Back in 2021 Maine lawmakers told the Maine Public Employees Retirement System — the state pension fund — that it was time to get out of the oil, gas and coal business. It gave the agency until 2026 to shed its assets in the fossil fuel industry, the biggest contributor to climate-warming greenhouse gas pollution.
It’s almost five years later, and Maine PERS still holds $1 billion in fossil fuel assets, almost the same value it held in the sector when the law was passed. Among the system’s stock? Oil giant Exxon-Mobil, national electric utility NextEra Energy and investment firm Berkshire Hathaway, which both own and operate coal-fired power plants.
As it turns out, the landmark divestment law had a loophole — Maine PERS only had to divest “in accordance with sound investment criteria and consistent with fiduciary interests,” the law said. In other words, if selling off assets would hurt Maine PERS’ investments, the agency didn’t have to do it.
And according to Maine PERS’ latest annual report to lawmakers on its compliance with the law, the agency has no plans to divest anytime soon.
Maine PERS “does not believe further active divestment from fossil fuels would be in the best financial interests of members as benefit recipients, as further action would conflict with both the trustees’ duty of loyalty and its duty of prudence to our members," it said in the report.
The agency hasn’t invested in fossil fuels since 2017. And the share of its investments in the sector has dropped from 8% when the law was enacted to about 5% last year, according to the agency. The pension fund was valued at about $21.4 billion as of last June.
Maine PERS expects its exposure to fossil fuels will gradually decline over time as it earns returns from private investments at the same time as it ramps up climate-friendly investments to almost $3 billion.
But in the meantime, the agency said it’s simply too costly to get out of fossil fuels.
First, reorganizing its stock portfolio to sell off fossil fuels would incur huge transaction and legal costs, Maine PERS said. And customizing its investment strategy to avoid the sector would triple the $1 million or so it pays in asset management fees, it added.
Second, many of its private investments are in fixed-term partnerships, and removing its fossil fuel exposure would require selling off the entire asset at a steep loss, according to the agency.
“This suggests a discount of nearly $400 million if the system were to dispose of the $2.9 billion of partnerships that hold some fossil fuel investments,” it said.
In an email, Maine PERS CEO Rebecca Wyke said the agency has repeatedly received guidance from the state’s attorney general that its approach is legally sound.
“MainePERS is in compliance with the divestment law,” Wyke said.
But activists who have been protesting the agency to divest for years aren’t convinced.
“They've been portraying divestment as a kind of zero-sum game, where their performance, their investment returns, or the level of risk in their portfolio would somehow be hurt by divestment,” said Scott Budde, a financial analyst who has been working with the Divest Maine coalition.
Budde said the agency is obfuscating facts and shielding itself behind fiscal obligations to avoid taking steps to meet the divestment law. And its latest report has no analysis or detail of how much its fossil fuel assets are earning members or if nonpolluting assets would earn the same or more.
“We’ve found plenty of evidence to indicate that they could make substantial divestment moves and, if anything, their performance might actually be better and it certainly wouldn't be hurt," Budde said.
Meanwhile, other environmental groups are leaning on Attorney General Aaron Frey to revise his informal opinion that MainePERS’ continued investment in fossil fuels is legal.
In a 10-page letter to Frey last year, the Conservation Law Foundation and Center for International Environmental Law laid out its argument that rapid divestment is, in fact, the prudent choice. For example, the long-term value of fossil fuel stocks is likely to sharply decline as the world transitions to cleaner energy, which makes holding onto those assets riskier than moving money into other investments, according to the law groups.
Sean Mahoney, the CLF’s Maine director, said the group had a productive meeting with the office of the attorney general about its position, but nothing has come to it so far. What comes next is uncertain, but a lawsuit isn’t off the table.
“Obviously, from our perspective the best result would be if the attorney general agreed with us and revised his analysis of the law and how it applies to MainePERS and said ‘yes, you can both meet your fiduciary obligations and divest from fossil fuels. And you should start making that plan now,’” Mahoney said.
“If the attorney general decides not to do that, then there are legal avenues that could be pursued, and we’ll certainly be looking at those in terms of how to enforce this legislative mandate.”
~ Story by Peter McGuire
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As we’ve mentioned before, energy efficiency is one of the most direct ways to combat climate change right at home. Not only does buttoning up drafty windows or adding some insulation make you more comfortable, it can reduce greenhouse gas pollution and lower home energy bills.
The benefit of more efficient homes is so obvious that for about 20 years the federal government offered a tax break of up to $1,200 a year to help pay for projects.
Unfortunately, that benefit evaporated at the beginning of the year, thanks to President Donald Trump’s “One Big Beautiful Bill Act.” But there’s still money on the table if you’re considering improving your home performance.
Here are a few examples of cash rebates being offered according to the Efficiency Maine website:
- $4,000-$8,000 for insulation and air-sealing
- $3,000-$9,000 for whole-home heat pumps
- Up to $12,900 for heat pumps in mobile homes
- $6,000 for wood or wood pellet boilers and furnaces
- $3,000 for geothermal heating
Plus, the agency offers low-interest loans to help pay for home efficiency performance projects.
It also has online tools to compare your home efficiency and heat load. And a database to search for nearby qualified vendors.
So if you’re thinking about how to keep your place toasty on cold winter nights — other than firing up the woodstove — and help save money and the planet, check out the benefits available.
Till next time,
Pete
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