Norwegian bank shuns lending to ‘heavy coal investors’

by Myrna Velasco – July 12, 2016

from Manila Bulletin

Norges Bank, the Central Bank of Norway, has categorically stated that it will shun lending to companies with “heavy investments on coal-fired power projects”, including Philippine developers.

In the first exclusion list that the Norwegian central bank came up with, it singled out Aboitiz Power Corporation among those that it will not be opening its credit window to.

The Norwegian lending institution has named several companies globally that it deemed not ideal for its fund portfolio because of their coal plant investments. The others are those from China, India, Japan, Chile, Canada, HongKong, Australia, United Kingdom, South Africa, Poland, Greece and the United States.AboitizPower is known in the Norwegian energy scene, primarily because of its tie-up with SN Power of Norway – but that is mainly for hydropower projects.

In a media statement, Norges Bank said it “decided to exclude 52 companies from the Government Pension Fund Global after an assessment of the product-based coal criterion.”

It explained that “the exclusions follow a first round of analysis by Norges Bank Investment Management.” Additions in the list are expected this year.

The bank has emphasized that “where thermal coal is a significant part of a company’s business activities, the company may be excluded from the fund.”

The lending criterion set for the fund, it was further noted, generally steer clear of coal power companies and mining firms, of which at least 30 percent of their business activities or at least 30 percent of their revenues are derived from coal-based generation.

Meanwhile, AboitizPower indicated that Norges Bank Investment Management (NBIM) already divested all of its holdings in their company first quarter this year. “There was no impact on company performance or share price at the time,” it said.

AboitizPower invested in various coal-fired power generation facilities to help meet the country’s need for baseload capacity. It is now sorting out forward developments to balance that via follow-through investments in renewable energy.

By far, Norges Bank has stipulated that “in the process of considering recommendations for exclusion or observation of companies that breach the thresholds, emphasis should also be given to the forward looking product/fuel mix transition as well as the degree to which the company utilizes renewable energy in its activities.”

With fuel mix changes, it noted that the energy production of the excluded companies may eventually be re-assessed.

At that time, if the covered companies would still have at least 30-percent of their base generation fueled by coal, they could still be part of the “exclusion criterion.”