Actions taken in recent days by the University of California Board of Regents, Gov. Gavin Newsom and state Treasurer Fiona Ma have ushered in a new era of pension divestment to take a stand against fossil fuels.

Jagdeep Singh Bachher, UC’s chief investment officer and treasurer, and Richard Sherman, chair of the UC Board of Regents’ Investments Committee, announced last week that the university’s $13.4 billion endowment will be free of any investments in fossil fuels by month’s end and that UC’s $70 billion pension fund will also end its last such investment in coming months. 

Several UC regents, the UC Academic Senate and other faculty groups have long since called for such divestment as an obvious step in an era in which fossil fuels are a major source of the green-house gases believed to contribute to global warming. But Bachher and Sherman also said that fossil-fuel investments – long a staple of hedge funds and pension funds alike – were no longer safe, given the rapid emergence of alternative energy sources and growing opposition to reliance on oil, natural gas and coal.

Oil company investments seen as risky

Newsom also cited both environmental concerns and financial risk on Friday in signing an executive order directing the California Public Employees’ Retirement System, which has $380 billion in investment assets, and the California State Teachers’ Retirement System, which has holdings of $237 billion, to transition to a new investment model that drops investments in fossil fuels.

Newsom’s office said he would work with CalPERS and CalSTRS on a mission statement that establishes “a timeline and criteria to shift investments to companies and industry sectors that have greater growth potential based on their focus of adapting to and mitigating the impacts of climate change.” 

The governor said California as a state had to be all-in in the fight to stop the planet’s warming.

“How we meet this moment will define our state – and country – for decades to come, just as the emergence of the internet defined our economy over the past few decades,” Newsom said in a news release. “We have to get ahead of this and align our state investments, our purchasing power and our transportation and housing policies to be ready to meet this moment head-on.”

State Treasurer Fiona Ma, who is a member of both the CalPERS and CalSTRS boards, foreshadowed Newsom’s decision two weeks ago when she urged CalSTRS to sell its $6 billion holdings in oil and gas companies.

The Pensions & Investments website reported that Ma made the call after hearing more than 40 students tell the CalSTRS board on Sept. 5 of the importance of divestment.

CalPERS trustee: Prioritize high returns

While the surge in support for divestment will likely prove popular with California Democrats, it’s not clear how CalPERS members will react. Corona police Sgt. Jason Perez stunned CalPERS Board President Priva Mathur in an October election after running on a platform that said CalPERS investment decisions should be solely based on their likely returns. Perez says many CalPERS members fear that they’ll never get close to their full pensions when they retire.

According to the most recent updates, CalPERS only has 70 percent of the funds it needs to meet its obligations to present and future retirees. CalSTRS is 63 percent funded, a huge disappointment to state officials who thought a 2014 bailout orchestrated by then-Gov. Jerry Brown and the Legislature would get it back to health. 

The University of California pension system is in much better shape than either CalSTRS or CalPERS, with 85 percent of needed funding.

In 2011, after his seven-year run as governor, Arnold Schwarzenegger had plenty of reasons to worry about how his time in elected office might be remembered. It wasn’t just that he was widely viewed as an under-performing leader who never lived up to his early promise as a brash outsider who would tackle unaddressed state problems. An ugly scandal broke in his final days in office, triggering a political firestorm, and an even more embarrassing scandal emerged soon afterward.

On his last night as governor, Schwarzenegger commuted the prison sentence of Esteban Nuñez – the son of former Assembly Speaker Fabian Nuñez, his friend and occasional political ally – from 16 years to 7 years for his manslaughter conviction in the killing of a San Diego college student. Schwarzenegger initially characterized the sentence as extreme, given that the student died after being knifed by another man. But in an interview with Newsweek three months later, he said he commuted the sentence because “of course you help a friend.” The younger Nuñez is now a free man as a result.

In May 2011, as his celebrity marriage to Maria Shriver collapsed amid intense gossip, Schwarzenegger admitted to fathering a 13-year-old boy with Mildred Baena, long a maid at his Brentwood estate. The revelation triggered headlines around the world.

