web analytics

No More Investing In Oil Exploration

Written By: - Date published: 10:47 am, March 10th, 2019 - 21 comments
Categories: climate change, Conservation, energy, Environment, global warming, sustainability, transport - Tags:

Norway’s government has announced it is selling out of oil exploration. It will continue to invest in energy companies that have refineries and are engaged in distribution and retail sales of oil and gas products – with significant stakes in Shell, BP, Total and ExxonMobil, it’s nowhere near as strong a decision as it could have been. But this is a fund worth US$1 trillion and counting.

That is a market signal with global impact.

While Oslo said the move is based solely on financial considerations and that it does not reflect any particular view of the oil industry’s future prospects, it does provide a context Saudi Arabia’s late 2018 decision not to float shares in its own oil interests. Every major government social fund can see the horizon for investing in oil when your citizens’ future social welfare entitlements depend on it.

These are not signals that will halt climate change. Asian demand for oil appears pretty much insatiable. It’s too late to turn that around much. Even New Zealand demand for transport oil keeps trucking along so to speak. Our overall energy source mix and demand is here.

The New Zealand Superfund policies are all listed here if you’d like to compare.

New Zealand’s own fund currently excludes investments in companies involved in:

  • the manufacture of cluster munitions
  • the manufacture or testing of nuclear explosive devices (NEDs)
  • the manufacture of anti-personnel mines
  • the manufacture of tobacco
  • the processing of whale meat
  • recreational cannabis.

The NZSuperfund also states: “We also may decide to exclude individual companies for severe breaches of our responsible investments standards, such as the UN Global Compact, where we consider engagement is unlikely to be effective due to the context of the company’s operations or to a lack of responsiveness from the company to the issue.”

They should be firmer about the UN local Compact, as Norway’s fund is being. (You get even more detail if you are in the Kiwibank Kiwisaver fund, which lists every single company it’s into.)

McKinsey Group’s view of oil is that demand growth will stay healthy through to 2022 at least, demand growth will likely peak around 2030, and there will still be some need for shale and offshore exploration for 4-5% of new oil production sources.

But Norway is sending an almighty big political signal here, and it’s one we should heed. Oil exploration to meet demand may well continue, but governments don’t have to assist.

If in 2019 New Zealand does form a Labour+National agreement on carbon pricing in the upcoming legislation, there should be little argument against stronger direction from the government for NZSuperfund to divest itself from oil investment as a matter of policy, just like Norway. It will take across-House agreement on carbon taxes to do that, but that’s the outcome that Shaw and Ardern simply must deliver.

A policy for NZSuperfund that excluded oil and gas investment would be completely consistent with government policy stopping future blocks from exploration.

What we the public ought to expect from this government is a whole picture about its approach to carbon. We are already seeing the chaos that occurs because this government failed to manage NZSuper and NZTA’s low-oil transport initiative in light rail: NZSuper worked actively against NZTA’s own light rail proposal and stopped all progress this term. That simply can’t happen again.

We need this government to get in to NZSUperfund and get dirty. Send clear signals, and a lot stronger than they did with the Reserve Bank changes.

As part of coherent carbon policy, all our public funds including NZSuperfund, ACC Funds, EQC, and Parliamentary Super, must be part of forswearing investment in petroleum exploration.

The least we can do is be good followers.

21 comments on “No More Investing In Oil Exploration ”

  1. RedLogix 1

    Good post Ad.

    We’re starting to see the big money end of town give more and more of these signals. By themselves they will not have a lot of impact, but they do represent a remarkable inflection point, a change of direction that we must hope and encourage to gain momentum.

    Don’t get me wrong here; the unreconstructed hippie in me still holds a candle for the kind of ‘low energy, high efficiency, organic inspired eco-technic’ future we dreamed about in the 70’s.

    But the realist in me understands quite soberly that real, dramatic change will come from the big energy and industrial corporates that have the collective funding and capacity to generate change on the scale and timeframes we need.

  2. Sam 2

    With out a price on carbon entrepreneurs can not borrow against a carbon price and grow and transform the energy sector into a more advanced one.

  3. Poission 3

    The Fund deleverage of exploration stocks is around 1.2% of the fund.

    The consideration (exit strategy) is due to the risk aversion of oilprice shocks of a negative nature ie price fall.

