MainePERS needs to divest from fossil fuels. Now. | Opinion

PORTLAND — A statewide clash over a landmark fossil fuel divestment mandate is entering a new phase, with Maine’s public pension system facing criticism for sitting on roughly $200 million in stranded fossil fuel assets while a 2021 law requiring the state to clean up its investment portfolio moves toward its first major deadline.

The Legal Divestment Directive In 2021, Governor Janet Mills signed LD 99, legislation that made Maine the first state in the nation to require its government to divest financial assets from the fossil fuel industry. The mandate came from House Paper 0065, passed by the 130th Legislature, and was framed by backers as both a climate imperative and a prudent financial move. The Maine Treasury complied with the directive, reallocating its holdings. The Maine Public Employees Retirement System, known as MainePERS, did not.

The divide came to a head in January 2026, when MainePERS missed the statutory divestment deadline. In a 2022 opinion, Attorney General Aaron Frey wrote that the pension system is only obligated to follow the law if doing so is consistent with its fiduciary duty to beneficiaries — the workers and retirees who depend on the fund for their security. Because MainePERS has held its fossil fuel positions past the deadline, the administration argues the divestment conflicts with that duty.

“MainePERS is only required to follow the legal directive of LD 99 if it is consistent with its fiduciary duty to its beneficiaries,” Frey’s office stated at the time.

Financial Arguments on Both Sides Critics point to a 2023 academic report that found eight U.S. public pension funds collectively lost roughly $23 billion over a decade by staying invested in fossil fuels. The analysis suggests MainePERS’ holdings have likely suffered similar drag on returns, costing the state’s current and future retirees millions in foregone growth.

“For years, the industry has underperformed, yet many public pension funds, such as MainePERS, remain invested in an option that jeopardizes the savings of former, current and future public employees,” said Jackson Chadwick, advocacy and organizing director for Maine Youth for Climate Justice, based in Portland. “Young Mainers across the state are starting jobs in municipal government, becoming teachers or working in some capacity for the state. For the sake of their retirement futures, I believe that an agency like MainePERS shouldn’t invest in underperforming market sectors and should divest its remaining fossil fuel holdings.”

MainePERS, for its part, has cited the transaction costs of liquidating existing share positions as a practical hurdle. A fiscal note associated with the original legislation estimated those costs as minimal — a fraction of the hundreds of millions of dollars the fund could have recouped by divesting sooner while maintaining a diversified portfolio. Still, the agency maintains that rebalancing must be done methodically to avoid disruption for beneficiaries.

Health and Environmental Rationale Beyond the ledger, advocates argue the investment conflict carries a tangible cost to Mainers’ well-being. The extraction, refinement and combustion of fossil fuels continue to raise local air pollution levels, amplify respiratory health risks, and contribute to the rise in global atmospheric temperatures that scientists link to increasingly extreme weather across the region. For many residents, continued public pension investment in the sector reads as an implicit endorsement of practices they say jeopardize public health and accelerate climate-driven instability.

“For many Mainers, there is also a moral imperative for divestment,” Chadwick said. “The extraction, refinement and use of fossil fuels raise air pollution levels, affect more people’s health and contribute to rising global atmospheric temperatures. Mainers understand that continued investment in the industry only incentivizes more extraction, more refinement and more consumption of their products.”

A Growing Youth Voice and Electoral Spotlight The issue has taken on added urgency as Maine enters a high-stakes election cycle. With open seats and competitive races for governor and legislative leadership, every candidate running for state office will inherit the file — and every voter will have a chance to weigh in on whether the state follows through on its commitment.

“If elected, all candidates running for state office will be responsible for ensuring that the next governor and state legislature pay attention to and take action on this matter,” Chadwick said. “For some, this issue may be about the focus on climate. For others, it may be about financial security and agency accountability.”

Chadwick encouraged Mainers, particularly those with retirement savings tied to the system, to press their representatives for answers.

“I encourage all readers to learn more about fossil fuel divestment and urge MainePERS pensioners to ask their retirement system: Why are you flouting a legal mandate and choosing to remain invested in the underperforming fossil fuel industry?”

Whether the next administration will move to compel compliance remains to be seen. What is clear is that the tension between a statutory mandate, a fiduciary interpretation, and the financial and environmental realities facing Maine’s retirement system is unlikely to fade from the capital’s agenda anytime soon.