Los Angeles Times columnist Steve Lopez cited both scandals in a scathing column that saw them as evidence that Schwarzenegger “has always seemed to live in his own celebrity world by his own twisted rules of privilege and entitlement, his life an orgy of self-glory.”

Legacy play pays off in big way

But six summers later, such harsh rebukes are hard to find. Instead, Schwarzenegger’s image has been resurrected to a considerable degree. His 2006 legacy play – shepherding Assembly Bill 32 to passage to make a California a pioneer in targeting and reducing the greenhouse gases believed to help cause global warming – has paid immense dividends.

This was on display last week when Gov. Jerry Brown featured Schwarzenegger at the signing ceremony for legislation extending the state’s cap-and-trade program for emissions that was established by AB32, with the men swapping praise for being leaders on what they called the world’s most pressing issue.

Last October, on the 10th anniversary of AB32’s signing, Schwarzenegger was also featured at an event organized by the governor’s office.

This was nothing new for the Austrian-born movie star, who’s been feted around the world for his environmental leadership. The praise is usually unstinting, and doesn’t note interesting nuances about AB32’s actual record – starting with the fact that the main reason for declining emissions in California in recent years is not the landmark law but the increased use of cheap, relatively clean natural gas, a fossil fuel of the sort the law targets. In 2015, Forbes said natural gas – not renewable energy – was “easily California’s most important source of energy.”

But now Schwarzenegger finds himself winning praise for another reason: His history offers an easy way for journalists to make the point that President Donald Trump doesn’t speak for all Republicans when he either questions whether climate change is real or opposes ameliorative efforts by the government to reduce its effects. A Nexis news database search shows major publications from Los Angeles to New York to London to Singapore have regularly made this point since Trump’s inauguration.

Schwarzenegger directly sought to promote this narrative with his late June visit to Paris to meet with French President Emmanuel Macron and jointly criticize Trump for his decision to pull the U.S. out of the Paris climate accord signed by President Obama in December 2015. Schwarzenegger used social media – including the image shown above – to publicize his meeting with Macron.

“One man cannot destroy our progress,” said Schwarzenegger, who turned 70 on Sunday. “One man can’t stop our clean energy revolution. And one man can’t go back in time.” He laughed heartily at Macron’s mocking Trump for not wanting to “make the planet great again.”

His new cause: redistricting reform

Now Schwarzenegger is trying to build on another of his accomplishments while governor. He led the successful push for Proposition 11 in 2008 and Proposition 20 in 2010 to assign redistricting duties for state and congressional districts to a nonpartisan commission and intends to lobby for similar reforms in other states. His official website declares “let’s shine a light on gerrymandering,” which has been blamed for increasing partisanship and discouraging moderates of both parties by packing voters with similar views into uncompetitive districts.

Schwarzenegger “has a Terminate Gerrymandering Crowdpac that he’s pledged to match dollar-for-dollar,” Politico reported last week. “He’ll be appearing at events, meeting with lawyers, having his team jump in to rewrite incomprehensible charts of the ‘efficiency gap’ and other technicalities ahead of Gill v. Whitford, the Wisconsin gerrymandering challenge that Justice Ruth Bader Ginsburg … called ‘the most important’ case of the Supreme Court’s next term.”

This account is from the Riverside Press-Enterprise:

The operators of a Mojave Desert solar power plant at the center of the Obama administration’s push to reduce carbon emissions faced an unusual task [earlier this month]. They had to prove to state air quality officials that they were complying with California’s cap-and-trade program to get carbon polluters to reduce their emissions.

 

The Ivanpah solar plant off Interstate 15 in northeast San Bernardino County makes electricity by focusing heat from thousands of mirrors onto water boilers mounted on top of three towers. Steam from the water then turns turbines that generate power.

 

But the plant also needs to burn significant amounts of carbon-emitting natural gas to operate and thus is required to be in the state’s cap-and-trade program.

 

The plant burns natural gas to heat water after sundown so that steam can be generated more quickly when the plant starts up in the morning, its operators have said. It also uses natural gas to keep electricity production up during cloudy days.

