Environment Report: San Diego's Still Got Fossil Fuel Stock
We don’t yet know when the city will take up the franchise fee agreement or which companies bid, scientists are looking for life-saving bacteria on the ocean floor and more in our biweekly roundup of environmental news.
How hard is it to separate fossil fuels and politics? Let’s look at a few recent examples — the first is straight ‘outta San Diego’s mayor race.
Last week, Voice of San Diego assistant editor Andrew Keatts and I broke the news that mayoral candidate Barbara Bry might recuse herself from future votes on the city’s contract with its next gas and electricity provider. That’s because her economic disclosures — California requires that public officials reveal their investments — showed Bry and her spouse held up to $1 million in Berkshire Hathaway stock.
The energy arm of Warren Buffett’s humongous company told the city back in February that it might be interested in bidding on the franchise agreement, which would mean buying out San Diego Gas and Electric, the holder of that franchise since basically the dawn of the city. We don’t know, though, if Berkshire Hathaway ultimately submitted a bid because those won’t be revealed until the Council president agrees to docket it. (More on that later.)
If Bry becomes mayor, her office would be in the lead negotiation position with the future energy provider because, in this town, the mayor makes many the big decisions on the budget before the City Council approves it. And since Council President Georgette Gómez is running for Congress, her replacement may have a different stance on the franchise fee altogether. (Again, more on that later.)
To add another layer of intrigue, Bry’s investment disclosures revealed that she and her husband hold an awful lot of stock in fossil fuel companies, ones that do hydrocarbon exploration, fracking, offshore drilling or supply the nuts, bolts and pipelines for natural gas.
Bry said in response that she doesn’t make trading decisions, meaning she doesn’t personally select the family’s investments, because they’re handled by an asset portfolio manager — UBS Financial Services, a Swiss multinational investment bank. She also said, via her campaign staff, that she doesn’t control her husband’s investment choices.
And she said those investments are irrelevant to her positions as a public official, even though she has publicly decried offshore drilling and been very supportive of San Diego Community, a public power provider, which is slated to begin purchasing more renewable energy for the city next year.
Just how hard is it to eliminate fossil fuels from your asset portfolio? UBS Financial didn’t respond to my questions about that.
But I talked with Gordon L. Clark of Oxford University’s Smith School of Enterprise and Environment about divestment over the summer. He said fully divesting from any specific industry is very complicated.
“If I sell my stock in Exxon Mobile, I might nonetheless indirectly hold stock in Exxon Mobile because I have a contract with an asset manager … where I’m not aware or informed of the fact that there’s a small portion in that portfolio that are obviously fossil fuels,” Clark said.
Pension funds, which are pools of investments that pay for worker retirements, usually hold a lot of debt tied to fossil fuels, he said.
“I think when people say they’ve divested from fossil fuels, what they really mean is they’ve sold direct holdings, which is direct equity stock holdings, but they haven’t tackled the question of indirect holdings or other kinds of investment instruments like debt,” Clark said.
San Diego explored divesting from fossil fuels back in October of 2019 when Councilman Chris Ward’s office introduced a “socially responsible investment policy” at the city’s Economic Development and Intergovernmental Relations Committee. It called on the city to divest from not only fossil fuels, but U.S.-Mexico border wall building, single-use plastic, investor-owned utilities and private prisons.
San Diego holds about $38 million in corporate bonds in Exxon Mobile and Chevron Corporation, according to the city’s most recent investments statement. The majority of its investments are in federally backed securities, however.
The city’s chief investments officer, Kent Morris, said at the time that the city didn’t have much flexibility under the law in terms of where it can invest. Bry said the pension fund should be the real target of such a policy.
“This is a small part that we invest in. It can make us feel good that we’re doing something socially responsible… but most of this doesn’t apply to things [the] city of San Diego invests in,” Bry said. She also acknowledged that she didn’t know San Diego had Exxon Mobile stock.
At the time, Bry suggested she might bring the investment policy to the Budget and Government Efficiency Committee, which she chairs, but the city confirmed Monday the policy never moved forward.
Laura Walsh, policy coordinator at Surfrider Foundation of San Diego County, said it shouldn’t be that hard for the city to get rid of what amounts to a small portion of its overall investments.
“The city’s actions feel tone deaf and very inconsistent with their overall climate action strategies,” Walsh said. “We hope to have a conversation with the next mayor to ask about the city’s next move toward divestment.”
More on the Franchise Fee
The city stopped accepting bids on the energy franchise agreement on Oct. 23. We won’t know who bid on it until the city clerk opens the sealed bids during a public meeting of the City Council. If there’s more than one bid, that’ll spur a kind of live auction bidding process where representatives from interested energy companies haggle over the minimum fee price. (The mayor set that price at $80 million, but if there’s competition, that final amount could be much greater.)
So though the mayor’s office gets to make the pitch, the City Council has to give them the ball. That means nobody can do anything until Council President Georgette Gómez puts the franchise fee bid on the docket.
But she hasn’t yet said publicly what she’ll do.
When I asked her office a day before the bids closed, her staffer Corinne Wilson, said, “It’s too early to comment.” They didn’t get back to me on Monday.
I also asked about the Council president’s legal obligations on the franchise fee, and she said, “as far as the process, I’m still evaluating options for the path forward.” So that tells us nothing. This is important because some citizens are organizing to push San Diego toward municipalizing its energy system.
That means the city would buy out San Diego Gas and Electric, purchase all of its equipment and bear all the risk of running that business. Elected city leaders so far haven’t jumped behind that effort. But stalling the franchise fee bidding process would be one way to exercise some political muscle in that regard.
Watch Live as Scripps Scientists Look for Life-Saving Bacteria on the Ocean Floor
On Oct. 27, the public can watch a live feed from deep-sea ocean-going robots as they explore the California seafloor at 2,000 meters. Scripps Institution of Oceanography scientists are gathering specimens of marine life, rocks and sand this way, hoping what they find could save someone’s life.
“Surprisingly, there are still areas off Southern California where marine life remains unexplored,” said lead scientist and Scripps biological oceanographer Lisa Levin.
One such scientist found a bacteria in the Bahamas that could prove to be a promising cure for brain cancer.
Watch the 24/7 live-streaming via the Nautilus Live website, with most remote dives conducted during daytime hours generally beginning at 8 a.m. PST. Because of COVID-19-related restrictions, staffing will be minimal and there will thus not be a way for the public to interact with the science team onboard the Nautilus.
In Other News
- The twin peaks of the San Onofre Nuclear Generating Station will be felled over a six-year process. (Union-Tribune)
- Angry San Marcoans and subdivision homeowners want the California Public Utilities Commission to have another hearing after it OK’d a 12-mile power line project over parts of the neighborhood. (Union-Tribune)
- Sempra Energy, which owns San Diego Gas and Electric, says it wants to focus on developing hydrogen energy. What the hell is that? My friends at The Straits Times in Singapore wrote up a good explainer.