Exiting Coal
Coal is the most carbon-intensive of all fossil fuels, and our ability to tackle the climate crisis critically depends on the speed with which we phase out coal. However, the reality is that the global coal industry has continued to grow since the Paris Agreement was signed, with the world’s installed coal capacity increasing from 1,910 GW in 2015, to 2,126 GW in 2023.
This stands in stark contrast to the consistent warnings from the International Energy Agency (IEA): there is no room for new coal infrastructure if we are to limit global warming to 1.5°C, and that emissions from existing coal projects are enough to push the world above this limit. According to the IEA, this means that existing coal mines and power plants must be phased out entirely in OECD countries by 2030 and globally by 2040. Research by Urgewald shows that 95% of coal companies have no phase-out plan for coal and that 40% of companies have plans to expand their operations. To continue their operations and start new projects, coal companies need access to finance and investments. By stopping money flowing to the coal industry and redirecting the money to a just and green energy transition, financial institutions play a crucial role in succeeding with the coal-phase out that the world urgently needs.
OUR IMPACT: SUBSTANTIAL COAL DIVESTMENT AMONG DANISH INVESTORS
In 2023, we analyzed the coal exposure of Danish pension funds and held meetings with them, asking for more ambitious coal criteria. We also discovered various coal investments in breach of several pension funds’ existing coal criteria. Our findings made headlines in one of Denmark’s biggest media and immediately resulted in coal divestments totaling half a billion Danish kroner. Following this, in early summer 2024, Denmark’s biggest pension fund, PFA, decided to tighten its coal criteria, leading to coal divestments amounting to nearly two billion Danish kroner.
NORWAY MUST SHOW TRUE LEADERSHIP
The Norwegian peoples pension fund, the Oil fund, continues to be Europe’s largest coal investor. Our most recent analysis shows that the Fund has 142,8 billion NOK in coal companies, with nearly half of the investments placed in companies planning to expand their operations.
These findings contradict Norway’s ambitions to withdraw from the industry and become an international climate leader. The Norwegian Parliament introduced a coal policy for the Fund in 2015 with the aim of pulling the Fund out of the coal industry, which was later strengthened in 2019. Since then, the climate crisis has become more urgent than ever, and coal investments have become far less desirable. Despite this, nothing has happened since 2019. In the meantime, nearly 100 financial institutions around the world have implemented coal policies that are far stronger than the Fund’s current policy. If Norway is serious about making the Oil Fund a leading financial institution on climate and finally exiting coal, the Norwegian Parliament urgently needs to strengthen the Fund’s coal exclusion criteria.
Banking on thin ice 1
February 2021
This report provides the first ever overview of the financial relationships between 10 major Nordic banks and the fossil fuel industry, as well as the policies the banks have in place to regulate their links to the industry.