Energy

DC’s Public Pension May Have Purged Fossil Fuel Assets Without Retiree Consent

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Chris White Tech Reporter

Analysts and energy insiders are worried Washington, D.C.’s $6.4 billion retirement pension never bothered asking retirees what they thought about the decision to divest direct investments from fossil fuels.

President of the National Taxpayer’s Union Pete Sepp indicated to The Daily Caller News Foundation he was surprised by the decision, especially after studies show retirees do not favor the idea of divestment for political reasons.

“I’m also curious if the people receiving their pensions all agreed with the decision. It really shouldn’t be that difficult to determine whether the city’s retirees approved of the city’s decision to divest,” Sepp said.

A recent survey conducted by business advisory firm FTI Consulting at the behest of the Independent Petroleum Association of America (IPAA) shows retirees do not want their pensions “politicized” by fossil fuel divestment advocates. Pensioners would rather have their pensions invest in technologies that green the environment, an idea carrying less political baggage.

The survey found 64 percent of pensioners want their pension fund manager “maximizing returns” on the money they’ve invested, not wallowing around in political minutia. Ninety-six percent of those surveyed told researchers they are “likely to cast a ballot in the upcoming presidential election,” and a majority of the respondents opposed divesting from fossil fuels.

Nearly 88 percent of pensioners in Texas, for instance, told researchers they opposed the divestment crusade. Almost 80 percent of Pennsylvania respondents said no to jettisoning oil assets and most New York retirees also rebuke green activists’ “Keep It In The Ground” crusades; more than 72 percent of pensioners in the Big Apple think divestment is a raw deal.

New York’s Democratic Gov. Andrew Cuomo officially banning hydraulic fracking last June, because, according to the governor, it used too much water and could potentially contaminate the state’s drinking source. Research shows hydraulic fracking does not actually affect water quality in five eastern Ohio counties at the center of the Utica shale boom.

Even though New York appears to be opposed to natural gas development, the FTI survey indicates citizens change their tune when personal finances are factored into the equation.

Energy analysts agree with the both Sepp’s argument and the findings in the FTI survey.

American Petroleum Institute’s Vice President of Economic Policy Kyle Isakower mirrored Sepp’s concerns Monday, noting in a press statement following the decision that “Millions of retirees and pension holders depend on income from oil and natural gas investments to live.”

Public pension fund managers “have a fiduciary responsibility to ensure the greatest return for their investors,” Isakower noted. He went on to suggest oil asset purges at public pensions will likely reduce the investment returns for retirees, thus leaving them in the lurch during their golden years.

Fossil fuels – coal, oil and natural gas – still account for more than 80 percent of the energy used on a daily basis, according to the Energy Information Administration.

The District of Columbia’s direct fossil fuel holdings are only a small portion of the city’s pension investment portfolio. It is heavily invested in mutual funds, commingled funds, and private equity, for instance.

According to the city’s most recent private investments update, the D.C. pension fund acquired Lime Rock Partners VII, LP, a private equity investor solely focused on the upstream oil and gas sector, which is not a direct holding.

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