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Capping the Well

For more than a century, the University of California has maintained extensive ties to the fossil fuel industry. A coalition of students, alumni, and climate scientists is trying to sever those bonds.


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But still, the task force has only met for a total of four hours. What's more, several of the task force's advisors, and one guest that Bachher invited to speak, are firmly opposed to divestment, perhaps telegraphing what Bachher's ultimate recommendations to the regents will be. During the second meeting of the task force, Bachher invited Peabody Energy CEO Gregory Boyce to argue against divestment.

Peabody Energy, which used to be more accurately named Peabody Coal, is one of the world's largest coal companies. And Peabody is very attuned to the controversial nature of its business model and to its tenuous future. As Peabody executives explained in their company's most recent annual report: "The potential financial impact on us of future laws, regulations or other policies will depend upon the degree to which any such laws or regulations force electricity generators to diminish their reliance on coal as a fuel source."

To counter any efforts to reduce carbon emissions from coal, Peabody spends millions each year lobbying the US Congress, and the company, with help of public relations strategists, has devised a message to counter climate activists: "Energy poverty is the world's number-one human and environmental crisis," said Boyce in Peabody's 2013 Corporate and Social Responsibility Report. Peabody officials say they care about the poor and the developing world, and that cheap coal energy will lift people and nations out of poverty.

Last year, Kammen spoke out against the construction of a massive coal marine export terminal being built by Peabody and Goldman Sachs in Washington state. In an op-ed, he wrote: "It's time we stopped feeding such fossil dinosaurs and started investing seriously in U.S. innovators, workers and companies that can help realize our low-carbon future."

Fernandez said that she and other pro-divestment members of the task force asked that another outside guest be allowed to counter Boyce's perspective, but were told there wasn't enough time. The UC's investments office did, however, hire Ophir Bruck, a UC Berkeley alum and divestment activist to work with the office in an effort to identify fossil fuel investments in the UC's portfolio and demonstrate the feasibility of divestment, said Dianne Klein, a spokesperson with the UC president's office.

Terry Tamminen, a friend of Regent Reiss, and also a former secretary of the California Environmental Protection Agency during the Schwarzenegger administration, is a task force adviser who also doesn't support divestment. In a July column in Fast Company magazine Tamminen opposed university divestment from the fossil fuel industry, arguing that "instead of the blunt instrument of divesting, what about civilizing these companies and our own consumer choices while we're at it?"

Tamminen and Reiss have long preferred soft approaches to environmental problems, while steering clear of proposals that would restrict certain environmentally destructive business practices — like the digging up and burning of oil, natural gas, and coal. The two also have a history of creating green business ventures aimed at making a buck off saving the environment.

For example, Tamminen's nonprofit, Seventh Generation Advisors (which is funded by grants from foundations with fossil fuel investments), helps run R20, an international organization that promotes and subsidizes green energy projects. One R20 initiative involves the promotion of energy-saving LED streetlights. The LED lights also happen to be manufactured by a company that Reiss and Tamminen have financial interests in: Lighting Sciences, Inc.

A controlling share of Lighting Science's stock is owned by Pegasus Capital, a private equity fund that lists Reiss and Tamminen as advisors. Reiss also was a director of Lighting Sciences and obtained more than 200,000 shares of stock in the company.

Like Reiss and Tamminen, regent and task force member Wachter is a close confidant of former governor Schwarzenegger. Wachter's investment company Main Street Advisors, manages Schwarzenegger's money, in addition to the fortunes of other wealthy individuals. Whether Wachter is leaning for or against divestment isn't clear. At a regents finance committee meeting in May, he said the board was taking the idea "very seriously."

Wachter's personal investments, which state law requires him to disclose, show that he doesn't directly own stock or bonds in any oil, natural gas, or coal companies, but some of the thirty hedge fund and private equity funds in which he invests hold fossil fuel company securities.

Other members of the board of regents have big personal investments in fossil fuels, and ties to the state's still-booming oil industry. Regent Russell Gould owns stock in the Alleghany Corporation, a holding company that owns two oil companies. Gould is also a lobbyist with California Strategies, an influence firm that counts fossil fuel companies Halliburton and Sunset Exploration among its clients.

On August 26, a bill sponsored by state Senator Hannah-Beth Jackson to ban offshore drilling in the Santa Barbara Channel — the exact patch of ocean that regent Edwin Pauley was so intent on drilling — died in the Assembly. State records show that Sunset Exploration, which is partnering with Exxon to drill in California's coastal waters, employed California Strategies to lobby the legislature to kill the bill. Gould did not respond to a request for an interview for this report.

Regents Monica Lozano, Richard Sherman, and Charlene Zettel also reported significant personal investments in oil, natural gas, and coal companies.


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