Controversial ‘offsets’ used to avoid CARB hit

The air board says the Ivanpah plant emitted 50,145 metric tons of carbon dioxide in 2013. The P-E says that is about twice the threshold for forced participation in cap and trade. But because Ivanpah managed to cut net emissions by 10 percent in 2014 — to approximately 46,000 tons — plant operator NRG Energy is telling reporters that it is in compliance. The net emissions is key, because NRG confirmed that Ivanpah complied not just by reducing emissions but by buying greenhouse gas “offsets” from companies which do projects in various states and countries that reduce greenhouse emissions.

The markets for such offsets are huge and growing. But they are controversial given that they don’t necessarily provide pollution relief to affected communities.

The California air board policy adopted in 2013 allows offsets to be purchased in any state in the nation but with emission credits applying to how much companies are polluting in the Golden State. That drew sharp fire from some environmentalists.

The revelation that the mammoth Ivanpah uses so much fossil fuel perhaps shouldn’t be a surprise, given its size and complexity — it relies on 346,000 computer-synced mirrors spread over 5.6 square miles — and because solar power can be irregular.

But advocates of renewable energy say the conundrum of clean-energy plants relying on fossil fuels for their operational needs won’t last forever. They predict advances in battery technology will allow solar plants to store energy for use at night and on cloudy days.

The Santa Clarita-based BioSolar start-up firm is working with UC Santa Barbara researchers on such advanced batteries. In June, it issued a press release claiming it had made a huge breakthrough, prompting its stock price to surge. But since then its stock price has plunged, suggesting analysts have grown skeptical of the company’s claims.

Roughly 1,000 miles away in Wyoming, the developers of what would be the nation’s largest on-shore wind farm quickly caught word of the proposal.

 

California has long represented the holy grail for the Power Company of Wyoming, the Anschutz Corp. subsidiary that has proposed building the 3,000 megawatt Chokecherry Sierra Madre wind farm in Carbon County.

 

California [already had] a mandate that requires 33 percent of its power come from renewable sources by 2020. And with almost 39 million residents in need of electricity, that represents a potentially hefty sum of green electrons.

 

The problem for wind developers in Wyoming, is Brown and other California policymakers have insisted the Golden State meet its 33 percent mark with power generated from inside the state. California is projected to reach its 2020 benchmark on time.

 

But Brown’s inaugural address left many wondering if the four-term governor was coming around to the idea of out-of-state renewables.

 

“They’ve always said if they raised their renewable portfolio, Wyoming would have a place in that new demand,” said Loyd Drain, the executive director of the Wyoming Infrastructure Authority.

 

Drain has spent the last five years lobbying California policymakers on the virtues of Wyoming wind.

 

“They’re going to look to us, I do believe,” he said.

Wind patterns in two states are opposite

Wyoming’s interest in supplying California is backed up by a pioneering study that looks at wind patterns, an important factor, given the great concern about renewable energy being erratic and unreliable as a 24/7/365 source of power.

A new University of Wyoming study further demonstrates that combining the strengths of Wyoming wind with California wind and solar will reduce the intermittency of renewable energy and smooth the power supply — leading to benefits for utilities and energy consumers alike.

 

It turns out that Wyoming’s and California’s wind patterns are rather opposite, and that means that they’re complimentary. When one is active, the other isn’t. Based on a yearly average, California wind is strongest at night, while Wyoming wind is strongest during the day and peaks in the afternoon — coincident with the time when the sun is beginning to set while the electric load is still increasing into the evening hours.

 

“Although the benefits of geographic diversity to renewable energy have been suggested for some time, only recently have there been attempts to quantify these benefits,” says the study’s author, Jonathan Naughton, a UW professor of mechanical engineering and director of the Wind Energy Research Center. “The renewable energy quality metrics proposed in this study are a start at being able to characterize different combinations of renewable energy sources. The result of applying these metrics to energy produced from Wyoming wind and California renewables provides a quite compelling case for geographic diversity.”

