Tag: fracking

UK Environmental Regulator Accused of “Clear Conflict of Interest” In Pension Fund Investments

big ben

A report by the Independent claims that the pension portfolio of the UK’s Environment Agency – the government body charged with protection of the environment in England – contains numerous investments in industries that the Agency regulates.

The portfolio holdings may present a conflict of interest for the Agency.

From the Independent:

The Environment Agency (EA) has been accused of having a “clear conflict of interest” after an Independent on Sunday investigation found the UK regulator’s pension fund invests millions in controversial industries which it then regulates. In the UK the EA’s pension fund – worth a huge £2.3bn – invests in companies investing in fracking, incineration and nuclear power, all of which the Agency is involved in regulating.

Globally, the fund also invests millions in chemical and mining companies, including diamond mining; tobacco and alcohol companies; arms manufacturers; a gambling company, as well as Starbucks which has been repeatedly accused of tax avoidance.

The pension details are contained in a response to a Freedom of Information request from the EA, which lists the companies it had a stake in as of March this year, its latest available audited information. And its investments are in marked contrast to the Agency’s public image of being a leading “responsible” investor that integrates “environmental, social and governance considerations into all decision-making.” The Agency champions its commitment that by 2015 “25 per cent of the fund will be invested in the sustainable and green economy”.

Despite these bold claims, the list reveals that the EA, which was heavily criticised last year for its response to flooding, holds £50m direct investments in oil and gas companies such as Shell, BP and BG Group, as well as millions more in indirect oil and gas funds.

[…]

The fund is investing in two companies financially intertwined with fracking giant Cuadrilla, the company that has been the subject of fierce protests in Lancashire and West Sussex. The first is Centrica, which is investing £60m in Cuadrilla’s Lancashire operations and the second is Riverstone Energy, which owns 44 per cent of Cuadrilla.

The Cuadrilla relationship is further complicated as Lord Browne of Madingley, who sits on Cuadrilla and Riverstone’s board, has been accused of having privileged access to Lord Chris Smith, the head of the EA. Browne, a former BP boss, met Smith on numerous occasions when Cuadrilla was trying to get a permit to frack. The minutes of one telephone meeting between Browne, Smith and other government ministers reveal that the EA offered to “shorten the consultation process prior to determining permits”, although this was rejected by Cuadrilla, which was worried about legal action.

The Agency hired consultants this year to look into the impact of divesting from fossil fuels. But the consultants advised against divesting from fossil fuel assets.

Read the entire investigation here.

 

Photo by  @Doug88888 via Flickr CC License

Newspaper: Pennsylvania Pension Funding and Shale Tax Shouldn’t Be Linked

Pennsylvania flag

Last week, a Pennsylvania lawmaker proposed levying a shale tax of 3.5 percent on the state’s frackers. The revenues – estimated to be $400 million annually – would then go to paying down the Public School Employees’ Retirement System’s (PSERS) unfunded liabilities.

One Pennsylvania newspaper agrees that paying down pension liabilities should be a top priority. But it disagrees that a shale tax is the way to do it.

From the Pittsburgh Tribune Review editorial board:

The GOP-controlled state Legislature must make Pennsylvania’s biggest financial woe — $50-billion-plus in unfunded pension liabilities — its top 2015 priority. And it must do so without linking pension reform to Democrat Gov.-elect Tom Wolf’s proposed natural gas severance tax.

Incoming Senate Majority Leader Jake Corman, R-Centre, during a Pennsylvania Manufacturers Association forum at the Pennsylvania Society gathering in New York earlier this month, said he’s willing to consider the severance tax if Wolf will negotiate on pensions. Going beyond compromise, that sets up GOP lawmakers to capitulate to Wolf’s taxing agenda.

Allegheny Institute scholar Frank Gamrat reminds that the extraction tax would have to compensate for the state-mandated elimination of the impact fee, a levy that has brought counties and municipalities nearly $130 million over the last three years. And for the tax to yield the Wolf-estimated $1 billion-plus at current gas prices, “production would have to rise by more than 50 percent.” It’s a quite iffy proposition given current market trends.

A too-high severance tax “could have adverse consequences for Pennsylvania,” says Gamrat. GOP leaders must take heed when he urges that the Legislature not spend “a great deal of (its) time and political capital” on a severance tax and focus instead on “pension reform” to address “the principal cause of the commonwealth’s budget problem.”

The Public School Employees’ Retirement System was 63.8 percent funded as of June 30, 2014.