As some of you may have read, the Washington Coal Act, SB 5439, is now in the Senate Ways and Means Committee and is unlikely to progress towards passage this year. The Act requires our state’ s public pension board, the WSIB, to divest from coal and stop making new investments in coal as well.
We should not be surprised or disappointed. We have made HUGE progress. Significant bills very often take a few years to pass, and this bill has already gathered unexpectedly broad and enthusiastic support during this difficult session. It generated thousands of supportive emails to senators and developed a Coalition of ten active organizations backing it.
Bills have a two-year life span so we will take that time, continue to build support and understanding of the need to divest from this deadly, dirty energy source that contributes to climate change throughout the world, including right here in Washington.
We are enormously thankful to Senator Noel Frame,( D36), who sponsored the Washington Coal Act with 6 co-sponsors during the current legislative session.
We are also going to use the interim to raise important issues, not the least of which is the WSIB’s characterization of the size of their investment in coal, and their movement towards investment in green energy. Frankly, we believe the information from the Board, provided to key legislators, obfuscated the real situation.
For example, The Board provided input to Senator Frame after the bill was introduced, claiming that the WSIB had only $119 million invested in coal and had reduced its exposure to coal from 0.33% in 2012 to 0.07% in 2024. The chair of the Ways and Means Committee’s legislative assistant sent an email to some of us bill proponents saying Sen. Robinson would not be scheduling a hearing for the bill because the WSIB is reducing its coal investments and will probably continue to do so.
Unfortunately, the method used by the WSIB to classify coal holdings only takes into account companies whose primary source of revenue is thermal coal according to the MSCI Global Industry Standards Classification (GCIS). This method eliminates huge coal operations that are parts of much larger companies that are dwarfed by their other trading businesses. This practice has the effect of hiding coal investments.
On the other hand, the Global Coal Exit List (GCEL) used in the proposed WA Coal Act, is internationally recognized and used by investors, banks, insurance companies, pension funds, and asset management companies around the world to get a clear view of major coal operations worldwide. Investors representing almost $20 trillion in assets use the GCEL to evaluate their investments. The GCEL turns up $2.6 billion in WSIB coal investments in public investments. That’s 24 times more than the WSIB counts in its coal holdings!
The GCIS used by the WSIB makes it almost impossible to track substantial coal investments, while the GCEL provides a clear, annually updated status of major coal operations.
The WSIB representative also posed the argument to Senator Frame, in an email against the WA Coal Act, that some WSIB coal investments “fall in the category of “brown-to-green” investments, whereby companies are actively transitioning from greenhouse gas-intensive energy production or consumption to renewable energy sources.” WSIB’s example of such an investment, NTPC Ltd, is the largest power company in India—mainly coal!
That’s a bit shocking. NTPC’s generating capacity of 71 gigawatts is equivalent to 92 Centralia coal plants, and while it claims to be adding 60 gigawatts of renewable energy by 2032, it is currently EXPANDING its coal production by the equivalent of 11 Centralia coal plants– not including its many subsidiaries. That certainly doesn’t sound like a brown to green investment!
The Washington legislature passed the Clean Energy Transition Act in 2019, which bans the use of coal for energy in Washington after 2025. How is it that a state agency completely stonewalls against the intentions of the legislature by refusing to even acknowledge that there are ways it could better align with climate policies and simultaneously up their game in complying with their fiduciary duty to act in the best interests of its beneficiaries?
This is not politics, this is prudence. Pensions are tasked with acting in the long-term best interest of beneficiaries, not making short-term gambles. Coal is dying out in the U.S. and is being replaced by much less expensive renewables. Coal is not a good long-term investment and the Board should take actions with that understanding.
The long-term outlook for U.S. coal is a steady downward trend. According to the Institute for Energy and Economic Financial Analysis IEEFA, it’s possible that all the remaining U.S. coal capacity could be shuttered by 2040.
Britain, where the first coal plant was built, has already closed its last coal plant. Coal produces more greenhouse gases than any other energy form– not to mention toxic emissions that researchers estimate have caused 460,000 premature deaths in the U.S. between 1999 and 2020.
Moving $2.6 billion from coal over 3-5 years into other investments is not a large ask for a $200 billion portfolio. Fiduciary duty is a hallmark of the WA Coal Act. The WSIB is good at making investments with healthy returns. California and Oregon have both passed coal divestment bills. CalPERS returns increased nearly $600 million in 2022 according to Wilshire, CalPERS’ consultant.
Many thanks to all the Third Act members who wrote to your senators about this significant issue. We ask you to continue to advocate with us as we move forward toward passage.