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 re- quires 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. 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 emailsto senators and developed a coalition of 10 active organizations backing it. We have made huge progress.

 

Bills have a two-year life span. We will take that time to continue to build support and understanding of the need to divest fromthis deadly, dirty, energy source that contributes to climate change throughout the world, including right here in Washington. We will use the interim to raise important issues and question some of the WSIB's claims to legislators.

 

We are enormously thankful to Senator Noel Frame (D-36), who sponsored the Washington Coal Act with six co-sponsors during thecurrent legislative session.

 

The Board provided input to Senator Frame after the bill was introduced, claiming that the WSIB had only $119 million invested incoal and had reduced its exposure to coal from 0.33 percent in 2012 to 0.07percent in 2024. The chair of the Ways and Means Committee’s legislative assistant sent an email to some of the bill proponents saying Sen. Robinson would not be scheduling ahearing 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 sourceof revenue is thermal coal, according to the MSCI Global Industry Standards Classification (GCIS). This method eliminates giantconglomerates whose huge coal operations may, nevertheless, be dwarfed by their other trading businesses.

 

In contrast, the Global Coal Exit List (GCEL), used in the proposed WA Coal Act, is internationally recognized and used byinvestors, banks, insurance companies, pension funds, and asset management companies around the world to get a clear viewof major coal operations worldwide. Investors representing almost $20 trillion in assets use the GCEL to evaluate theirinvestments.

 

The GCEL turns up $2.6 billion in WSIB coal 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 opposing the WA Coal Act, that some WSIB coal investments “fall in the category of ‘brown-to-green’ investments, whereby companies are actively transitioning fromgreenhouse gas-in- tensive 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-fired plants! That’s a bitshocking. NTPC’s generating capacity of 71 gigawatts is equivalent to 92 Centralia coal plants. While it claims to be adding 60 gigawatts of renewable energy by 2032, it is currently 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 inWashington after 2025. How is it that a state agency completely stonewalls against the intentions of the Legislature byrefusing to even acknowledge that there are ways it could better align with climate policies and simultaneously up theirgame in complying with their fiduciary duty to act in the best interests of their beneficiaries?

 

This is not politics, this is prudence. Pensions are tasked with acting in the long-term best interest of beneficiaries, not makingshort-term gambles. Coal is dying out in the US and is being replaced by much less expensive renewables. Coal is not a good long-term investment.

 

The long-term outlook for US coal is a steady downward trend. According to the Institute for Energy and Economic FinancialAnalysis (IEEFA), it’s possible that all the remaining US coal capacity could be shuttered by 2040.

 

Britain, where the first coal plant was built in 1882, has already closed its last coal plant. Coal produces more green-housegases than any other energy form – not to mention toxic emissions that researchers estimate have caused 460,000 prematuredeaths in the US between 1999 and 2020.

 

Fiduciary duty is a hallmark of the WA Coal Act. The WSIB is good at making investments with healthy returns. California andOregon have both passed coal divestment bills. CalPERS’ returns increased nearly $600 million in 2022 according to Wilshire, CalPERS’ consultant. Moving $2.6 billion from coal over 3-5 years into other investments is not a large ask for WSIB’s $200 billion portfolio.

 

Many thanks to all the PSARA members who wrote to their senators about this significant issue. We ask you to continue toadvocate with us as we move forward toward passage.

 

Mary Lou Dickerson is a former Washington State Representative, PSARA member, and Third Act Washington Policy Lead.

Barbara Carey is a Divest Washington co-leader, PSARA member, and Washington State PERS3 Retiree.