Oslo Divests from Coal, Hopes to Inspire Other Cities to Follow
By Ahnika LeRoy, Contributor
Oslo Norway is the first capital city in the world to divest from coal and may be paving the way for other cities to follow. The Norwegian capital city recently announced plans to sell all of the coal investments in its pension portfolio. That will reallocate about $7 million from coal investments into more worthy holdings.
The rationale behind the move was voiced by Oslo’s finance commissioner Eirik Lae Solberg: “We are pulling ourselves out of coal companies, because power generation based on coal is one of the most environmentally harmful in the energy sector. We want to use our investments to promote more environmentally-friendly energy and a more environmentally-friendly society.”
“We’ve seen that coal is clearly the energy source that is most harmful. It’s been said that the cities of the world contribute about 70% of carbon emissions. So clearly, the cities of the world are an important part of the problem of climate change.”
—Eirik Lae Solberg, Vice Mayor of Finance, Oslo, Norway
he move to avoid investment exposure to coal is in line with other environmental commitments that Oslo has embraced. The city plans to reduce greenhouse gas emissions by 50% by 2030 and become climate-neutral by 2050. To begin their journey, they have invested in infrastructure to support a low emission lifestyle, including the installation of 258 municipal electric car charging stations and recycling household waste to power city buses.
On the move away from coal, Oslo may have been inspired by Seattle, the first city in the U.S. to join the Fossil Free divestment campaign. Seattle is seeking to divest its $1.9 billion pension fund and $700 million deferred compensation plan from fossil fuel extraction companies.
Fossil Free has sights on encouraging European cities, such as Amsterdam, Berlin, and Stockholm, to divest. Their mission statement is to freeze any new investment in fossil fuel companies and divest from direct ownership of any funds that include fossil fuel public equities and corporate bonds. They have been a catalyst for organizing large-scale events like Global Divestment Day.
Similar movements can be found in other major European cities. In London, Mayor Boris Johnson has been urged by the London Assembly to pull City Hall’s £ 4.8b pension out of coal, oil and gas investments.
Prestigious academic institutions in America are also divesting in coal. Most notably, Stanford University has said no to coal.
While there are strong environmental reasons for divesting from coal, these moves are not entirely altruistic—there is a compelling economic argument as well. Due in part to declining relative cost efficiency, coal has lost 10.5% of the U.S. power market over the last decade. With its main substitute, natural gas, expected to remain inexpensive for the foreseeable future (IEA estimates call for $7.65/MCF in 2040), this trend will likely continue.
Global demand does not paint a significantly rosier picture. Estimates for future coal demand in China, which accounted for 47% of the world’s coal consumption in 2012, have been revised downward twice by the IEA. Lauri Myllyvirta of The Energy Collective expects a third revision as China has recently entered into an agreement to achieve a CO2 peak by 2030, putting downward pressure on demand for high CO2 emitting fuels, such as coal. BP’s Energy Outlook 2035 projects coal to be the slowest growing fuel technology at 0.8% per annum from 2013-2035.
The British Petroleum report noted key industry headwinds: “the slowing of coal-based industrialization in Asia, compounded by the effects of environmental regulations and low gas prices in key markets.”
Divestment from coal is spreading around the world. The statement Oslo has made with the decision to divest has bolstered a global movement which has an important role to play in creating a more environmentally sustainable world.
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Posted: April 10, 2015