Norway Fund Excludes More Utilities over Coal

Norway’s central bank said December 21 it has decided to exclude 15 more companies from the government’s $865bn oil fund for having not reduced coal production or consumption enough, and therefore for contributing to climate warming.

The fund is a nest-egg for when Norway's revenues from oil and gas taper out post-2050.

Oslo has asked the bank to exclude such companies from the Government Pension Fund – the world’s largest sovereign wealth fund, and third-largest government-run fund after US and Japanese state pension funds. The latest decision means that 59 companies are excluded from the fund and 11 more placed under observation on the coal criterion. The bank warned that “further exclusions will follow in 2017.”

The rationale of Norway's oil fund (Graphic credit: Norway's central bank)

Among those most recently excluded – from which the fund will now divest or has recently divested holdings – are US power firms NRG Energy and Alliant Energy, Japan’s Chugoku Electric and Hokuriku Electric, China’s Guangdong Electric Power Development, and peninsular Malaysia’s main power utility Tenaga Nasional. Many are also involved in gas and LNG supply and trading so Oslo's decision may aim to increase their gas exposure instead.

Among the 11 now 'on watch' are Spanish utility Endesa and its Portuguese counterpart EDP, US firms CMS Energy and Southern, plus Japan's Kyushu Electric and Tohoku Electric, all of which generate from gas as well as coal, and for all of which Oslo's decision will come as an embarassment.

In April, dozens of US, Chinese and Indian firms along with Greece’s state-run generator PPC and UK generator Drax Power were excluded from Norway’s oil fund over coal and climate change. The fund also excludes certain companies such as Kosmos and Cairn for other reasons.

Mark Smedley