BOSTON––It's not getting the fanfare of a less-ambitious California bill, but Massachusetts is in the midst of an even bolder divestment push, calling for the state's pension funds to completely rid themselves of fossil fuel investments.
Rep. Marjorie Decker and Sen. Benjamin Downing, both Democrats, have proposed identical bills to divest Massachusetts' $62.3 billion public pension fund of its 8 percent holdings (about $5 billion) in coal, oil and natural gas.
Tuesday, the Joint Committee on Public Service held a nearly three-hour public hearing on the issue. More than 70 students, public school teachers, retirees, financial analysts, public officials, labor and environmental activists, as well as legislative aides, vied for seating and standing room along the wall of a first-floor room of the State House.
About 20 people testified; most supported divestment. The first to speak was Decker, a representative from Cambridge.
Rep. Decker told how she had served nearly a decade in public office before the importance of climate change action really sank in. Sitting next to Decker was her young daughter. Decker said this is the first time her daughter has accompanied her to work, and it's because preschool just ended. But "it is important she's here," Decker said, to understand "the sense of urgency I feel around this."
Sen. Downing was the second to testify. Massachusetts has "taken important steps over the last decade to transition away from fossil fuels," he said. Downing noted that the state is first in the nation in energy efficiency and in clean-energy job growth. He then praised the state's uptake in solar: In 2007, there was less than 2 megawatts (MW) installed; in May 2015, there was a total of 840 MW installed; and the state has announced a goal to reach 1,600 MW by 2020. Downing said it didn't make sense to him how his state could make the commitment to clean energy economy on the one hand, and then also rely "on the profits of fossil fuel companies to pay for pensions."
Downing proposed a similar bill in the last legislative session but it died on the Senate floor. It's unclear whether there's enough support in the legislature to pass the divestment mandate. No vote will be scheduled in either chamber until the bill passes out of the hands of the 16-person Public Service committee.
Massachusetts is one of at least four states with bills pushing for pension divestment from all or some fossil fuels. The California legislature is attracting widespread attention for considering a bill mandating that the state's pension funds divest their holdings in coal. Last week, the state Senate passed the bill and sent it to the Assembly for review. Both Vermont and Connecticut have proposed pension divestment bills that are currently stuck in committee.
Divestment activist Emily Kirkland told InsideClimate News: "Our goal is to get [these bills] out of committee as soon as possible and continue building support," so when they reach the floor for a vote, they will pass. Kirkland is the communications coordinator for environmental organizations Better Future Project and 350 Massachusetts.
According to the proposed measures, the state's pension fund, run by the Massachusetts Pension Reserve Investment Management Board, would have to divest from fossil fuels over the next five years. The bills offer a safeguard to protect the pension funds against poor earnings. Once the phase-out of fossil fuel stocks begins, if the total pension funds' earning drops by even 0.5 percent of their original value, divestment will stop.
There was extensive discussion at the hearing surrounding whether divestment is financially sound. Opponents of divestment, including Stephen Dodge, associate director of the Massachusetts Petroleum Council, urged engagement with fossil fuel companies instead.
The track record for engagement, however, has not been encouraging. A recent InsideClimate News investigation showed that shareholders of the three largest U.S. oil companies submitted more than 100 climate-related resolutions since 1990 to prod them to acknowledge and quantify the climate risks they face. Shareholders voted on 83 of the resolutions. None of them passed.
The Massachusetts Pension Reserve Investment Management Board did not respond to a request for comment.
Climate change scientists, United Nations climate negotiators and others have endorsed the concept that to limit global warming to 2 degrees Celsius, the world must stop spewing carbon dioxide into the air from energy use this century. This means most of the world's proven fossil fuel reserves would have to remain buried in the ground, untouched.
What happens to the value of those reserves if they stay buried?
Chuck Collins, co-founder of the Boston-based financial group Divest-Invest, gave an example illustrating this point at the Massachusetts hearing: Imagine a warehouse full of IBM Selectric typewriters. "At one time, that was worth a lot," he said. "Today, it is not worth a lot." And, he told his listeners, you don't want the Massachusetts commonwealth to be stuck with the equivalent of all those typewriters.