But whether this intriguing study and Wyoming’s strong interest will translate into the state becoming a California energy supplier is very much up in the air. Solar power is expanding so quickly in California that utilities are making what appear to be barely disguised attempts to make it a less attractive option for homeowners and businesses considering installing solar panels, as the San Francisco Chronicle reported Thursday. If solar panels keep coming down in price, Wyoming officials’ assumption that their wind power supplies would be attractive to California on cost grounds appears shaky.

More people are driving electric cars. Gasoline cars are getting better mileage. And California’s vehicles are causing less pollution.

But all that good news is generating a major problem: As motorists buy less gasoline, state gas tax revenues that pay for roads have been falling for a decade, leading to more potholes and traffic jams.

Now, in a move that could solve the problem — or cause a political pileup — state officials have begun to seriously study a plan to replace California’s gas tax with a fee for each mile motorists drive.

“We’re going to have to find another way to finance the upkeep of the roads,” Gov. Jerry Brown said earlier this month in rolling out his 2015 budget, noting that California has a $59 billion backlog of maintenance needs on state highways and bridges.

This has drawn concern on civil liberties grounds because some fear the state wouldn’t just track miles, it would for the first time actively track where people go 24-7-365. Townhall columnist John Ransom outlines his issues with the proposal here.

Fees calibrated to punish regular car owners?

But if the state had the power Brown envisions, we also could see another unprecedented scenario: Environmentalists constantly lobbying elected officials to find the optimum way to maximize revenue while minimizing use of fossil-fuel vehicles. It seems likely that greens would argue that hybrids and electric vehicles shouldn’t have to pay as high a usage fee as vehicles using internal-combustion engines.

So we could see a new form of social engineering, one in which taxes are used to make standard cars and trucks much more expensive and much less attractive a driving option.

It’s true that more than a dozen Democrats in the Assembly and Senate have indicated concern about AB 32 and other state policies forcing gasoline prices higher.

But California may be in a new era in which Tom Steyer and other green billionaires throw their weight around and create a liberal political establishment that is even more hostile to fossil fuels than the old one. Steyer’s potential vanity candidacy for the U.S. Senate died of whispered ridicule, but the deference he routinely receives from Democratic power centers is a sign that party insiders know the former hedge fund manager’s aggressive environmentalism is a fact of life in state politics going forward.

Not just against fracking but all fossil fuels

Are young liberals all aboard for the Steyerization of the California Democratic Party? A good barometer of their anti-fossil fuel sentiment will come Feb. 7 in Oakland at the “March for Real Climate Leadership.”

The protest was originally conceived as a way to pressure Gov. Jerry Brown to change course and actively oppose fracking. But now organizers’ goals are broader:

On the heels of an historic ban on fracking on the basis of health impacts in New York, and after seeing millions of people around the world respond to dire scientific warnings about climate change by standing up and raising their voices in unison, we find ourselves on the verge of something big.  We now are well positioned to not only ban fracking and other dangerous forms of fossil fuel extraction, but to also dramatically turn the tide against fossil fuels in the great state of California, and usher in a 100% renewable energy future.

A compost experiment that began seven years ago on a Marin County ranch has uncovered a disarmingly simple and benign way to remove carbon dioxide from the air, holding the potential to turn the vast rangeland of California and the world into a weapon against climate change.

The concept grew out of a unique Bay Area alignment of a biotech fortune, a world-class research institution and progressive-minded Marin ranchers. It has captured the attention of the White House, the Brown administration, the city of San Francisco, officials in Brazil and China, and even House Republicans, who may not believe in climate change but like the idea that “carbon farming” could mean profits for ranchers.

Experiments on grazing lands in Marin County and the Sierra foothills of Yuba County by UC Berkeley bio-geochemist Whendee Silver showed that a one-time dusting of compost substantially boosted the soil’s carbon storage. The effect has persisted over six years, and Silver believes the carbon will remain stored for at least several decades.

The experiments were instigated by John Wick and his wife, Peggy, heiress to the Amgen biotech fortune, on a 540-acre ranch they bought in Nicasio. …

The research showed that if compost from green waste — everything from household food scraps to dairy manure — were applied over just 5 percent of the state’s grazing lands, the soil could capture a year’s worth of greenhouse gas emissions from California’s farm and forestry industries.

