Imagine losing over $330 million of hardworking Californians’ retirement money on a gamble that went south faster than a flock of geese in winter. That’s the bitter reality for the California Public Employees' Retirement System (CalPERS), which saw a staggering 71% drop in its $468 million stake in a clean energy venture. It’s a financial faceplant that raises serious questions about risky investments with public funds and puts Gov. Gavin Newsom in the hot seat, as the Center Square reports.
The crux of this fiasco is CalPERS’ investment in the CalPERS Clean Energy & Technology Fund (CETF), which plummeted from a committed $465 million in 2007 to a measly $138 million by March 31, 2025, while private equity firms pocketed at least $22 million in fees.
Back in 2007, CalPERS poured nearly half a billion dollars into CETF, hoping to ride the wave of clean energy and tech innovation. By 2010, Capital Dynamics took the reins of what was then a $480 million portfolio, with a sharp focus on solar projects in the U.S. But as the years rolled on, the fund’s value eroded dramatically, leaving a gaping hole in the pension system’s books.
Capital Dynamics, as listed on CalPERS’ own website, spearheaded investments heavily into American solar companies during the early 2010s. Yet, much like the ill-fated Solyndra -- which collapsed despite a $535 million federal loan guarantee, costing taxpayers over $500 million -- these ventures couldn’t withstand market pressures. Evergreen Solar, another player in the space, buckled under competition from cheap Chinese solar cells flooding the market.
The numbers are grim: CalPERS ultimately paid in over $468 million to CETF, only to watch it dwindle by more than $330 million. Had this money been parked in a simple S&P 500 index fund with dividends reinvested, it could have ballooned to around $3 billion. That’s a missed opportunity so large it could fund a small city.
CalPERS, for its part, is playing the blame game while hiding behind legal exemptions. They’ve refused to release detailed records on CETF’s losses, despite a public records request from The Center Square, citing state laws that shield alternative investment data from scrutiny. It’s a convenient curtain to draw over a very public mess.
“The public should have a right to know how public money is being invested,” said David Loy, legal director for the First Amendment Coalition. That’s a sentiment any taxpayer would echo when pension funds -- meant to secure retirements -- take a nosedive with little explanation.
CalPERS’ defense? It’s all ancient history, tied to decisions made nearly two decades ago. “The CalPERS Clean Energy & Technology Fund dates back to 2007, before the pension fund’s board and staff worked together to tightly focus our private equity strategy,” said spokesperson Abram Arredondo.
But let’s not buy the ‘old news’ excuse too quickly. If anything, it highlights a pattern of chasing trendy, high-risk investments -- often aligned with progressive environmental agendas -- without enough accountability. When retirees’ futures are on the line, shouldn’t caution trump ideology?
CalPERS boasts that private equity has been a top performer over the past 20 years, with a 14.3% return for the 2024-2025 fiscal year compared to 16.8% for public equities and an overall 11.6% return. They’ve even bumped their private equity target from 7% in 2021 to 17% in 2024, while trimming fees by 10% since 2022. Yet, with private equity fees still costing 6-7% annually, one wonders if the juice is worth the squeeze.
Meanwhile, CalPERS’ pension benefits are only 79% funded, leaving a 21% shortfall -- estimated at a whopping $180 billion by the Reason Foundation. That’s a massive liability hanging over California taxpayers and retirees. Losses like CETF’s aren’t just numbers; they’re a direct hit to financial security.
Critics argue there’s a deeper issue with these opaque, ideologically driven investments. When public funds chase the latest green fad without clear oversight, the risk skyrockets -- and the public is left holding the bag.
Capital Dynamics didn’t respond to requests for comment, leaving more questions than answers about CETF’s downfall. Were these solar bets simply bad timing, or a fundamental misstep in strategy? Either way, the silence doesn’t inspire confidence.
CalPERS may tout diversification and better management now, but the CETF debacle is a cautionary tale. Public pension funds aren’t venture capital playgrounds for testing unproven markets or pushing policy agendas.
California’s retirees deserve better than a system that gambles their savings on speculative projects with little transparency. If CalPERS wants to rebuild trust, it must prioritize steady, accountable growth over flashy, high-stakes experiments. After all, when it comes to pensions, the only ‘green’ that matters is the kind in the bank.