    The objective is to reduce the vulnerability of our common wealth to a permanent oil price decline. Hence, it is more accurate to sell companies which explore and produce oil and gas, rather than selling a broadly diversified energy sector, says the Minister of Finance, Siv Jensen.

    https://www.regjeringen.no/en/aktuelt/excludes-exploration-and-production-companies-from-the-government-pension-fund-global/id2631707/

  4. greywarshark 4

    I thought that Bryan Gould discussing why he and neighbours are going solar showed the way to think about personal change. And he is thinking that he can recharge his car from his own home eventually.

    http://www.bryangould.com/combatting-global-warming/

  5. Darien Fenton 5

    Watch Occupied.

  6. Dukeofurl 6

    “with significant stakes in Shell, BP, Total and ExxonMobil, ”

    leaves out the elephant in the room for Norway , which is the part state owned Statoil.
    Thats how the fund has accumulated to $1 trill.

    Its the sort of thing they pretending to stop when in fact Statoil will continue on.

    Statoil has been renamed last year
    https://en.wikipedia.org/wiki/Equinor

  7. Stuart Munro. 7

    I wonder myself if the financialization of government decision-making makes positive decisions even possible any more.

    Corporations are masters at ignoring shareholder preferences, false accounting either in terms of proceeds or service delivery, and misrepresenting their human and environmental impacts.

    I expect nothing good from government under a faux corporate model, and this is no exception.

  8. tsmithfield 8

    Technology is just around the corner that would make all transport and potentially power generation completely carbon neutral.

    https://www.weforum.org/agenda/2018/02/bill-gates-to-strip-c02-from-air-for-clean-fuel/

    This technology would make electric vehicles redundant as well. That is because this fuel could be used in all existing cars, meaning a much faster transition to carbon neutrality.

    The secret to making this technology viable is to power the production plants through renewable sources.

    • Andre 8.1

      Electric cars will take over from liquid fuelled cars even if fuel gets created from thin air using renewable energy.

      If for no other reason than they offer a much better driving experience. Seriously, you ever driven a modern EV? Most electric motors deliver their maximum torque instantly from zero speed, no lag whatsoever. Limited only by the controller’s current handling capability. Then at some point in the rev range, the back emf becomes large enough that it becomes the current limiting factor and from there the motor provides its maximum power all the way to its maximum revs. Almost dead silent the whole time.

      But with the vast improvements in battery technology and manufacturing, it’s very likely that soon a new battery powered vehicle will be cheaper than a similar internal combustion engine vehicle. Then the battery vehicle will use the renewable electric energy with much less loss than creating fuel from thin air then burning it in an ICE. Let alone the energy losses involved in turning the electric energy into chemical energy to create the liquid fuel.

      Once battery technology reaches a tipping point level for energy density and rapid recharge capability (which isn’t far away, BTW), the only users that will continue to be interested liquid fuels will be those that absolutely need the energy density of liquid fuel (long haul aviation) and the rapid refueling capabilities of liquid fuels (again long haul aviation and possibly long haul trucking).

    • WeTheBleeple 8.2

      From the same article, seeing as your wee blurb is misleading:

      “They are not an insurance policy; they are a high-risk gamble with tomorrow’s generations, particularly those living in poor and climatically vulnerable communities, set to pay the price if our high-stakes bet fails to deliver as promised,” Anderson says. If the technologies are not as successful as promised, “our own children will be forced to endure the consequences of rapidly rising temperatures and a highly unstable climate”

      It’s not ‘just round the corner’ at all. It is pie in the sky.

      They say they can (once scaled up, not now) produce fuel at $1 a litre. We currently pay what – 60c wholesale? So production cost will be considerably lower than that.

      Sounds like a real winner. We’re saved!

  9. gsays 9

    Thanks Ad for this post.

    One of the interesting points you make is a bipartisan approach needed here to make progress.
    What is there that Labour would give up or offer to get the other side to the table?

    Apart from Winstons head on a spike (metaphorically of course).

    • Ad 9.1

      We will never know what has been given up in the negotiations.

      There will be a lot of good policy concepts dead on the cutting-room floor with the Carbon legislation.

      And that’s a particular part of sausage-making that I don’t want to know.

