$17 billion state pension fund to cut $1.3 billion in coal, oil and gasJune 23, 2021 The Maine State Legislature passed LD 99, An Act To Require the State To Divest Itself of Assets Invested in the Fossil Fuel Industry on June 8, 2021. While states such as New York have divested their pension funds from fossil fuel companies, Maine’s LD 99 […]
$17 billion state pension fund to cut $1.3 billion in coal, oil and gas June 23, 2021
The Maine State Legislature passed LD 99, An Act To Require the State To Divest Itself of Assets Invested in the Fossil Fuel Industry on June 8, 2021. While states such as New York have divested their pension funds from fossil fuel companies, Maine’s LD 99 is the first legislative directive of its kind in the country .
LD 99, requires the state treasurer’s office and the board of the Maine Public Employee Retirement System (MainePERS) to sell all fossil fuel investments by Jan. 1, 2026, and until then provide yearly divestment reports to the Legislature’s Appropriations and Financial Affairs committee. The law directs the State Treasurer to divest the $17 billion Maine Public Employee Retirement System from their $1.3 billion of investments in coal, oil and gas companies.
“My generation and people that are younger than me will literally be paying for everything that our government and our leaders don’t do to address the climate crisis now. We’re really pairing those two things, that we want to protect our retirees and that we want to protect our future,” said Representative Margaret O’Neil, the primary sponsor of LD 99. “Fossil fuels are linked directly to climate change, and continuing to invest in them is bad for state coffers, our retirees and our environment. It is our responsibility to steward state retirement funds to get the best financial benefit for our retirees and, as we transition to a reduced carbon economy, divestment advances that goal. It’s also our responsibility to protect our environment so that future generations can inherit a healthy, habitable planet.”
Fossil fuel investments have been losing value for years, a decline that has worsened with shifts to renewable energy and the pandemic. The S&P 500 Energy Sector – composed entirely of fossil fuel stocks – lost 16 percent from 2011 to the end of 2019, while the remainder of the S&P 500 gained 150 percent over the same period. Over the 8-year period prior to the pandemic and recession, MainePERS had directly lost hundreds of millions of dollars on their fossil fuel investments.
“It is a bold law and a bold statement,” said Henry Beck, Maine’s treasurer. “We do very uncomplicated investing and that’s why it’s easier for us to deal with legislative directives. It’s easier to unwind those stock investments than, say, a private equity arrangement.”
The bill received support from State Treasurer Henry Beck, the Maine Youth for Climate Justice coalition, and numerous environmental advocacy organizations. While 1,325 institutions worldwide have made similar pledges after grassroots activism efforts, Maine has become the first state in the nation to commit to fossil fuel divestiture through legislation.
“This bill represents our chance to both stop investments in fossil fuels and to guarantee a better future for our teachers and other public employees. I hope this can be the first of many divestments from industries like fossil fuels that are damaging our chances at a livable future,” said Sirohi Kumar, a Core member of Maine Youth for Climate Justice and a high schooler at Mount Desert Island High School.
Last February, a committee hearing saw numerous testimonies form supporters including the Sierra Club Maine who identified environmentally positive investments that MainePERS could make instead of propping up the fossil fuel industry.
“Divesting $1.3 billion from the fossil fuel industry is one of the biggest steps that Maine can take to address climate change in the short term,” said David Gibson with Sierra Club Maine.
Maine Youth for Climate Justice also testified in support of LD 99 stating, “to tackle a broad issue such as the climate crisis, it must be dealt with comprehensively. Such a comprehensive response includes financial solutions, making L.D. 99 an important step forward.”
“Pensioners deserve better out of their retirement funds than investment in companies that actively damage the ground on which we walk, the water we drink, and the air we breathe,” said Anna Siegel with Maine Youth for Climate Justice.
10 other states have divestment bills, using Maine as a template. The bill passed the House with a vote of 80 to 57, and the Senate 19 to 13 in June, 2021.
“The divestment of MainePERS is a necessary step in authentically tackling the climate crisis on a systemic level and investing in Maine’s future, ” said 350 Maine and Maine Climate Action Now’s Youth Engagement Coordinator, Cassie Cain.
Seven Maine municipalities have declared climate emergency. Many states, including Maine, California, and New York, have Renewable Portfolio Standards that require 100 percent clean electricity by 2050, or sooner. It is important that Maine has bolstered our carbon emission reduction goals with a concrete commitment to end our financial enabling of fossil fuel companies.
The Governor’s Climate Council wrote in their recent 2020 report, Maine Won’t Wait, that, “Climate action requires leveraging a variety of funding sources and innovative financing mechanisms to support sector-level transformations and the ability of Maine lenders to make crucial long-term investments in climate-focused projects and initiatives.”
The millions of dollars that will come from the state divesting from fossil fuel companies is exactly the type of “innovative financing mechanism” that the Governor’s Council recommends, freeing up capital for reinvestment into “climate-focused projects and initiatives.”
The legacy of distrust in fossil fuel companies comes from decades of these corporations not telling the public the truth about the irreversible impacts of emitting massive amounts of carbon into the atmosphere, and has been compared to actions by tobacco companies that withheld scientific knowledge of public health harm in favor of profit.
The new law will go into effect 90 days after final adjournment of the legislative session at the end of June.
Rep. O’Neil is serving her third term in the Maine House. She is House chair of the Agriculture, Conservation and Forestry Committee and represents District 15, part of Saco.