Norway wealth fund backs oil firms’ climate plans

Norwegian sovereign wealth fund Chief Executive Officer Yngve Slyngstad announced last year he would step down after a dozen years in the job. (Reuters)
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Updated 28 February 2020

Norway wealth fund backs oil firms’ climate plans

  • Non-European oil companies still lagging, says CEO Yngve Slyngstad

OSLO: Norway’s $1.1 trillion wealth fund, the world’s biggest fund and a long-time advocate of companies being more transparent about their impact on the climate, on Thursday welcomed a shift among European oil and gas firms toward greener policies.

Top energy firms including BP, Repsol, Royal Dutch Shell and Total — as well as Norway’s Equinor — have in recent months pledged to cut carbon dioxide emissions and provide more information about their role in global warming.

Many environmentalists argue the targets do not go far enough, but the supportive comments from the Norwegian fund — which owns 1.5 percent of all globally listed equities — could help to persuade other investors that sufficient progress is being made.

“European oil companies have moved a long way, the clever detail and the comprehensiveness of reporting is quite different and much improved from what we saw a decade ago,” the fund’s chief executive, Yngve Slyngstad, said in an interview.

Slyngstad’s comments came as the fund, built up itself from the proceeds of Norway’s extensive oil and gas resources, reported a 19.9 percent return on investment last year and record earnings of 1.69 trillion Norwegian crowns ($180 billion), helped by surging stock markets.

The fund, now worth three times Norway’s annual gross domestic product, owns a 2.55 percent stake in Shell, worth $5.9 billion at the end of 2019, according to fund data published Thursday, as well as 2.34 percent in BP, worth $3 billion, and 2.3 percent in Total, worth $3.4 billion.

“Shell, BP and Total ... are going quite rapidly into, it seems to me, a strategy that is more adapted to a scenario of climate change,” said Slyngstad.

“It is something that in general we welcome as an investor, that the companies are aware of these issues and ... are publicizing to us the relevant numbers to see how they move. But we do not get involved in their strategy,” he added.

Slyngstad said Europe in general had moved further on tackling climate change than other regions, and that this was reflected in actions taken by companies.

The fund said its return for 2019 was ahead of its benchmark index and amounted to almost $34,000 for each of Norway’s 5.3 million people. The overall value of the fund is now equivalent to about $207,000 for every man, woman and child in the country.

Apple and Microsoft contributed the most to the fund’s return in 2019, followed by Nestle, while the worst performers were Nokia, Pfizer and Swedbank, it said.

The fund holds stakes in more than 9,000 companies globally, and also invests in bonds and
real estate.

Slyngstad announced late last year he would step down after a dozen years in the job. A successor, yet to be appointed by the board of Norway’s central bank, is expected to take charge within the next few months.


GM energizes Chinese electric micro car market

The Wuling Hong Guang MINI EV, below. (Supplied)
Updated 22 min 34 sec ago

GM energizes Chinese electric micro car market

  • Trend toward a new segment of EVs in the country following changes to government subsidies

BEIJING: When 32-year-old photographer Jaco Xu needed a run-around car for work in the eastern city of Hangzhou, the price tag on the latest micro EV from GM’s China joint venture overcame his qualms about electric vehicles.

Xu paid 38,800 yuan ($5,735) for his tiny two-door Wuling Hong Guang MINI EV, while the basic model retails for just 28,800 yuan ($4,200), making it China’s cheapest EV.
“It feels pretty good. The price is so low and the appearance is simple and beautiful,” said Xu. “Why would I hesitate at that price?“
Launched in July, the Wuling MINI is heading a trend toward a new segment of EVs in China following changes to government subsidies — smaller vehicles with less range between charges, but a super-cheap price tag.
Despite basic features — no safety air bags, optional air-conditioning and a driving range of less than 200 km (125 miles) due to a smaller battery — buyers have been enthusiastic.
SGMW, GM’s venture with partners SAIC Motor Corp. and Guangxi Automobile Group, sold about 15,000 of the vehicles in August, making it China’s top-selling EV for the month, surpassing Tesla’s popular Model 3.
The venture plans to expand manufacturing capabilities of the new model, turning out cars at its plant in Liuzhou as well as its existing facilities in Qingdao, said Zhou Xing, SGMW’s branding and marketing director.
“We positioned this model as a ‘people’s commuting tool’,” he said, speaking ahead of the Beijing auto show that starts on Saturday. “Customers can drive their cars to work every day.”
The target market includes people like Xu who are looking for a city run-around as a second car, rural buyers who want a vehicle to move goods and young first-time buyers who are motivated by price.

HIGHLIGHTS

● GM JV micro car is China’s best-selling EV in August.

● Wuling MINI EV targets new EV buyers, sells from $4,200.

● Leads trend to smaller cars, batteries after subsidy cuts.

Total sales of new energy vehicles — including electric, plug-in hybrid and hydrogen fuel-cell vehicles — are expected to reach 1.1 million vehicles in China this year, about 5 percent of total auto sales. The micro car represents a shift in what typifies a mainstream electric vehicle, as policymakers push for increased EV production and sales have been bolstered by restrictions on petrol-fueled cars.
In response to government requirements to win generous EV subsidies, automakers over the past decade have developed higher energy-density battery systems to allow cars to drive for longer with a single charge.
Tesla’s Model 3, which has a range of more than 400 km, has been the market leader in China for most of 2020, retailing for about $43,000, about 10 times the cost of the Wuling MINI.
However, China cut subsidies heavily in 2019 and is now asking for higher EV power efficiency to save energy. Automakers, in turn, are planning more smaller EVs with a moderate driving range aimed at customers who can charge cars easily, industry executives said.
The economics are skinny. Wuling MINI will not get EV subsidies due to its short range. For SGMW, the cheap price tag means it makes very little money at best, according to insiders.
EVs, however, generate green credits for SGMW that can be used to offset negative credits of other companies like SGM, its sister venture which is expanding a lineup of bigger SUVs under Buick, Chevrolet and Cadillac marques.
“Selling micro EVs in China makes more sense this year,” said a product planning official at a GM rival. “Subsidies have become a less important factor of pricing as government has already cut a lot, while green credits are expected to become more expensive,” the official said.
Bidding to reverse a sales decline due to a slower economy and stiff competition, GM expects EVs to make up more than 40 percent of its new launches in China over the next five years.
The Detroit automaker is revamping plants in Shanghai, Wuhan and Liuzhou under its two Chinese JVs to enable production lines making gasoline cars to turn out EVs, public documents detailing its constructions plans show.
For now, the Wuling MINI is the cheapest EV, but it faces competition from the cheapest models from rivals BYD and BAIC BluePark.
Great Wall Motor and Toyota’s China partner GAC are also planning more electric models with a range below 400 km, company officials said this month.
And startup Kaiyun Motors is trying to radically lower the price of its new electric pickup truck Pixel to about 20,000 yuan for urban delivery services, although these EVs will be sold without batteries, allowing consumers to swap them.