OSLO, Feb 6 (Reuters) - Norway’s $1 trillion sovereign wealth fund, the world’s largest, will be able to invest again in British power firm Drax Group, the central bank said on Thursday, as the firm has cut its use of coal in producing electricity.
The wealth fund is not allowed to invest in firms deriving more than 30% of their revenues or of their activity from coal, following a 2015 decision by the Norwegian parliament. The fund excluded Drax from its investments as a result.
“The company has undergone significant restructuring, with a transition from coal to biomass as fuel,” the central bank said in a statement.
“Our estimates now indicate that the company’s coal power capacity is less than 30% of the total power capacity by a good margin, and thus that the company bases less than 30% of its operations on coal.”
The wealth fund is managed by a unit of the Norwegian central bank.
It was the first major fund to ban coal companies and those divestments in 2015 prompted other long-term investors to set similar guidelines, including German insurer Allianz later that year.
The rules were tightened last year and, in addition, the fund can no longer invest in companies that mine more than 20 million tonnes of coal annually or generate more than 10 gigawatts (GW) of power from coal. (Reporting by Gwladys Fouche, editing by Terje Solsvik)