The writing on the wall: a trillion dollar fund built on oil & gas exploration has just pulled out of oil & gas exploration

The Norwegian government has just mandated its sovereign wealth fund, the biggest such wealth fund, to divest from pure oil and gas explorers. It will sell stakes in 134 companies, including UK-listed firms Tullow Oil, Premier Oil, Soco International, Ophir Energy and Nostrum Oil & Gas, all of which saw their share price fall after the announcement, reducing their combined stock market value by £130m. The divestment involves 1.2% of its equity holdings, worth about £5.7bn.

This is a significant landmark in the global battle to abate global heating. If oil and gas companies can’t see this particular piece of writing on the wall, they will deserve the bankruptcy that will ultimately face them. Investors who stick with them, pouring $700+ billion a year into oil and gas each year compared to some $300+ into clean energy, will deserve the stranded assets and wasted capital that await them. The fact that big oil companies were not included in this divestment because they have renewable energy assets in a way only emphasises the direction of travel.

I want to thank and congratulate the many organisations and people that have pushed for this development. They include Carbon Tracker, WWF, DivestInvest, Christiana Figueres, Bill McKibben and many more.

I was privileged to play a very minor role myself, tee’d up by the work of others. I append an extract from The Winning of The Carbon War, for those with appetite for a short story, to give a feel for what that looked and felt like. (Short version: a lot more civilised than trying the same in Washington, London, or Canberra).

Oslo, 31st October–5th November 2013

The Norwegian Government Pension Fund is the biggest sovereign wealth fund in the world. It has around $850 billion under management and owns 1% of all shares in global stock markets. Many observers view the “oil fund”, as it is often called, as too skewed towards fossil fuel investments, especially considering that the money it invests largely derives from Norwegian oil and gas in the first place.

Any recognition by this fund of fossil fuel asset-stranding risk would obviously send the mother of all signals to the capital markets, to the general detriment of fossil fuel investments, and default betterment of renewables investments. The Norwegian Labour Party, when in government, opposed any change to rules allowing fossil fuel investments by the fund. In an election last month, Labour was replaced by a minority conservative coalition. The environmental organisation WWF has now arranged a day of Carbon Tracker briefings for politicians and business leaders, including the former Labour minister of foreign affairs, hoping to change their minds about fossil fuels and the fund. This is one of those occasions where the responsibility falls not to one of the star Carbon Tracker analysts, who are off around the world doing what they do, but to the chairman.

What the analysts do is increasingly jaw dropping. Citywire, a City of London news outlet, wrote recently that Carbon Tracker has “caused a sensation” in the capital markets. Mainstream coal and oil analysts at institutions including Goldman Sachs, Citi, Morgan Stanley and Deutsche Bank have started engaging with carbon-bubble risk in reports to their clients. Terms from Carbon Tracker reports like “unburnable carbon” and “stranded assets” are appearing in investment-bank research reports with increasing regularity. Questions about the wisdom of capital expenditure of fossil fuel companies – capex, for short – are flooding into fund managers’ inboxes. Carbon Tracker’s Director of Research, James Leaton, has been voted by peers into 6th place internationally in the Socially Responsible Investment Research Analyst ranking, from a very large field.

And we are fresh off another milestone, one that the Norwegians must be mulling carefully. One of the five Swedish state pension funds has just retreated from fossil fuel investing, saying it is seeking relief from carbon-bubble risk. The $38 billion AP4 fund plans to invest in a tailored emerging markets fund consisting of companies that have both low-carbon emissions and low fossil fuel reserves. Chief executive Mats Andersson tells the financial press that “if it works, we will increase our exposure so that hopefully it will be a much bigger part of our portfolio. We want to do this on a global basis.” He explains his rationale purely in business terms. “In 10 years’ time, carbon will be priced and valued in a different way so that companies with a high carbon footprint will perform worse. This sustainable approach isn’t about charity, but about enhancing returns.”