Project recognized by White House

This sounds almost too good to be true, but the article emphasizes the project’s bona fides and notes that it has already been recognized by the White House, among many other signs that it is legit. And there’s still more good news.

Unlike high-tech geo-engineering schemes to pull excess carbon dioxide from the air and stick it in old coal mines or under the ocean, applying compost is a simple way of creating what scientists call a positive feedback loop.

Plants pull carbon dioxide from the air through photosynthesis and transfer a portion of the carbon to the soil through their roots. Soil microorganisms then turn the carbon into a stable form commonly known as humus.

This not only sequesters the carbon but improves the soil’s fertility, boosting plant growth and capturing more carbon while also improving the soil’s ability to absorb and retain water. …

Rattan Lal, director of the Carbon Management and Sequestration Center at Ohio State University … considers it essential to restore carbon to the world’s soils, regardless of whether it combats climate change. “The other reasons are much more pressing,” he said. “Food security, water quality, biodiversity, other environmental issues are related to soil. And in addition to all that, it does also offset some of the carbon emitted by fossil fuel combustion.”

Will greens obstruct promising technology?

What’s interesting here is how greens will react if this approach is remotely as promising as it looks.

If they really are driven just by a goal of protecting the natural environment, they will embrace this as an obvious, easy way to contain the problems posed by greenhouse gas emissions.

But if they are the greens who sometimes seem to see environmentalism as akin to a religion in which fossil fuels are the devil, they won’t like this at all — because it will take away their key arguments against fossil fuels.

And if it really does work, between compost spreading and fracking, the 21st century will be as defined by fossil fuels as the 21st century.

This axiom is playing out right now in Australia, where the government has repealed a carbon tax adopted in 2012 when another regime was in power. Here’s some analysis from the liberal Vox site:

The repeal is a big blow for climate policy. Economists have long argued that carbon pricing is one of the most effective ways to tackle global warming. The premise is simple: People should pay for the damage they cause by emitting carbon. And making fossil fuels more expensive will spur companies to seek out cleaner alternatives.

But the major weakness of a price on carbon has always been politics. So many daily activities depend on fossil fuels — from driving to home heating to industry — and the pinch from any tax is likely to be more noticeable than, say, that from more complex regulations. …

And so Tony Abbott and the Liberal Party made repeal of the carbon tax a major issue in the run-up to the 2013 elections. Abbott argued that the tax was costing the Australian economy some $9 billion per year and had little climate benefit so long as other countries weren’t also enacting their own carbon taxes.

Hilarious that Vox labels concern about how much something costs a “politics” problem.  But still.

Same populism in Melbourne and Fresno

Now of course AB 32 isn’t the same thing as a carbon tax, but both California’s and Australia’s initiatives build on the idea that families and businesses should pay more for energy that isn’t renewable. Subtext: Fossil fuels are evil.

But when believing in this truth began to have a price-tag — and especially when it seemed pointless, because most of the world wasn’t into symbolic masochism — Aussie voters bailed.

And in California, so did 16 Assembly Democrats.

Assembly Bill 69 by Assemblyman Henry Perea, D-Fresno, would delay for three years [an AB 32] rule requiring the energy industry to purchase permits for transportation fuels. Lawmakers and critics have been warning for months about a resulting price bump. …

In a show of broad discontent, 16 Democrats last week sent a letter to the Air Resources Board urging the air quality regulator to delay implementing the new rule. …

Perea said he still supports AB 32’s overarching goal of reducing emissions but does not believe consumers have been adequately prepared.

That’s from the Sac Bee earlier this month.

Notice the parallel between Perea’s double-talk and Vox’s? The liberal website likens concern about higher costs of energy to playing “politics” with the issue. Perea suggests the public won’t mind paying more for energy — so long as it’s “prepared” for the pain.

Somehow, I don’t think the Fresno pol actually believes that.

gnnone size-full wp-image-51681″ alt=”AB-32″ src=”http://calwatchdog.com/wp-content/uploads/2013/10/AB-32.jpg” width=”300″ height=”167″ align=”right” hspace=”20″ />California's headlong rush to force a broad switch to cleaner-but-costlier energy has long been depicted as something that's either neutral or beneficial for the state's economy, with little or no downside. AB 32 and other state laws mandating use of renewable energy are rarely looked at with anything resembling critical objectivity.

