The California Senate voted 22-14 in favor of legislation calling on both CalPERS and CalSTRS to divest from investments in coal companies.
The bill, introduced by Senate President Pro Tem Kevin de Leon, requires the $304.1 billion California Public Employees' Retirement System, Sacramento, and $193.1 billion California State Teachers' Retirement System, West Sacramento, to liquidate holdings in thermal coal companies by July 1, 2017, if officials cannot conclude the companies are transitioning their business to cleaner energy generation.
Just five years ago, the American coal industry was looking strong. Business was good. Opponents of climate change regulation had kept a Democratic-controlled legislature from enacting meaningful carbon-reduction legislation. With renewable energy in its infancy, nuclear power plant construction stalled, and due to the higher cost of natural gas, there was no immediate alternative on the horizon to replace the dirtiest fossil fuel.
But times have changed, and the market value of coal companies has collapsed. The four largest coal companies were worth a combined $21.7 billion dollars in June 2010. Now they’re worth $1.2 billion. Two other large coal concerns, Patriot and James River, have both filed for bankruptcy in recent years. And one market analyst told the Financial Times in February to expect “multiple bankruptcies in US coal over the next 12-18 months.”
Citing climate change as a major threat, one of the world’s largest insurance companies has pledged to drop its remaining investment in coal assets while tripling its investment in green technologies.
At a business and climate change conference held this week in Paris, AXA — France’s largest insurer — announced that it would sell €500 million ($559 million) in coal assets by the end of 2015, while increasing its “green investments” in things like renewable energy, green infrastructure, and green bonds to €3 billion ($3.3 billion) by 2020.
During the announcement on Friday, AXA’s chief executive Henri de Castries spoke about the threat that climate change poses to the environment, and the responsibility of insurance companies to deal with those threats. Last year, AXA paid over €1 billion ($1.1 billion) globally in weather-related insurance claims, citing climate change as a “core business issue” already driving an increase in weather-related risks.
In 2014, 39 percent of American electricity was generated by burning coal – down from 52.8 percent from 1997. Though the fuel source has steadily declined from its late 20th century peak due to competition with other energy sources and increased enforcement of environmental safety measures, the coal industry still maintains great economic and political power. However Big Coal may face its biggest challenge yet as the EPA implements new regulations governing greenhouse gas emissions. As a result, coal plants are shutting down at an impressive rate.
Bank of America unveiled a new global coal mining policy today committing to reduce exposure to coal mining companies across the board. Bank of America’s Andrew Plepler announced the new policy at the bank’s annual shareholder meeting this morning in Charlotte, stating, "With regard to coal, over the past several years we have been gradually and consistently reducing our credit exposure to companies focused on coal mining. Our new policy...reflects our decision to continue to reduce our credit exposure over time to the coal mining sector globally.” The policy change comes after four years of campaigning from Rainforest Action Network and other groups, and is the strongest policy of its kind to date.
“Today’s announcement from Bank of America truly represents a sea change: it acknowledges the responsibility that the financial sector bears for supporting and profiting from the fossil fuel industry and the climate chaos it has caused,” said Rainforest Action Network Climate and Energy Program Director Amanda Starbuck. “In real terms, this means the bank is turning its back on the coal mining industry and committing to energy efficiency and renewable energy.”