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$20 Billion Fund in Denmark Divests From 10 Major Oil Companies, Citing 'Poor Returns'
A Danish pension fund has said it would sell its stake in major oil companies as their business models are incompatible with the goals set out in the Paris climate agreement.
MP Pension, a $20 billion pension for Danish M.A's, M.Sc.'s and Ph.D's who are employed in public sector universities and upper secondary schools, said it would dump its stakes in 10 of the world's largest oil companies, including ExxonMobil, BP, Chevron, PetroChina, Rosneft and Royal Dutch Shell.
The divestments amount to nearly $100 million, or 0.5 percent of the fund's total portfolio.
"We found that none of the oil majors has a business model that is compatible with the goals of Paris Agreement and thus we decided to sell them all," Anders Schelde, the fund's chief investment officer, told DW. "We put them all on our blacklist, our exclusion list."
The fund reviewed the corporate strategies of the companies to figure out how serious they were about tackling climate change, their capital expenditure to see if they were building new fossil fuel projects and finally their lobbying efforts to ensure they remained in sync with the climate goals.
MP Pension's decision comes as asset managers across the world review their investments in oil and gas and coal companies at a time the world is struggling to limit the global average temperature rise to below 2 degrees Celsius above preindustrial times as agreed in Paris in 2015.
In March, Norway's $1 trillion asset manager — the world's biggest sovereign fund — said it would shed its stakes in oil and gas explorers and producers. But the fund fell short of expectations that it would dump all its oil and gas investments for good. It said it would remain invested in Big Oil companies such as Shell, BP, Total and ExxonMobil, in which it owns significant stakes.
The Norwegian government stressed the move was based solely on financial considerations rather than climate concerns and that it did not reflect any particular view of the oil industry's future prospects.
MP Pension's latest announcement is part of a decision the fund made in 2016 that its investment strategy should be aligned with the goals of the Paris Agreement.
But the fund's latest move is not only based on climate concerns.
"Our first and foremost concern is future investment returns," Schelde said. "The companies that we are divesting in have delivered poor returns in the past 4-5 years and we feel for the next 10-20 years they would continue to be poor."
Sticking With Fossil Fuels
MP Pension does not plan to completely move away from investments in fossil fuel companies.
"We are not ditching fossil fuels entirely. For example, we do not exclude companies that focus on gas because we feel gas is an intermediary fuel that we will be needing to replace for instance coal, which has a carbon intensity roughly double that of gas," Schelde said.
"We realize that fossil fuels will remain part of the energy mix for many years, even 100 years. But we need to bring down the amount of carbon that we emit in the atmosphere."
The company has also prepared an "inclusion" list that would include fossil fuel companies making good progress toward a greener future.
"So far there are no companies on that list. It's still empty. But I hope it grows as we move forward," Schelde said.
Reposted with permission from our media associate DW.
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By Harry Kretchmer
By 2030, almost a third of all the energy consumed in the European Union must come from renewable sources, according to binding targets agreed in 2018. Sweden is helping lead the way.
Sweden is a world leader in renewable energy consumption. Swedish Institute/World Bank
Naturally Warm<p>54% of Sweden's power comes from renewables, and is helped by its geography. With plenty of moving water and 63% forest cover, it's no surprise the <a href="https://sweden.se/nature/energy-use-in-sweden/#" target="_blank">two largest renewable power sources</a> are hydropower and biomass. And that biomass is helping support a local energy boom.</p><p>Heating is a key use of energy in a cold country like Sweden. In recent decades, as fuel oil taxes have increased, the country's power companies have turned to renewables, like biomass, to fuel local 'district heating' plants.</p><p>In Sweden these trace their <a href="https://www.sciencedirect.com/science/article/pii/S0360544217304140#fig3" target="_blank">origins back to 1948</a>, when a power station's excess heat was first used to heat nearby buildings: steam is <a href="https://www.sciencedirect.com/topics/engineering/district-heating-system" target="_blank">forced along a network of pipes</a> to wherever it's needed. Today, there are around 500 district heating systems across the country, from major cities to small villages, providing heat to homes and businesses.</p><p>District heating used to be fueled mainly from the <a href="https://www.sciencedirect.com/science/article/pii/S0360544217304140" target="_blank">by-products of power plants</a>, waste-to-energy plants and industrial processes. These days, however, Sweden is bringing more renewable sources into the mix. And as a result of competition, this localized form of power is now the country's<a href="https://www.sciencedirect.com/science/article/pii/S0360544217304140#fig3" target="_blank" rel="noopener noreferrer"> home-heating market leader.</a></p>
Sweden is using smart grids to turn buildings into energy producers. Huang et al/Elsevier
Energy ‘Prosumers’<p>But Sweden doesn't stop at village-level heating solutions. Its new breed of energy-generation takes hyper-local to the next level.</p><p>One example is in the city of Ludivika where 1970s flats <a href="https://www.buildup.eu/sites/default/files/content/transforming-a-residential-building-cluster-into-electricity-prosumers-in-sweden.pdf" target="_blank">have recently been retrofitted with the latest smart energy technology</a>.</p><p>48 family apartments spread across 3 buildings have been given photovoltaic solar panels, thermal energy storage and heat pump systems. A micro energy grid connects it all, and helps charge electric cars overnight.</p><p>The result is a cluster of 'prosumer' buildings, producing rather than consuming enough power for 77% of residents' needs. With <a href="http://www.diva-portal.org/smash/get/diva2:1232060/FULLTEXT01.pdf" target="_blank" rel="noopener noreferrer">high levels of smart meter usage</a>, it's a model that looks set to spread across Sweden.</p>
<div id="d7bf9" class="rm-shortcode" data-rm-shortcode-id="8757b138d5570bec9d6aad18074a429a"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1273556364263071744" data-partner="rebelmouse"><div style="margin:1em 0">Read more about Western Harbour and book a visit: https://t.co/ujSmVs9rNK 🏡🌳🌊 https://t.co/C5PuPziqIM</div> — Smart City Sweden (@Smart City Sweden)<a href="https://twitter.com/SmartCitySweden/statuses/1273556364263071744">1592474473.0</a></blockquote></div>
Scaling Up<p>A recent development by E.ON in Hyllie, a district on the outskirts of Malmö, southern Sweden, <a href="https://www.eonenergy.com/blog/2019/February/sweden-smart-city" target="_blank">has scaled up the smart grid principle</a>. Energy generation comes from local wind, solar, biomass and waste sources.</p><p>Smart grids then balance the power, react to the weather, deploying extra power when it's colder or putting excess into battery storage when it's warm. The system is not only more efficient, but bills have fallen.</p><p>Smart energy developments like those in Hyllie, Ludivika, and renewable-driven district heating, offer a radical alternative to the centralized energy systems many countries rely on today.</p><p>The EU's leaders have a challenge: how to generate 32% of energy from renewables by 2030. Sweden offers a vision of how technology and local solutions can turn a goal into a reality.</p>
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By Jessica Corbett
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