Norway’s divestment is great news. But this is the last moment to be complacent.
By Tim Ratcliffe February 6, 2015
Today’s news that the Norwegian Sovereign Wealth (oil) Fund has divested from a total of 22 companies, potentially totaling billions of dollars in assets, is a huge win for the rapidly growing divestment campaign and should be celebrated. In fact, in terms of amount of money it is likely the biggest divestment decision to date, so reason to be optimistic that this rapidly growing campaign is having a serious impact.
But once the celebrating is over, there’s no time to sit back. Now is the time to push. In the words of Naomi Klein, acclaimed author and journalist, regarding the implications of the falling oil price, “We’re in a much better situation to win but we need to understand that this is a window. This is the last moment to be complacent.”
This has been reiterated in recent publications by both the Economist and Deutsche Bank. The reality is that most of the carbon in our already proven reserves must stay in the ground and that legislation to ensure that this is the case is just around the corner. Now is the time to demand big changes.
The Norwegian oil fund still invests in well over 100 fossil fuel companies with assets totalling around $40bn, and total reserves representing well over 500gt CO2 if burnt. Enough to take the world soaring past a 2 degree target and any chance of stopping dangerous changes to the climate system.
“I see this as a “counter-move” from Norges Bank Investment Management (NBIM), the group that oversees investments by the fund, to the growing pressure from divestment, where they try to demonstrate to politicians that they can do OK without stricter political mandates,” suggests Truls Gulowsen, campaigner with Greenpeace Norway. “It is still up to Parliament to instruct the Fund to complete full fossil fuel divestment, as the Fund still has billions in coal, oil and tar sands investments. This decision is scheduled for May this year, so maximum pressure on Norway is needed.”
Global Divestment Day next week, 13 and 14 February comes at the perfect time to increase the pressure on institutions such as the Norwegian Sovereign Wealth fund to commit to full divest from fossil fuels.
Repost from The Guardian [Editor: significant quote: “Note: The first line originally said 40 coal mining companies had been dropped, instead of the correct number of 32. A further eight companies were dropped due to their greenhouse gas emissions: five tar sand producers, two cement companies and one coal-based electricity generator.” My emphasis. – RS]
World’s biggest sovereign wealth fund dumps dozens of coal companies
Norway’s giant fund removes investments made risky by climate change and other environmental concerns, including coal, oil sands, cement and gold mining
By Damian Carrington, 5 February 2015
Part of a mining platform at a disused coal mine in Spitsbergen, Svalbard, Norway. The country’s £556bn sovereign wealth fund, GPFG, has published its divestment details in its first report on responsible investing. Photograph: Alamy
The world’s richest sovereign wealth fund removed 32 coal mining companies from its portfolio in 2014, citing the risk they face from regulatory action on climate change.
Norway’s Government Pension Fund Global (GPFG), worth $850bn (£556bn) and founded on the nation’s oil and gas wealth, revealed a total of 114 companies had been dumped on environmental and climate grounds in its first report on responsible investing, released on Thursday. The companies divested also include tar sands producers, cement makers and gold miners.
As part of a fast-growing campaign, over $50bn in fossil fuel company stocks have been divested by 180 organisations on the basis that their business models are incompatible with the pledge by the world’s governments to tackle global warming. But the GPFG is the highest profile institution to divest to date.
A series of analyses have shown that only a quarter of known and exploitable fossil fuels can be burned if temperatures are to be kept below 2C, the internationally agreed danger limit. Bank of England governor Mark Carney, World Bank president Jim Yong Kim and others have warned investors that action on climate change would leave many current fossil fuel assets worthless.
“Our risk-based approach means that we exit sectors and areas where we see elevated levels of risk to our investments in the long term,” said Marthe Skaar, spokeswoman for GPFG, which has $40bn invested in fossil fuel companies. “Companies with particularly high greenhouse gas emissions may be exposed to risk from regulatory or other changes leading to a fall in demand.”
She said GPFG had divested from 22 companies because of their high carbon emissions: 14 coal miners, five tar sand producers, two cement companies and one coal-based electricity generator. In addition, 16 coal miners linked to deforestation in Indonesia and India were dumped, as were two US coal companies involved in mountain-top removal. The GPFG did not reveal the names of the companies or the value of the divestments.
“One of the largest global investment institutions is winding down its coal interests, as it is clear the business model for coal no longer works with western markets already in a death spiral, and signs of Chinese demand peaking,” said James Leaton, research director at the Carbon Tracker Initiative, which analyses the risk of fossil fuel assets being stranded.
A report by Goldman Sachs in January also called time on the use of coal for electricity generation: “Just as a worker celebrating their 65th birthday can settle into a more sedate lifestyle while they look back on past achievements, we argue that thermal coal has reached its retirement age.” Goldman Sachs downgraded its long term price forecast for coal by 18%.
