Norway $900bn oil fund set to ditch coal shares

Coal-heavy power utilities and mining companies in firing line as lawmakers endorse biggest fossil divestment push to date

Norway's Parliament will vote on coal divestment rules for its sovereign wealth fund on 5 June (Pic: Michael Spiller/Flickr)

Norway’s Parliament will vote on coal divestment rules for its sovereign wealth fund on 5 June (Pic: Michael Spiller/Flickr)

By Megan Darby

Norway is set to drop coal holdings from its US$900 billion sovereign wealth fund, after a cross-party parliamentary committee backed divestment calls on Wednesday.

The finance committee recommended the fund sell stakes in companies that get more than 30% of revenues from coal mining. In an even further-reaching move, it targeted power companies that generate more than 30% of their output from coal.

It will be the largest scale withdrawal of funds from coal miners and burners to date – and the first to be mandated by elected lawmakers.

All parties backed the law, which goes to a full parliamentary vote on 5 June.

“Investing in coal companies poses both a climate risk and a future economic risk,” they said in a joint statement.

“This is a great victory in the battle against climate change,” said Torstein Tvedt Solberg, an MP in the opposition Labour Party.

“Coal is in a class by itself as the source with the greatest responsibility for greenhouse gas emissions.”

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Green groups estimate the fund holds NOK 85.8 billion (US$11 billion) worth of coal assets.

It is not yet clear how much of that will be captured under the criteria recommended by the finance committee.

Finance minister Siv Jensen told the Washington Post 50-75 companies worth NOK 35-40 billion could be dropped.

The fund, which is based on the Nordic country’s oil wealth, shed 51 coal mining companies from its portfolio in 2014.

But Greenpeace, Urgewald and Future in our Hands found the fund at the same time increased its stake in coal-intensive power companies.

That is what makes the extension of divestment to electricity companies “the really significant thing” to Urgewald’s Heffa Schuecking.

Utilities like Germany’s RWE, Japan’s Electric Power Development Company and Duke Energy in the US could be in the firing line.

On the other hand, the world’s two biggest mining companies, BHP Billiton and Rio Tinto, escape the cull. Less than 30% of their sales are in coal.

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Campaigners are “incredibly happy” with the result, said Shuecking.

She is hopeful other major funds will follow suit, strengthening efforts to reach a global climate deal in Paris this December.

“For a fund of that size to steer away from the coal industry is one of the best signals,” said Schuecking. “It gives you hope in the lead up to Paris.”

Scientists say more than 80% of coal is “unburnable” if a global temperature rise is to be held to 2C – the international goal.

The Stowe Global Coal Index lost 71% of its value in the last five years, as production growth outstripped demand.

Rising energy consumption in emerging economies is keeping coal in the picture.

But with signs Chinese coal use is flatlining or even falling, analysts at IEEFA predict the market will continue to be oversupplied and unprofitable.

“Norway’s leadership is to be applauded for its efforts to rid itself of a losing financial proposition and the threat coal poses to the environment and climate,” IEEFA finance director Tom Sanzillo told RTCC.

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