principle, and increased chance of returns and dividends, and thus makes it a good “investment”, when seen from a purely mercenary point of view, it really isn’t “investment” in the sense I think you mean: buying stock in Exxon is buying stock in the churn of drill, refine, burn, gasp and, you’re not really making anything better. In addition, there is unlikely to be any sort of multiplier. You might help Exxon pump crude out of the ground faster. You might fund another, bigger, tanker that’ll (hopefully safely) get the crude to the refinery). But you’re not investing in much progress. If anything, you’re working against the present state of things where most modes of conveyance, cars, boats, airplanes and trains are in a race to become more fuel efficient. The actual process of turning crude into petrol isn’t all that different from the cracking processes first invented in the 1890’s and refined in the 1920’s. It’s an industry in stasis and unlikely to change. The only thing that will change is the amount of crude available. I had hopes when British Petroleum tried to change it’s name to “Beyond Petroleum” but they suffer, distinctly, from the same issue described here: the lure of easy cash returns rather than real progress.
But specifically investing in renewables is specifically investing in progress: things will need to be built, problems solved, infrastructures built and maintained, and energy delivered. As such, it’s a real investment and, bonus, likely to have a more potent multiplier and a much longer shelf life. Personally, and for those reasons, I’d like to see that 1.3b spent chasing progress, perhaps even eventually being chased by it, rather than simply chasing more bucks in an ever diminishing spiral of diminishing returns. But I don’t think of it as ‘divestment’ in fossil fuels but ‘investment’ in progress.