Norway’s unicameral parliament, the Storting, has voted into law plans for its $1.06 trillion Government Pension Fund Global to divest more than $13 billion worth of fossil fuel investments, while also putting more money into renewable energy.

As a result of the unanimous vote, the fund will gradually sell off $8 billion worth of investments in 134 oil and gas firms, according to New Scientist magazine. However, the divestment will only affect investments in companies that are exclusively involved in fossil fuel exploration, such as Premier Oil and Tullow Oil, but not oil companies that have renewable energy business units, such as BP and Royal Dutch Shell. Shell is the fund’s sixth-largest equity holding as of the end of March.

In addition to the oil and gas divestments, the fund will also sell off approximately $5.8 billion in investments in coal companies.

“Today’s decision represents … a major step in our efforts to limit our nation’s climate risk and contribute to the urgent global shift from fossil fuels to renewables,” Tore Storehaug, a Storting representative and member of the ruling Christian Democrats coalition, said in a statement.

In March, the Norwegian government presented a report to the Storting requesting the removal of exploration and production companies from the fund’s reference index.

“By removing exploration and production companies, the goal is to make the government’s wealth less vulnerable to a permanent drop in oil prices,” Egil Matsen, deputy governor of Norges Bank, the country’s central bank, said at the time. 

And in May, the Norwegian government granted approval for the fund to invest in unlisted renewable energy infrastructure, and doubled the limit on the amount the fund can invest in wind, solar, and other so called green energy companies to 120 billion Norwegian Kroner ($13.7 billion).

The government said that allowing for unlisted renewable energy infrastructure was not a climate policy measure, but part of the fund’s investment strategy, and will be subject to the same profitability and transparency requirements as the other investments.

Norges Bank said that as of the end of 2018, the fund held investments in exploration and production companies worth approximately 66 billion kroner, or 1.2% of the fund’s equity holdings. According to the bank’s policy on responsible investment, the reason for divestment from companies for climate change reasons is based on safeguarding the fund’s assets.

“Climate change issues, including physical impacts and regulatory and technological responses, may give rise to risks and opportunities for companies,” says Norges Bank. “How companies manage transition and physical risks and opportunities, may drive long-term returns for us as a shareholder.”

In the first quarter of the year, the bank’s investments in oil and gas returned a robust 14.1%, and accounted for 5.9% of the fund’s share in equity investments. The bank attributed the sector’s strong performance to higher oil prices, which were a result of potential production cuts from OPEC and Russia, and decreased output in Venezuela due to political unrest.

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Tags: coal, Divestment, Fossil Fuels, Gas, Norway, oil and gas, Sovereign Wealth Fund