Around $7.5bn set to be divested from 150 oil and gas firms, with a further $7.5bn drawn out of coal companies following crucial parliamentary vote
The Norwegian parliament yesterday voted to instruct the country's trillion-dollar sovereign wealth fund to ditch more than $13bn in fossil fuel stocks, in what experts estimate may be the world's biggest-ever divestment.
To replace the fossil fuel holdings the fund will for the first time be allowed to invest in renewables, with up to $20bn - two per cent of the fund - made available for solar and wind projects in developed markets.
The pivot is based partly on the Finance Ministry's commissioned analysis which predicted the global renewable energy infrastructure market will grow by almost 50 per cent by 2030 to $4.2tr, with expansion largely powered by wind and solar projects.
Yesterday's vote mandates the fund to divest from around 150 upstream oil and gas companies, with total investments estimated by the finance ministry to total $7.5bn.
It also mandated the fund to divest billions of dollars from coal companies, a move which climate pressure groups estimate to be worth $5.8bn. Ethical exclusion criteria will be set at 20 million tons of coal mined annually or 10GW of operating coal power plants, a standard which should screen out some of the world's largest mining and energy firms.
IEEFA finance director Tom Sanzillo said the move "will send shudders down the spines of institutional investors and leaders in other oil and gas producing states such as Russia, China, Argentina, Qatar and OPEC states".
"Norway's pivot away from oil and gas puts into practise the growing worldwide consensus that oil prices will remain low and volatile for decades to come due to clean energy innovation, increased competition over hydrocarbon exploration, and political instability," Sanzillo added.
"As the Oil Fund now will plough billions of dollars into solar and wind infrastructure, it shows the rest of the world that fossil fuel investment is no longer worth the risk."
Some opposition figures in the Norwegian parliament voiced disappointment that the plan was not more ambitious in its pursuit of global climate goals.
The finance ministry itself has maintained that the decisions were guided solely by the need to reduce exposure to expected declines in oil prices. The focus on upstream oil and gas firms means the decision will not impact more diversified oil and energy majors, such as Shell, BP, and Exxon.
Still, the move was widely applauded by green groups with Divest Invest estimating it likely represented the largest ever publicly disclosed oil and gas divestment - leagues ahead of the previous frontrunner, when Axa committed to divest $3.5bn from coal in 2017.
Norway's Government Pension Fund Global - also known as the Oil Fund - was established in 1990 and is owned and managed by the country's Finance Ministry. The world's largest sovereign wealth fund, it owns shares in more than 9000 companies and an average of 1.3 per cent of every listed company in the world.
However, it seems that some companies remain unconcerned about the prospects of fossil fuel assets becoming stranded as global decarbonisation efforts accelerate.
In a major blow to climate campaigners globally, the state government of Queensland today granted approval to the giant Adani coal mine, clearing the way for work to begin on the controversial project.