      • gsays 9.1.1

        I know referring to a bigger picture, when discussing climate changey things is a misnomer, but CC is a great opportunity to get a working relationship between the two larger parties in parliament.

        I suppose it depends on who the parties put up to negotiate as to how successful these things progress.

  10. Anonymous 10

    Everyone benefits from cheap oil prices. Banning oil exploration will reduce the supply of oil and make it more expensive. This will hurt the poor and middle class the most. Green policies like this are not in the interests of the working class. New Zealand produces a third of its oil needs but sends 97% of it overseas.

  11. Dukeofurl 11

    is this story a fake news item ?

    The lead sentence says this
    ‘Norway’s government has announced it is selling out of oil exploration”

    An embedded link https://www.dw.com/en/norwegian-sovereign-wealth-fund-hits-milestone-valuation/a-40585412
    Says nothing about Norways government doing anything about ‘getting out’. Not a jot.

    I have found what should have been the embedded link-
    https://www.theguardian.com/world/2019/mar/08/norways-1tn-wealth-fund-to-divest-from-oil-and-gas-exploration

    The Guardian story is not balanced since it just gives the Funds point of view and ignores its controlling stake in Equinor- one of the worlds top 12 oil companies and the source of most of the funds wealth.
    But the facts are that Equinor has a deep sea drilling program in the Great Australian Bight in our part of the world.

    There are fudges if you read closely -“It will retain stakes in fossil fuel companies as long as they have ‘some’ involvement in renewable energy.”

  12. timeforacupoftea 12

    Death on the way for Norway.

  13. Ad 13

    https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12211652

    Greenpeace requests divestment for NZSuperfund, Shaw not clear .

