Calpers Looks to Take-Private Deals as Trump Batters Renewables

The California Public Employees’ Retirement System, one of the world’s largest and most climate-friendly investors, is seeking ways to navigate one of President Donald Trump’s top priorities: boosting the US fossil fuel industry and killing green subsidies.

Author of the article:

Bloomberg News

Eliyahu Kamisher

Published Jan 23, 2025  •  3 minute read

A wind turbine next to electricity pylons near to Clacton On Sea., on Monday 12 30, 2024. Carlos Jassoin London UK, on Monday, Dec.. 30, 2024. In the UK, plans to essentially eliminate fossil fuels from the power network by the end of this decade would require a major overhaul of the way power is consumed to better match fluctuating supply from renewable supplies, according to a recent report by the countrys grid operator. It would be great if there is a way to shoot something around the grid network too.Photographer: Carlos Jasso/Bloomberg Photo by Carlos Jasso /Bloomberg

(Bloomberg) — The California Public Employees’ Retirement System, one of the world’s largest and most climate-friendly investors, is seeking ways to navigate one of President Donald Trump’s top priorities: boosting the US fossil fuel industry and killing green subsidies. 

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One option for Calpers is taking companies private if their shares, already hammered by years of headwinds, decline further under Trump. The country’s largest public pension fund, which oversees $527 billion, will also look to finance wind and solar projects, as well as investments in polluting businesses that can be transitioned to more environmentally sustainable profiles.

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“We continue to examine opportunities in renewable energy development and in transition (from brown to green) projects,” Peter Cashion, who leads climate investing at Calpers, said in a statement. “For a variety of reasons, we may also see opportunities in the future of ‘take-private’ transactions around listed renewable energy stocks, given some of the declines in valuation that we have seen over the past few years.”

Calpers, run by Chief Executive Officer Marcie Frost and Chief Investment Officer Stephen Gilmore, aims to double its exposure to wind, solar and other renewable areas to $100 billion by 2030. While operating on a longer time horizon than a single presidential administration, the fund’s strategy offers a glimpse into how prominent environmentally-oriented investors will navigate the White House’s hostility to green policies. 

Hours after being sworn in Jan. 20, Trump issued executive orders targeting subsidies and regulations that had made climate-friendly investing more attractive under former President Joe Biden. 

Trump’s moves included the likely elimination of electric-vehicle tax credit, rollback of environmental protections and suspension of offshore wind leases. He also ordered the US to withdraw from the landmark Paris Agreement on climate change. 

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Industry Woes

The renewable energy industry has already been under pressure in recent years from higher interest rates, supply chain snarls and inflation. 

The WilderHill Clean Energy Index, which includes a range of renewable energy companies, has fallen by more than half over the past two years compared with a gain of more than 50% for the S&P 500 Index. Trump’s executive orders also contributed to a 16% two-day decline in offshore wind developer Orsted A/S. 

Calpers would be well positioned to partner with private equity firms if renewable energy companies become prime acquisition targets, said Panos Patatoukas, an accounting professor at the University of California, Berkeley. 

“It just so happens that in this cycle, green companies become undervalued,” Patatoukas said. 

Cashion, Calpers’ climate investing head, said the fund is still working to craft its climate strategy under Trump. Despite the president’s zeal for oil, Cashion expressed optimism about renewable energy investments.

“We see the new administration as being pro-energy, and as an investor in energy, including renewables, with a particular focus on renewables if it’s cost-competitive, we believe that will not be negatively impacted,” he said in separate comments before Trump’s inauguration.

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“We may end up doing a lot of large infrastructure-type investments in the US, which are big dollar volume,” he said. “We may end up doing less venture climate tech if it depends on Department of Energy low-cost loans or guarantees.”

Other options include increasing ESG investments abroad in countries with more supportive policies on renewables, though no geographic decisions have been made, he said.

Congressional Pressure

Calpers faces mounting challenges in Washington. The Republican-led House Judiciary Committee has accused the fund of operating as a “cartel” by coordinating with nonprofits that pressure companies to reduce greenhouse gas emissions. 

Additionally, Republicans on the House Education and the Workforce Committee are investigating Calpers for allegedly promoting union interests over those of its members through labor-friendly investment mandates.

Internal tensions are also simmering at Calpers over investing strategy. At a November board meeting, Cashion promoted carbon capture, a technology that allows industries like oil refineries and power plants to capture and store their carbon emissions.

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Theresa Taylor, the president of Calpers’ board, questioned investments in the technology, which has drawn fire from climate activists who argue it prolongs reliance on fossil fuels while diverting attention from renewables.

“I’m not clear that carbon capture is the best use of our funds,” Taylor said at the meeting.

But that’s just one area of potential investment for Calpers, which manages money for police, firefighters and public services employees. With a major commitment to sustainable investments, the fund is still thinking through potential changes to its approach under Trump.

“It’s really a bit too early to say at this point,” Cashion said. “But, as I said, we’ll follow the investment opportunity.”

—With assistance from Shelby Knowles and Mark Chediak.

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