Maybe all the reports about what AB 32-type policies are doing to Europe will change that. Here's a fresh example from Forbes.com:

“The stability of Europe’s electricity generation is at risk from the warped market structure caused by skyrocketing renewable energy subsidies that have swarmed across the continent over the last decade.

“This sentiment was echoed a week ago by the CEOs of Europe’s largest energy companies, who produce almost half of Europe’s electricity. This group joined voices calling for an end to subsidies for wind and solar power, saying the subsidies have led to unacceptably high utility bills for residences and businesses, and even risk causing continent-wide blackouts.

“The group includes Germany’s E.ON AG, France’s GDF Suez SA and Italy’s Eni SpA, and they unanimously pointed the finger at European governments’ poorly thought-out decision at the turn of the millennium to promote renewable energy by any means.

“The plan seemed like a good one in the late 1990s as a way to reverse Europe’s reliance on imported fossil fuels, particularly from Russia and the Middle East. But it seems the execution hasn’t matched the good intentions, and the authors of the legislations didn’t understand the markets.

“'The importance of renewables has become a threat to the continent’s supply safety,' warned senior global energy analyst, Colette Lewiner …”

Didn't even help reduce greenhouse gases

What's striking about Europe's energy policy is that it didn't even achieve its fundamental goal.

“'We’ve failed on all accounts: Europe is threatened by a blackout like in New York a few years ago, prices are shooting up higher, and our carbon emissions keep increasing,' said GDF Suez CEO Gérard Mestrallet … '”

In the U.S., meanwhile, carbon dioxide emissions are plunging. Not because of AB 32-type policies. Primarily because of fracking — which greens hate but which has yielded access to natural gas reserves and spurred a shift away from much-dirtier coal.

An argument can be made that Europe's approach is fundamentally more flawed than California's because of its heavy subsidies. But in general, any time government issues sweeping mandates that affect large parts of the economy instead of letting the free market sort things out, costly inefficiencies will result.

Some states’ main retirement systems may be in worse shape than the California Public Employees’ Retirement System or the California State Teachers’ Retirement System. But at the local level, there are more government bodies facing ruin in the Golden State than anywhere in the U.S.

And the political influence of the pension status quo-ists is stunning. Gov. Jerry Brown may tout himself as a pension reformer, but the union allies he put in charge of the state Public Employment Relations Board are so militant that they attempted to block a city of San Diego pension reform measure before it even got on the ballot. There are many examples of such reform monkey-wrenching around the Golden State.

Fossil-fuel ‘divestment’ comes with a price

This doesn’t change the basic fact that with all the strain that underfunded pensions are causing cities, counties and school districts, it is more crucial than ever that pension funds focus like a laser on generating healthy returns.

But this is California. Smart, responsible governance is for others, not for us.

And so we see the state’s emergence as Ground Zero for a movement dedicated to pension fund divestment in a consistently lucrative sector of the economy.

The Contra Costa Times has the details:

“In the 1980s, hundreds of American cities, states and universities sold their investments in South African companies as part of a protest against that country’s former apartheid government.

“Now, environmental groups are trying to duplicate that effort, but with global warming polluters in the role of villain. And, just as with South African divestment a generation ago, the Bay Area is at the head of the parade again, prompting cheers from environmentalists and jeers from skeptics who say the whole effort amounts to little more than empty symbolism.

“On Tuesday night, the Santa Clara Valley Water District, a government agency based in San Jose, is scheduled to vote to drop its investments in fossil fuel companies. If the measure passes, as expected, the water district will become the first Silicon Valley governmental agency to join the movement. It also will join Berkeley, San Francisco and Richmond — along with Seattle, Portland and other cities — among a small, but growing group of local governments that have taken similar stands in recent months.”

