Climate Crusaders Are Wrong About Norway’s Oil Divestment Proposal

Climate crusaders celebrating Norway’s proposal to divest its sovereign wealth fund from oil and gas stocks should pause before popping the carbon-neutral champagne.

In fact, the proposed divestment is limited to only include companies solely involved in oil and gas exploration, not integrated majors like BP, Exxon and Equinor, Norway’s state-owned oil giant. Norway’s proposal would affect about $40 billion in holdings out of a $1 trillion fund.

Also, Norway’s government said Friday the decision was to “reduce the vulnerability of our commonwealth to a permanent oil price decline,” and not environmental considerations. Basically, the country doesn’t want to hold too many oil and gas stocks should the price tank like it did in 2014.

Environmental activists are spinning this as a victory in their war against fossil fuels. Activists said it shattered the “illusion” that fossil fuels would continue to be used for decades, despite global warming.

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Bill McKibben founded 350.org, an anti-fossil fuel environmental group that pushes for divestment. The group claims more than 1,000 organizations, companies and nonprofits pledged to divest from fossil fuels, collectively worth more than $8 trillion.

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350.org includes Norway’s sovereign wealth fund on its divestment list, but the country is not divesting from fossil fuels as McKibben claimed. McKibben and 350.org rose to prominence over their opposition to the Keystone XL oil pipeline.

Norway is trying to insulate itself from price volatility — the country is heavily reliant on petroleum exports and oil revenues. Norway’s sovereign wealth fund is the largest in the world, funded through oil and gas revenues.

“The oil business will be a major and important industry in Norway for many years to come,” said Norwegian Finance Minister Siv Jensen, according to The Financial Times.

Jensen did, however, say Norway was looking to capitalize on expected growth in renewable energy. Paradoxically, Jensen suggested the growth in renewables, mainly wind and solar, would be driven by oil major, like BP.

“Everything indicates that almost the entire growth in listed infrastructure for renewable energy over the next 10 years will be driven by companies that do not have renewable energy as their main activity. It is a growth the fund should be able to take part in,” Jensen said.

Norwegian lawmakers will vote on the proposal to divest from oil and gas companies later this year.