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Norway shows what to do with fading oil and gas holdings

A marquee global fund sees too much risk in not divesting

In recommending two weeks ago that oil stocks be excluded from its equity benchmark index, Norges Bank, the Norwegian Government Pension Fund Global (GPFG) manager, has moved oil stocks from a mainstream investment to a speculative grade risk.

If Norway’s Finance Ministry and Parliament agree, GPFG will still invest in oil and gas stocks, but under different terms and at a reduced level. GPFG holds 4 per cent of its fund, about $36 billion, in oil stocks with additional amounts in corporate bonds and approximately $36 billion in Norway’s Statoil.

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West Virginian governor lobbies for $15 coal subsidies

By David Schlissel and Tom Sanzillo
A flimsy and dangerous rationale rooted in a denial of modern energy market trends

Just how big a giveaway to the Appalachian coal industry is West Virginia Gov. Jim Justice talking about as he lobbies the White House for a $15-per-ton subsidy for coal producers in the region?

Central and Northern Appalachia coal fields produced 167 million tons in 2016, which not incidentally was its lowest year of production since the 1970s. We’ll see some rebound this year, and if the region produces, say, 180 million tons of coal in 2017, Justice’s scheme would cost federal taxpayers $2.7 billion annually.

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From oil to wind

By Tom Sanzillo
Why the world’s biggest sovereign wealth fund should invest in global renewable energy infrastructure

IEEFA published a report this last week that highlights how Norway is at a historic crossroads in how it manages some of its vast national wealth bound up in the Government Pension Fund Global (GPFG).

Indeed, GPFG is facing an unusually opportune moment this summer, as Parliament considers whether to enact a mandate that would have the fund put up to 5 per cent of its $900 billion in wealth into unlisted infrastructure holdings.

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Red flags on Exxon

By Tom Sanzillo
A decoupling from the larger stock market two years ago portends a different future for the world’s biggest oil company

The world is moving in fits and starts but with gathering momentum toward a more diversified, low-carbon energy mix.

The evidence is all around us. One exhibit, of many, is in the report IEEFA published this week – “Red Flags on Exxon: A Note to Institutional Investors” – which includes the chart above.

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Fiduciary responsibility and climate change

By Tom Sanzillo
NYC pension funds begin to craft a fossil-fuel divestment path

A certain recent RFP from the New York City comptroller on behalf of the city’s pension funds could be the beginning of something big.

It calls for a carbon footprint analysis of the funds’ holdings and advertises an opening for a climate-risk investment-strategy consultant. While the RFP is shrouded in pension-speak, its aim is clear: to introduce a series of asset-allocation decisions that will minimize fossil fuel risk and optimize portfolio returns.

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