Recent Comments

Recent Posts

  • Tokelau Language Week reminds us to stay united and strong
    Staying strong in the face of challenges and being true to our heritage and languages are key to preserving our cultural identity and wellbeing, is the focus of the 2020 Tokelau Language Week. Minister for Pacific Peoples, Aupito William Sio, says this year’s theme, ‘Apoapo tau foe, i nā tāfea ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • NZ announces a third P-3 deployment in support of UN sanctions
    The Government has deployed a Royal New Zealand Air Force P-3K2 Orion (P-3) maritime patrol aircraft to support the implementation of United Nations Security Council (UNSC) resolutions imposing sanctions against North Korea, announced Minister of Foreign Affairs Winston Peters and Minister of Defence Ron Mark. “New Zealand has long supported ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Pacific trade and development agreement a reality
    Pacific regional trade and development agreement PACER Plus will enter into force in 60 days now that the required eight countries have ratified it. Trade and Export Growth Minister David Parker welcomed the announcement that the Cook Islands is the eighth nation to ratify this landmark agreement. “The agreement represents ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Securing a pipeline of teachers
    The Government is changing its approach to teacher recruitment as COVID-19 travel restrictions continue, by boosting a range of initiatives to get more Kiwis into teaching. “When we came into Government, we were faced with a teacher supply crisis,” Education Minister Chris Hipkins said. “Over the past three years, we ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Border exceptions for a small number of international students with visas
    The Government has established a new category that will allow 250 international PhD and postgraduate students to enter New Zealand and continue their studies, in the latest set of border exceptions. “The health, safety and wellbeing of people in New Zealand remains the Government’s top priority. Tight border restrictions remain ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • First COVID-19 vaccine purchase agreement signed
    The Government has signed an agreement to purchase 1.5 million COVID-19 vaccines – enough for 750,000 people – from Pfizer and BioNTech, subject to the vaccine successfully completing all clinical trials and passing regulatory approvals in New Zealand, say Research, Science and Innovation Minister Megan Woods and Health Minister Chris Hipkins. ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • International statement – End-to-end encryption and public safety
    We, the undersigned, support strong encryption, which plays a crucial role in protecting personal data, privacy, intellectual property, trade secrets and cyber security.  It also serves a vital purpose in repressive states to protect journalists, human rights defenders and other vulnerable people, as stated in the 2017 resolution of the ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ministry of Defence Biodefence Assessment released
    The Ministry of Defence has today released a Defence Assessment examining Defence’s role across the spectrum of biological hazards and threats facing New Zealand. Biodefence: Preparing for a New Era of Biological Hazards and Threats looks at how the NZDF supports other agencies’ biodefence activities, and considers the context of ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020
    New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020 Hon David Parker’s response following Thomas Piketty and Esther Duflo. Good morning, good afternoon, and good evening, wherever in the world you might be. I first acknowledge the excellent thought provoking speeches of Thomas Piketty and Esther ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Kaipara Moana restoration takes next step
    A Memorandum of Understanding has been signed today at Waihāua Marae between the Crown, local iwi and councils to protect, restore and enhance the mauri of Kaipara Moana in Northland. Environment Minister David Parker signed the document on behalf of the Crown along with representatives from Ngā Maunga Whakahī, Ngāti ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Zealand and Uruguay unite on reducing livestock production emissions
    Agriculture Minister Damien O’Connor and Uruguayan Minister of Livestock, Agriculture and Fisheries Carlos María Uriarte have welcomed the launch of a three-year project that will underpin sustainable livestock production in Uruguay, Argentina, and Costa Rica.  The project called ‘Innovation for pasture management’ is led by Uruguay’s National Institute of Agricultural ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • 3100 jobs created through marae upgrades
    Hundreds of marae throughout the country will be upgraded through investments from the Provincial Growth Fund’s refocused post COVID-19 funding to create jobs and put money into the pockets of local tradespeople and businesses, Regional Economic Development Minister Shane Jones and Māori Development Minister Nanaia Mahuta have announced. “A total ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Health volunteers recognised in annual awards
    Health Minister Chris Hipkins has announced 9 teams and 14 individuals are the recipients of this year’s Minister of Health Volunteer Awards.  “The health volunteer awards celebrate and recognise the thousands of dedicated health sector volunteers who give many hours of their time to help other New Zealanders,” Mr Hipkins ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Community COVID-19 Fund supports Pacific recovery
    The Minister for Pacific Peoples, Aupito William Sio says a total of 264 groups and individuals have successfully applied for the Pacific Aotearoa Community COVID-19 Recovery Fund, that will support Pacific communities drive their own COVID-19 recovery strategies, initiatives, and actions. “I am keen to see this Fund support Pacific ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Community benefits from Māori apprenticeships
    Up to 50 Māori apprentices in Wellington will receive paid training to build houses for their local communities, thanks to a $2.75 million investment from the Māori Trades and Training Fund, announced Employment Minister Willie Jackson today. “This funding will enable Ngāti Toa Rangatira Incorporated to provide its Ngā Kaimahi ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Training fund supports Māori jobseekers
    Rapidly growing sectors will benefit from a $990,000 Māori Trades and Training Fund investment which will see Wellington jobseekers supported into work, announced Employment Minister Willie Jackson today. “This funding will enable Sapphire Consultants Ltd. to help up to 45 Māori jobseekers into paid training initiatives over two years through ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ruakura Inland Port development vital infrastructure for Waikato
    The Government is investing $40 million to develop an inland port at Ruakura which will become a freight super-hub and a future business, research and residential development for the Waikato, Urban Development and Transport Minister Phil Twyford, and Māori Development Minister Nanaia Mahuta announced today. The funding has been has ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Appointments made to Defence Expert Review Group
    Defence Minister Ron Mark announced today the establishment of an Expert Review Group to review a number of aspects of the New Zealand Defence Force’s (NZDF) structure, information management and record-keeping processes.  The Expert Review Group’s work arises out of the first recommendation from the Report of the Government’s Inquiry ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • No active community cases of COVID-19
    There are no active community cases of COVID-19 remaining in the country after the last people from the recent outbreak have recovered from the virus, Health Minister Chris Hipkins said today. “This is a big milestone. New Zealanders have once again through their collective actions squashed the virus. The systems ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Clean energy upgrade for more public buildings
    More public buildings will be supported by the Government to upgrade to run on clean energy, the Minister for Climate Change James Shaw announced today. Minister Shaw announced that Lincoln and Auckland universities will receive support through the Clean-Powered Public Service Fund to replace fossil fuel boilers. Southern, Taranaki, and ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Schools back donations scheme for the second year
    More schools have opted in to the donations scheme for 2021, compared to 2020 when the scheme was introduced. “The families of more than 447,000 students will be better off next year, with 94% of eligible schools and kura opting into the scheme,” Education Minister Chris Hipkins said. “This is ...
    BeehiveBy beehive.govt.nz
    3 weeks ago