Wealth Fund Ban Betrays Norway’s Awkward Fossil Fuel Goals

Wealth Fund Ban Betrays Norway’s Awkward Fossil Fuel Goals

Western Europe’s biggest oil producer has decided coal is too dirty to invest in.

Norway’s $890 billion sovereign wealth fund, built on more than four decades of extracting crude from the North Sea, was ordered by lawmakers on Wednesday to limit holdings of companies that produce or burn coal. That could trigger at least $4.5 billion in divestments of stocks such as RWE AG and Duke Energy Corp.

“There’s this incredible logic that coal is the climate problem, and Norway is helping solve the world climate problem by producing gas that can replace coal in Europe and reduce emissions,” Rasmus Hansson, a lawmaker for the Green Party, said in a phone interview. “That logic has unbelievably been accepted by the Norwegian majority as credible — which it isn’t.”

The cognitive dissonance is on display in Stavanger, Norway’s oil capital. The local Scandic hotel, which charges around $200 a night, tells guests it runs on wind and hydropower. The view is of the North Sea, where Norway — a country that boasts the highest per capita income in Europe after Luxembourg — spends billions extracting its oil.

Rain Forests

Such ironies carry over to Norway’s aid programs. The country devotes $385 million a year to saving rain forests in places like Brazil, where it also explores for oil and gas through its ownership of Statoil ASA. The company, in which the state holds a 67 percent stake, is among a list of producers that includes Royal Dutch Shell Plc and BP Plc that on Monday urged governments to replace coal with natural gas, which pollutes less.

The fund is the biggest investor yet to turn its back on coal. Others, including insurer Axa SA, Stanford University as and pension funds such as KLP and the Church of England, have also pledged to reduce or scrap such holdings.

Even fossil-fuel producers such as Total SA want to get out of the coal business. The French company is awaiting regulator clearance to sell mining operations in South Africa, Chief Executive Officer Patrick Pouyanne said on Monday.

Consumption of the fossil fuels Norway produces each year generates about 500 million tons of carbon dioxide, according to its statistics bureau. That’s 10 times the 50 million tons of CO2 Norway’s wealth fund is directly responsible for through its ownership in coal companies, according to Bloomberg calculations based on figures from environmental groups including Greenpeace. The math assumes the fund owns an average 1.3 percent of the coal producers, the same average stake it has in listed stocks worldwide.

Arctic Oil

“The battle to get Norway to leave in the ground its own fossil resources, especially Arctic oil, coal and gas, will and must continue,” said Truls Gulowsen, who heads Greenpeace in Norway. That’s “in addition to the divestment of hundreds of billions of kroner in oil and gas companies that have yet to be affected by Norway’s new investment ethics.”

Norway’s fund hasn’t released figures on how much coal the companies it invests in produce and doesn’t plan to do so at the moment, spokeswoman Marthe Skaar said in an e-mail.

Parliament was unanimous in wanting to ban the fund from holding stakes in utilities or miners that base at least 30 percent of their businesses or revenue on coal. It was hailed as a watershed moment by supporters, who say the ban has the potential to pave the way for more such restrictions.

Source: Bloomberg

Date: May 2015

Read the article

Related Articles

Trump gives green light to Keystone, Dakota access pipelines

President Trump gave the go-ahead for construction of two controversial oil pipelines, the Keystone XL and the Dakota Access. As

High school girls with no engineering experience won a $10,000 grant for inventing a solar-powered tent to combat homelessness

For some high school students, after-school activities might consist of rehearsals, study groups, or babysitting gigs. These 12 kids invented

Electric cars will be cheaper than conventional vehicles by 2022

Electric cars will be cheaper to own than conventional cars by 2022, according to a new report. The plummeting cost