California State Retirement Fund Lost 71% of $468 Million Clean Energy Investment

The California Public Employees’ Retirement System (CalPERS) for state employees lost 71% of a $468 million private equity investment in clean energy.

Since CalPERS retirement benefits are only 79 percent funded, the California taxpayer and state government must make up the remaining 21 percent. With a high pension deficit of $180 billion, CalPERS’ private equity investment strategies have come under scrutiny, according to The Center Square:

CalPERS committed $465 million to the CalPERS Clean Energy & Technology Fund (CETF) private equity fund in 2007, ultimately paying $468,423,814.

Since then, withdrawals and the remaining investment value of the investment fund have decreased to $138,045,373 as of March 31, 2025.

This represents a loss of 71%, or more than $330 million, for which private equity firms received at least $22 million in fees and costs.

For fiscal year 2024-25, overall CalPERS returns were 11.6 percent, with private equity returns totaling 14.3 percent and public equity returns totaling 16.8 percent.

Marc Joffe, a public finance expert and visiting scholar at the California Policy Center, questioned why CalPERS invested large sums in much riskier and more expensive private equity investments when the returns were nearly equal to those of public equity investments.

“The returns were similar…so why go to all the trouble – if you can get those kinds of returns in the public markets, why bother with all the complexities and illiquidity involved in private equity? Joffe told The Center Square.

Joffe noted that the 71% loss of the CETF investment illustrates the “combined dangers of private equity and ESG investing,” in which “a very opaque investment choice appears to have been chosen because of its green credentials, and yet it is now generating a huge loss for taxpayers and retirees.”