San Diego will stop investing in fossil fuel industry to avoid contradicting city climate goals

San Diego will soon join New York, Los Angeles, Pittsburgh and many other cities that no longer invest their financial reserves in the fossil fuel industry because that contradicts municipal efforts to fight climate change.

San Diego will prematurely sell off a recent $17 million investment in Chevron before the new policy, which the San Diego City Council approved last month, takes effect Jan. 1.

City officials didn’t say whether any other holdings in San Diego’s $2.33 billion portfolio must be sold because the corporations engage in the exploration, production, drilling or refining of coal, petroleum or natural gas.

Mayor Todd Gloria says the policy aligns city investments with city values and will boost progress on San Diego’s climate action goals by not providing financial support to corporations that increase greenhouse gas emissions.

“In order for San Diego to be a global leader on climate, our actions must match our words,” Gloria said after the council’s 8-1 vote.

Councilmember Sean Elo-Rivera said aggressive action by cities is needed to stop accelerating climate change.

“Divestment from fossil fuel companies and other extractive industries is a significant step to align our policies, plans and pocketbooks with the moral imperative to take immediate climate action,” he said. “By removing the power of these industries in our economy, we shift that power toward equitable climate solutions. While this will not fix our climate crisis, it is an important step.”

Councilmember Chris Cate, who cast the lone “no” vote, said the new policy contradicts recent city investments in natural gas vehicles and a natural gas fueling stations that cost millions.

“I think it is contrary to what we have been doing as a city,” said Cate, noting that the policy was unveiled shortly after Gloria updated the city’s climate action goals. “I understand the timing and why this was brought forward, but I don’t agree with it.”

Cate is the council’s only Republican member.

A fossil fuel divestment policy for San Diego was first proposed nearly two years ago by Councilmember Chris Ward, who left the council last December to join the state Assembly. Ward’s proposal stalled in the council’s economic development committee.

Councilmember Joe LaCava said San Diego leaders hardly qualify as pioneers.

“Divesting may be new to us, but we are following the model already set by cities and institutions around the world,” he said.

LaCava noted that the council gets a chance to review and adjust its investment policies each year, so the new prohibition can be modified if there are unintended consequences.

Critics of divestment policies say they don’t result in a reduction of demand for fossil fuels, but that they give environmentally conscious investors less influence over fossil fuel companies.

San Diego’s new prohibition does not apply to subsidiaries of corporations involved in fossil fuels. And the city won’t cease investing in a pooled state fund even though it doesn’t have a policy that prohibit fossil fuel investments.

The new policy will require the city to prematurely sell $17 million in Chevron bonds that are scheduled to mature in March 2022. Selling before Dec. 31 instead of waiting until March will cost the city about $70,000, officials said.

Gloria said the city will try to re-invest money previously given to fossil fuel companies in industries focused on alternative energy and industries with high-paying jobs.

On a related note, city officials said they haven’t yet begun to explore investments in cryptocurrency because California law still prohibits cities from making such investments.