California’s pension fund bails on coal as industry begins Trump-era rebound

By Chris White

California’s massive retirement pension has almost completely sold off its coal assets even as the once beleaguered industry rebounds during the first few months of the Trump administration.

The California Public Employees’ Retirement System (CalPERS) has divested the bulk of their coal portfolio, according to a report the pension released Monday. CalPERS’s move to jettison the industry comes as one of the pension’s biggest coal assets, Peabody Energy, has seen its financials improve dramatically.

Peabody was one of CalPERS worst performing assets in 2015, a year when the Missouri-based energy company reported a $2 billion loss. Peabody had a mere $900 million on hand at the time of the loss – it declared Chapter 11 bankruptcy last year.

CalPERS owned about 46,000 shares in Peabody a year ago that were worth less than $64,000. The pension, which is the largest retirement fund in the U.S., had paid more than $13 million for those shares.

The company’s plunge in fortunes reduced some of the pain pensioners would feel from a 2015 law compelling CalPERS and the California State Teachers’ Retirement System to divest from coal by July of 2017. The pension’s coal stocks were worth about 10 to 50 percent what CalPERS paid for them, according to the group’s 2016 investment report.

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The coal industry was targeted for extinction under the Obama administration but has new life under President Donald Trump.

Peabody stocks were trading about $30 a share in Monday, which is below the stock’s peak value but 15 times the value it was when the company declared bankruptcy. Some of the company’s gains have come as President Donald Trump continues rolling back Obama-era climate regulations.

Trump ordered the Environmental Protection Agency (EPA) in March to pause former President Barack Obama’s Clean Power Plan, which conservatives claim harmed the coal industry. Trump also signed legislation rolling back the Department of the Interior’s Stream Protection Rule, which stymied energy companies efforts to mine coal on federal lands.

CalPERS sold off shares from 14 coal companies that were worth $14.7 million when the pension fund sold them, according to the pension’s report, but 13 of those 14 companies are worth more than they were a year ago when the coal industry was at its low point.

CalPERS spokeswoman Megan White told reporters on the Monday following the report that the pension fund had some Peabody stock earlier this year but had since sold all of its stake in the coal company.

The coal divestment bill was characterized at the time as a stand against fossil companies that environmentalist and Democrats argue contribute to man-made global warming. They also argued it was simply a good idea considering coal’s poor market performance.

“Coal is a losing bet for California retirees and it’s also incredibly harmful to our health and the health of our environment,” California state Sen. Kevin de León of Los Angeles told reporters when Gov. Jerry Brown signed the law.

Activists have also pushed the pension fund into divesting from other fossil fuel projects, but staff at the massive fund have pushed back on such crusades. CalPERS refused to disconnect from companies connected to the Dakota Access Pipeline, for instance, with staff members saying such a move would limit the pension’s ability to change corporate behavior through engagement.

Democrats called on California to pass legislation compelling the $300 billion fund to divest from all companies investing in the project. The bill would compel CalPERS to sell off shares in Dakota Access LLC and Energy Transfer Partners, the company behind the 1,178-mile-long project.

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