Bailing on oil, gas firms just as they boom

But what makes this especially ludicrous is that the world is going in the opposite direction — toward expanded use of natural gas and oil — despite fears about climate change. That’s thanks to the stunning technological breakthroughs that have made energy exploration much more efficient. Don’t take that from me. Take that from The New York Times, which devoted a special section to the new energy world on Oct. 26, 2011. Its key takeaway:

“From the high Arctic waters north of Norway to a shale field in Argentine Patagonia, from the oil sands of western Canada to deepwater oil prospects off the shores of Angola, giant new oil and gas fields are being mined, steamed and drilled with new technologies. Put together, these fuels should bring hundreds of billions of barrels of recoverable reserves to market in coming decades and shift geopolitical and economic calculations around the world.” …

“’Use whatever hackneyed phrase you want, like tectonic shift or game-changer,’” Edward L. Morse, global head of commodity research at Citigroup, told the Times. ‘These sources will dramatically change the energy supply outlook, and there is little debate about that.’”

So environmental zealots are trying to force pension funds to abandon fossil-fuel companies just as they approach a bonanza, courtesy of fracking, horizontal drilling and other newly productive exploration strategies. This is crazy.

Most of the world understands that this new era is coming. This spring, I did a 13-part blog series on all the different nations that have jumped on the fracking phenomenon — Germany, China, Russia, Saudi Arabia, Brazil, Canada, Argentina, Mexico, South Africa, Poland, Algeria, Indonesia and Great Britain.

Energy giants won’t suffer — just Californians

But California greens would rather just pretend none of this is happening. And so we’ll see pressure on pension funds to divest holdings in fossil-fuel companies even as they solidify their standing as one of the safest, smartest investments for decades to come. Even as they occasion paragraphs like the following from The Economist:

“Exxon Mobil, with a market capitalisation of $417 billion, vies with Apple as the world’s most valuable listed company. Royal Dutch Shell is the most valuable firm on the London Stock Exchange. Chevron employs 62,000 people; Total operates in more than 130 countries. In BP’s case the big numbers are more calamitous—it may end up paying out $90 billion in fines and compensation stemming from the Deepwater Horizon disaster. But its ability to do so and stay standing is a perverse sign of the company’s underlying strength.”

Losing a few investments from California pension funds isn’t going to hurt these behemoths in the slightest.

Instead, the pain from that decision will have to be borne by Californians dealing with chronic pension shortfalls as a new and near-permanent fixture of local governance.

Great. Just great.

By Chris Reed

As Californians begin to appreciate the immense economic potential of the state’s underground natural gas and oil reserves, the debate will sharply intensify over the safety of hydraulic fracturing — the newly refined and improved tool used to access previously unreachable reserves. Fracking, the shorthand term for the process, involves using high-powered streams of water, with a small amount of chemicals and solids or sand, to break up rock formations thousands of feet underground.

Of the states most associated with fracking — North Dakota, Texas, Ohio and Pennsylvania — what has happened in the latter is of most interest to Californians. In the Keystone State, the use of fracking to tap vast natural gas reserves in an underground formation called the Marcellus Shale flourished under a liberal Democratic governor, Ed Rendell. The former Philadelphia mayor simply never gave credence to the various scare tactics used to try to block fracking and brushed off the criticism from the Philadelphia Inquirer editorial page, environmental groups and others with an ideological, quasi-religious abhorrence of fossil fuels.

If Democratic Gov. Jerry Brown is to be persuaded to follow Rendell’s path, advocates of fracking need to learn from Pennsylvania and how the debate unfolded there.

Stick to the facts to counter hysterics

Advocates should argue that fracking is not perfect, but that no oil exploration is, and note that when properly regulated, it has a strong safety record. Scott Perry, who was the director of the Pennsylvania Department of Environmental Protection’s Bureau of Oil and Gas Management under Rendell, liked to respond to the harshest critique with this just-the-facts statement: “There has never been any evidence of fracking ever causing direct contamination of fresh groundwater in Pennsylvania or anywhere else.”

