Yesterday, I wrote about Ivy Main’s excellent post on Gov. Terry McAuliffe’s interview at “The Next Frontier of Climate Change” conference. The main conclusions of that post: 1) McAuliffe clearly doesn’t know a great deal about energy issues, from what distributed power is (e.g., rooftop solar); to how much it costs to transmit electricity from a nuclear plant vs. a renewable energy facility; to the Virginia power mix, both today and in coming years; to the “levelized cost of energy” for different sources of power (perhaps someone can stick this report on his desk and make sure he’s read it?); etc. and 2) what McAuliffe DOES know appears to come disproprortionally from a wildly biased, pro-fossil-fuel, pro-nuclear, anti-energy-efficiency, anti-distributed power source — Dominion Power — with which he spends an inordinate amount of time (question: could a small business, or an ordinary citizen, get the level of access Dominion Power – $13 million in donations and counting! – has to the governor’s office?), and which he alternately claims he has no control over/can tell what to do.
Anyway, there were so many misstatements, flat-our errors, etc. in Gov. McAuliffe’s 38-minutes-but-felt-like-an-eternity interview at the “The Next Frontier of Climate Change” conference, this is going to require a multi-part series to tackle them. We’ll start with McAuliffe’s comments on fossil fuel divestment, which were flat-out wrong on several points.
First, the question was specifically about whether “the state of Virginia and its retirement fund and other relevant funds should divest from fossil fuel companies. McAuliffe’s answer?
No! I think they have to make the decision what is in the best interest of whatever they’re making their investments; they have a fiduciary duty to make those investments. And clearly as governor I am not going to sit here and tell the people who manage these funds what to do — not my role. And I clearly understand my role…Jeff, it is not my job to come in and tell our businesses what to do. I am a fiscally conservative, pro-business Democrat; I am socially very progressive…
Just a few problems here.
- After answering point-blank “no” to the question about whether Virginia’s retirement fund should divest from fossil fuels, McAuliffe completely contradicts himself by arguing that it’s actually NOT his job/role to tell the people who manage these funds how to handle their “fiduciary duty.” So then why answer “no” to the question — or “yes” for that matter? If McAuliffe really believes he has no role in this, then why doesn’t he just say “not my role” and leave it at that?
- Of course, if Terry McAuliffe really believe that it’s not the governor’s role to be a leader on the most important issue facing humanity (man-made climate change), and our state (which the last I checked was part of humanity), that’s just sad. And I’m just curious: by that reasoning, is it also not McAuliffe’s role, as governor, to lead on a whole host of other issues affecting Virginia? Or is it just this specific issue? If so, why just this specific issue? Perhaps because Dominion Power and other powerful, wealthy fossil fuel interests (and donors to Virginia politicians) fiercely oppose fossil fuel divestment? Or is that just a wild coincidence? Hmmmm.
- McAuliffe then segues into a complete non-sequitur about it not being his “job to come in and tell our businesses what to do.” Except that nobody asked him about “our businesses;” they asked him about the Virginia STATE retirement fund, which covers thousands of employees of the Virginia executive branch – you know, the one that Gov. McAuliffe heads up. Wo why bring up businesses at all? Freudian slip?
- Anyway, just for argument’s sake, let’s say we were looking at this issue purely from a “fiscally conservative, pro-business” point of view. Would it make sense to at least CONSIDER divesting from fossil fuels? Actually, yes – big time. Evidence? See this post, which points to several leading private-sector analyses on this topic, such as:
1. Impax Asset Management, which found that “over a five-year period, ‘removing the fossil fuel sector in its entirety and replacing it with ‘fossil free’ portfolios of energy efficiency, renewable energy, and other alternative energy stocks, either on a passively managed or actively managed basis would have improved returns.”
2. S&P Capital IQ, which found that “Endowments That Divested Ten Years Ago Would Have Been ‘Better Off.'”
3. Northstar Asset Management, which “found negligible costs between 0.07 and 0.15 percent annually for divesting from fossil fuels.”
4. Aperio Group, which found that “a portfolio excluding the 15 most harmful stocks as identified by climate change advocates incurs ‘virtually no risk penalty.'”
Meanwhile, scientists say that “75% of known fossil fuel reserves must stay in ground,” which effectively means that if humanity hopes to avoid environmental catastrophe in the next few decades, most fossil fuels are simply “unburnable”. That, in turn, raises the spectre of a massive carbon “bubble” (think the real estate bubble, but possibly even more dire), in which “fossil fuel assets, such as coal, oil and gas, could be significantly devalued if a global deal to tackle climate change is reached.”
The upshot of all this is clear: it’s imperative for pension funds like the Virginia Retirement System (VRS) to be considering, seriously and urgently, whether they NEED to divest from fossil fuels, and quickly, in order to protect their investors. And they need to be considering that divestment for purely “fiduciary” reasons, not even taking into account their moral obligation to the planet, future generations, etc. As such, it follows that the governor of Virginia should be leading that conversation, not claiming he has no role to play as the top elected official in our state.
Other than all that, a fine answer by Gov. McAuliffe. 🙂 Stay tuned for more in this multi-part series…