Massive Dutch fund sticks to fossil fuel investments; avoids wind farms

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The largest Dutch pension administrator, APG, is not going to follow the lead of foreign administrators investing in durable energy, such as wind farms, and is choosing to put money into fossil fuels instead. 

APG manages the investments of five pension funds, including the ABP. It is the biggest pension administrator in the Netherlands, and also one of the biggest in the world, with management assets of €359 billion.

On Thursday, the APG explained the Responsible Investing Report of the fund, saying that offshore wind farm technology is still young, and the contribution of the subsidizing government is too fickle to reach the standards of the fund's efficiency requirement, according to De Volkskrant.

This comes as a setback to the Cabinet, who must arrange for €11 billion in investments into 1000 wind turbines for offshore wind farms. This is in an effort to follow international climate agreements about durable energy. The Cabinet needs company support to execute this move.

Investing into alternative energy sources such as wind and solar power "are largely dependent on subsidies and tax advantages", the APG says. The main reason the APG is not willing to invest money into this, then, is that it is "not a solid basis for long-term investments."

According to APG spokesperson Harmen Geers, the APG is wary of investing because of the insecure role that government subsidies play. 'In Spain, for example, promised subsidies for durable energy were pulled back again. In Norway, agreed-upon tariffs for gas networks were hiked up. We were very scared by this."

The pension administrator has invested €1 billion in renewable energy, especially existing wind turbines on land. This concerns 0.3 percent of the invested capital. No new investments were made in 2013, because no proposals were able to meet the administrator's quality demands, Geers tells the Volkskrant.

This pales in comparison to the amount of money that APG has put into oil and gas companies such as Shell, BP and Gazprom. According to research bureau Profundo, APG invested ten times more into fossil fuels than durable energy. The amount is €10.2 billion, which is three percent of the managed assets. The APG will not yet confirm this sum.

Despite the fact that global efforts to put a brake on climate change and global warming, APG is still confident that energy companies are not yet seriously taking into account any government action on this. If the government wants to limit global warming to two degrees, then fossil fuel consumption would also plummet. The likelihood of this scenario will be researched in the coming year.

Danish pension fund PKA invested in the construction of Dutch wind farm Gemini, 55 kilometers above Ameland. The necessary funds were gathered from 12 international commercial credit lenders, three export credit associations and the European Investment Bank. A total of €2.8 billion was needed.

Director of the durability team of APG, Claudia Kruse, says there are also no hints as of yet that investments into fossil fuels are being driven back. Other international companies are taking a preemptive step away from fossil fuels, however, such as Norwegian company Storebrand who took themselves out of 13 coal companies and six oil companies. Predicting the drop in efficiency of fossil fuel companies in the future also made Swedish pension fund AP4 to scrap a large chunk of its investments.