The argument that fracking, which is typically at a depth of 5,000 feet or more, might affect water tables thousands of feet higher isn’t one that most scientists take seriously. John M. Deutch, an MIT chemistry professor who served in high posts in the Carter and Clinton administrations and has been a key adviser to the U.S. Energy Department on fracking, says careful regulation addresses environmental fears in comprehensive fashion. He adds that fracking “is by far the biggest event that I’ve seen” in 50 years of monitoring world energy developments.

What’s striking about media coverage of fracking safety questions is how it largely ignores the fact that the Obama administration rejects the alarmism of the Sierra Club and the Natural Resources Defense Council. In House testimony in May 2011, EPA Director Lisa Jackson said she was “not aware of any proven case where the fracking process itself has affected water.” The U.S. Geological Survey dismissed the idea that fracking causes earthquakes. Most definitively, a November 2011 Energy Department study concluded that there were legitimate pollution concerns surrounding hydraulic fracturing. But the concerns involved the worries about surface air and water quality and about community effects that would come with any heavy industrial project, and were not due to the deleterious effects of fracking underground.

Efficiency gains: It’s not the chemicals, it’s the computers

In explaining why fracking is so much more effective than it used to be, advocates should stress that it is a result of computing power — not more toxic and dangerous chemicals. Drillers are now able to use extraordinarily sophisticated sensors to take the equivalent of a gigantic MRI of underground rock formations, then focus their water cannons on weak spots in the formations surrounding the shale formations with natural gas and oil reserves.

Now, as in the past, by volume the chemicals and sand used are less than 1 percent of the total water used. Because of fracking’s increased efficiency, this means much less water is used than in past versions — and thus fewer chemicals.

Another claim regularly invoked by fracking critics is that the process wastes an extraordinary amount of water. But the Marcellus Shale Coalition says 90 percent of the water used is recycled, and that far more water is used in Pennsylvania on golf courses than in fracking. The recycling percentage is only going to improve as focus grows on the importance of reuse.

The ‘Goebbels’-like anti-fracking documentary

Fracking supporters can shore up their case by pointing to the intentional deception in a 2010 anti-fracking documentary, “GasLand.” The movie’s most unforgettable image is residents of a town in a heavy drilling area — Dimock, Pa. — lighting their tap water on fire, leaving the plain impression this was the result of fracking. Instead, even director Josh Fox acknowledged in an interview with McClatchy-Tribune that it resulted from local conditions unrelated to the chemicals used in fracking. Fox, however, insisted it wasn’t misleading.

Defenders of Pennsylvania’s fracking record like to bring up “GasLand” because they know it is so easily discredited. In a 2011 interview with a newspaper in Lancaster, Pa., Teddy Borawski, chief oil and gas geologist for the state Department of Conservation and Natural Resources, relished the chance to tee off on the documentary. “Joseph Goebbels would have been proud,” he said. “He would have given him the Nazi Award. That, in my opinion, was a beautiful piece of propaganda.”

And in the war of talking points, the fact is that fracking has actually led to the single best news on the U.S. environmental front in many years. Natural gas is much cleaner than coal and oil, and fracking has increased supplies so dramatically that it now costs only a third or less of what it did in 2008 in the United States. The result: “The amount of carbon dioxide being released into the atmosphere in the U.S. has fallen dramatically to its lowest level in 20 years,” as AP reported last summer.

The irony could hardly be greater. For decades, environmentalists have argued that renewable energy such as solar and wind power are the only way to reduce the release of dangerous emissions into the atmosphere. But it is plentiful new supplies of a fossil fuel, natural gas, that has been the game changer. The U.S. has reduced carbon dioxide emissions more than any other nation since 2006, according to the International Energy Association.

California could thrive if it joins the “brown energy” revolution. The  Monterey Shale formation under the Central Valley is far bigger than the Marcellus Shale formation under Pennsylvania and other northeastern states. As the Wall Street Journal reported on Jan. 15, “The overall economic benefits of opening up the Monterey Shale field could reach $1 trillion.”

Allowing fracking to work its magic will be especially difficult in a state that is home to AB 32 and that is ground zero for regulatory excesses in the name of preventing pollution. But while governor of Pennsylvania from 2003-2011, Ed Rendell overcame reflexive green objections with his just-the-facts approach. It can work in California, too.