Divestment

Clean Energy on the Rise

 In 1990, wind and solar energy were responsible for zero percent of US energy generation, but in 2023, they generated around 15% of the country's energy. At the same time, other renewables (excluding wind and solar) have only decreased in generation share from 11% to 7% over the same period. The renewable industry now generates around 21% of US electric power generation, a 92% increase in the overall share of US power sector generation. Fossil fuels have experienced long-term declines in market performance and the country's overall energy strategy. As an increasingly marginal and unprofitable player in both US energy and investor portfolios, divestment from the sector is crucial in upholding the interests of pensioners and ensuring the financial longevity of the NJ Pension Fund.

New Jersey’s Clean Energy Cost Woes

One of the major concerns residents in opposition to clean energy have is the ratepayer increases that will occur with the transition. But, every year, billions of dollars in taxpayer money are spent on subsidizing oil, gas, and even coal through tax breaks, direct payments, loans, and low interest rates. Clean energy is only as expensive as the federal and state governments allow it.  Suppose New Jersey is to take the climate crisis seriously. In that case, pension fund fossil fuel subsidies need to be scaled back and redistributed into renewable energy industries like offshore wind and solar.  With large-scale investment into renewable energies, we can enhance the innovation process and allow renewables to become more efficient and cost-effective.

One may think that a relatively small portion of the funds are invested in fossil fuels. Still, billions of dollars could make a significant impact on the clean energy economy in New Jersey. While the pension fund has invested billions of dollars directly into fossil fuel companies, it has not made the same comment about clean energy companies operating in New Jersey. ChooseNJ, responsible for attracting business to the State of New Jersey, identifies the clean energy industry leaders operating in the state. The NJ pension is not invested in any New Jersey solar companies recognized as industry leaders. The Division of Investment has failed to properly assess the risks and benefits when investing in the energy industry.

Transparency

While other universities, cities, and states have taken steps to divest, success has not always been achieved. Notably, Princeton disassociated from 90 fossil fuel companies in 2021. However, the university still invests in major fossil fuel companies such as Shell and BP. Furthermore, Princeton has failed to disclose when they will divest from fossil fuels. Although the University claims to have completed divestment, they have not reported how much they have divested.

The pension fund may be managed by the state but it is the money of the people and they deserve to have a say on what their money does. It is of the utmost importance that any divestment proposal includes complete transparency of the divestment process.

Pensioners have a right to know how their money is invested.