On Wednesday, a group of medical organisations called for the health sector to divest from fossil fuels as it had from tobacco. The £18bn Wellcome Trust, one of the world’s biggest funders of medical research , said “climate change is one of the greatest challenges to global health” but rejected the call to divest or reveal its total fossil fuel holdings.
In January, Axa Investment Managers warned the reputation of fossil fuel companies were at immediate risk from the divestment campaign and Shell unexpectedly backed a shareholder demand to assess whether the company’s business model is compatible with global goals to tackle climate change.
Note: The first line originally said 40 coal mining companies had been dropped, instead of the correct number of 32. A further eight companies were dropped due to their greenhouse gas emissions: five tar sand producers, two cement companies and one coal-based electricity generator.
The City of Palo Alto, responding to concerns from Peninsula Interfaith Climate Action (PICA), voted unanimously to send a message to CalPERS (California Statement Employee Retirement System), the national’s largest pension fund, to pull its investments out of fossil fuels.
Councilmembers Marc Berman, Patrick Burt, Karen Holman and Liz Kniss submitted the initial “Colleague’s Memo” in favor of divestment. “Climate change poses a top-tier threat to our future. Our obligation to address climate change through all avenues requires support from all sectors,” noted Council member Cory Wolbach. “I was inspired to see the passionate and effective work of these congregations collecting 152 signed letters on behalf of fossil fuel divestment. Those letters, presented by a cross-denominational coalition, sent a very powerful moral statement.”
Eileen Altman is an associate minister at First Congregational Church in Palo Alto and a PICA member who spoke at the City Council meeting. “As Christians, we share a core set of values and concern for God’s gift of life, both human and all other life. Our investments should reflect our values.” said Rev. Altman. “This concern is not a liberal or conservative value, but is a Christian value. The US political system unproductively magnifies differences when Americans everywhere share 98% of the same values. Climate is about the future of our children and is especially about the people who are most vulnerable to the effects of climate change. Climate is the biggest social justice issue of our time. From the pews in Palo Alto and throughout the United Church of Christ, the first denomination to pass a resolution to move toward divestment from fossil fuels (in 2013), we welcome the opportunity to respectfully dialogue about climate with churches in all regions of the country and across all party affiliations.”
While the call for fossil fuel divestment may have its strongest impact as a symbolic statement, it also has practical implications for the economic value of employee pensions, explained Debbie Mytels, convener of PICA, which comprises a dozen local congregations that submitted signed letters to the Council in favor of the divestment resolution.
“While we believe it’s a moral obligation to stop using the fossil fuels that are causing sea level rise, extreme weather events and drought-related crop losses,” Mytels said, “it’s also important to question how long investments in these companies will be financially valuable.”
“If we want to protect our employees’ pensions, we need to get CalPERS to pull out of dirty fuels before they become ‘stranded assets’.” said Mytels, citing a recent statement by Deutsche Bank in Germany that said “to meet climate change targets, over half of identified fossil fuel reserves will have to stay in the ground.”
“While we are pleased with Palo Alto’s progress in becoming a city that supplies ‘carbon free’ electricity to its utility customers,” Mytels said, “we feel it’s time for our city to demonstrate further leadership by joining the call for divestment.”
“Thankfully, Palo Alto itself does not own any investment in fossil fuels of any sort — that’s all the more reason for the Council to consider the long-term safety of our employees’ CalPERS retirement assets,” she added.
Reverend Will Scott, from California Interfaith Power & Light (CIPL), noted that “CIPL and our growing statewide network of more than 640 congregations are grateful for the inspiring work of the Peninsula Interfaith Climate Action group, now a CIPL Regional Working Group. Their regular, committed, and personal engagement on the local level as people of diverse faiths concerned about the climate crisis, is a strong model for other regional working groups in our network. Indeed, they are exemplifying the sincere, collaborative, practical, rooted and creative community resiliency needed throughout the world to meet the seriousness of this global challenge. California Interfaith Power & Light is learning much from PICA’s practices and shared wisdom.”
Palo Alto now joins a growing group of California cities, including San Francisco, Oakland, Berkeley, Brisbane, Richmond, Fairfax, and Santa Monica in calling for dropping fossil fuels from employee pension funds. Sunnyvale may be the next city. Other regional agencies, including the Santa Clara Valley Water District, which is mandated to protect Silicon Valley citizens from floods, have also passed similar resolutions due to concerns about sea level rise.