I increasingly wonder whether it is good tactics for Carbon Tracker to have a known long-term climate campaigner as chairman, especially one so regularly accused of hyping the climate problem simply because he wants to sell more solar panels. Perhaps a City of London grandee, one with a closet desire to see action on climate change, might provide better optics. But the analysts seem happy enough with me chairing them.

I do my duty for a long day in Oslo. It would be far more time efficient if I could do a single two-hour Q&A briefing for all the politicians, rather than a repetitive series of one hour briefings one-on-one. But, my hosts tell me that if they had gone that route, none of the politicians would have turned up. I suppose that would be the same in every country. Three days later, the former foreign affairs minister announces that the Norwegian Labour party will support the national pension fund’s complete withdrawal from coal, and put oil and gas under watch too. Combined with minority-party support, this gives a voting majority in the new Norwegian parliament in favour of extracting the oil fund from coal.

WWF are over the moon, amazed at the success of their briefings. A day later, the new Norwegian prime minister Erna Solberg speaks at a climate conference for the first time. The Zero Emission Conference, in a historic Oslo theatre, is packed with the youth of Norway: stalls and balconies of fair hair as far as the eye can see from the stage off into the gloom. Chelsea Clinton is the keynote speaker. She does a good job trying to walk in her parents’ footsteps, pressing all the hot buttons of climate change: the roles of cities, communities, solar, youth, and so on.

Erna Solberg does not mention the oil fund in her pedestrian climate debut speech. But afterwards, she is surrounded in the foyer of the theatre by a media scrum of TV, radio and print journalists. I watch from the fringes of the scrum as impossibly young journalists fire questions at her about the Labour move on fossil fuel investments in the national pension fund.

She says that ahead of any support for withdrawal by the sovereign wealth fund she will look at coal companies to check that they aren’t investing in renewables.

I am asked for a comment by Aftenposten, a national paper.

She won’t have to spend too long on that exercise, I say.

It had seemed impossible to dare hope this, but it looks as though the world’s biggest pension fund may well withdraw from coal next year. The entire coal industry would look to be in danger of investor withdrawal as a result. This is beginning to look like a very gratifying few days’ work.

Dagens Naeringsliv, the financial daily, wants to know what I think of Norwegian investors putting their money into yet more oil.

That’s a big bet now, I venture. Investors should take a hard look at whether their money might be wasted on high-cost frontier projects such as those in the Arctic.

I fly home, telling myself not to be over-encouraged. I know how easily, in the world of politics, today’s apparent advance can be reversed tomorrow.


  1. I was astonished to see (in a tweet dated 06 March from Doug Parr @doug_parr quoting an FT article by Anjli Raval and Leslie Hook) a chart from CDP showing energy company investments in “low carbon” projects between 2010 and 2018. Total was exceptional, with 2% of its investment was in solar alone, with some from other sources including “energy smart technologies” bringing their total to over 4%. Of the rest, only BP beat 2%, and then only by inclusion of a nearly 1% bioenergy, and I remain to be convinced whether crop-based bioenergy should be counted. Of the rest, only Equinor (mostly wind), Repsol (mostly solar and hydro) and Shell (mostly bioenergy) beat 1%.
    OK, maybe the light is now beginning to dawn in some boardrooms, but it seems very, very slow. Earlier this week I saw a BP television advert, referenced in the FT article, extolling their commitment to renewables.

  2. Hurrah! Jeremy, you called it. What a splendid moment, huge! ‘Winning’ and all the work you’ve put in have helped to rewrite our story. What’s going to happen next? ?

  3. I continue to push the idea of building no new fossil fuel infrastructure as we have to stop digging the hoel deeper if we want to decarbonize. So much will turn into white elephants if we do not stop now.;

  4. The fact that sell-side research is using Carbon Tracker is awesome and newsworthy. But why exactly is Norway’s slight rebalancing of its super oil dependent portfolio a victory? They’re only divesting of 1% (vs 5% they own) bc retaining stocks in oil companies that have “any” exposure to renewables (eg BP, Shell). And they’re explicitly NOT doing it for climate change reasons: “GPFG said the decision was motivated by a desire to protect the Norwegian economy by reducing exposure to oil price falls, rather than climate concerns.”

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