In advance of Global Divestment Day, Feb. 13, 2015, Norway announced last week that it would drop coal and tar sands companies from its national investment portfolio. Similarly, the Rockefeller Brothers Fund has made such a decision, along with 50 other philanthropic organizations. The divestment movement is also growing significantly among national faith-based groups, and nearby Stanford University has agreed to eliminate its holdings in coal companies. Today, California State Senate President Kevin de Leon introduced SB 185, directing CalPERs to divest coal fossil fuel investments.
Repost from the Houston Chronicle [Editor: Interesting and possibly a “realistic” view, but not very optimistic when it comes to a progressive timeline for change…. – RS]
Q&A: For vehicles, oil’s days are numbered
By Collin Eaton, November 21, 2014
Henrik Madsen expects “a transformation in that oil will lose its position in transportation.”
One day, crude oil will lose its grip on cars and trains and ships, but with costs to produce alternative energy still high, a change that big will likely take many decades. How long is anyone’s guess, says one man with a head start on most prognosticators.
Henrik Madsen, the CEO of Norway’s international shipping and oil field equipment classifier DNV GL, says the commercial automobile market is the last bastion of crude oil, after its disappearance from power plants and heating fuels in the second half of the 20th century. Its days in vehicles and vessels are numbered.
Searing cold liquefied natural gas – don’t spill it, it’s minus-261 degrees – and compressed natural gas are elbowing their way into crude’s territory, powering some large trucks and locomotives, and finding prime real estate aboard big tankers as international demand for gas surges.
LNG’s advance in vehicles is likely good news for those counting on the earth’s resources in coming decades, Madsen says. Oil, he added, is too precious to burn in a combustion engine, and should be reserved as a feedstock for ingredients to make high-end products including clothing, plastics, coatings and pharmaceuticals.
Energy
The emergence of alternative energy sources in transportation isn’t great news for oil-producing nations like Saudi Arabia whose economies are linked to crude-pumping wells, he said.
“They might be a little bit afraid of shale oil, but I think they’re more afraid of the use of oil in transportation disappearing,” Madsen said.
DVN GL has an office and oil and gas operations in Katy. Madsen, recently in Houston, spoke with the Chronicle about the pivot to LNG and compressed natural gas fuels in trucking, and the early signs that point to a future of lower oil consumption. Edited excerpts follow:
Q: You describe the “energy trilemma” as the balance between protecting the environment while retaining affordable energy costs and ensuring we have enough energy. Where is that effort today?
A: I think everybody agrees we need many energy sources in the future. We need oil, gas, coal, wind, solar, geothermal. One of the things we’re focused on is how we use the different forms of energy. We think there will be a transformation in that oil will lose its position in transportation. On the trucking side in the U.S., that transformation is happening fast, because the price of LNG is 10, 20 percent of the price of diesel. You’ve seen some train companiesconsider using gas instead of diesel, you’ve seen it in the oil field service sector, where they’re using gas to drill for shale oil.
Q: Expand on what’s driving this.
A: In terms of emissions, you will reduce local pollution a lot. But primarily it is because gas is much cheaper. From a technical point of view, this major change would not be impossible, say over a 20- to 30-year period. But at the same time, it will be as the cost of transportation fuels goes up, so how slow the transformation will be is anybody’s guess.
Q: Do you envision less oil exploration in the future?
A: That may be 30 or 40 years from now. I think consumption will be lower then. But people don’t talk much about that. They’re talking about how we’re at peak oil and how we can find more oil and so on, instead of looking at what it’s used for. I personally think it would be nice to reserve oil for high-value products.
Q: What are the safety concerns related to using LNG as a transportation fuel?
A: It’s very cold, so if you spill it on a ship, the steel will crack. LNG can burn but it doesn’t explode, so LNG is remarkably safe. They’ve been transporting LNG around the world in tankers for 40 years and there have not been any fatalities.
Q: Are renewable energy sources growing fast enough?
A: Many people talk the growth down, but at least in Europe there’s still a high growth in renewables, and there’s also high growth in the U.S. I think the International Energy Agency constantly underestimates the growth. If you look at solar now, prices are coming down much faster than we thought, and it’s actually competitive for local production. Onshore wind costs are coming down and we’re trying to drive offshore wind costs down.
Q: Is wind held back by its reliance on subsidies?
A: They don’t need subsidies. The more they talk about subsidies, the more everybody thinks they’ll need subsidies forever and that it’s not a long-term solution, which is actually wrong.
Today’s news that the Norwegian Sovereign Wealth (oil) Fund has divested from a total of 22 companies, potentially totaling billions of dollars in assets, is a huge win for the rapidly growing divestment campaign and should be celebrated. In fact, in terms of amount of money it is likely the biggest divestment decision to date, so reason to be optimistic that this rapidly growing campaign is having a serious impact.
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