The world’s largest sovereign wealth fund, which manages $1tn (£786bn) of Norway’s assets, has been given the go ahead for the largest fossil fuel divestment to date by dropping more than $13bn of investments.

Norway’s parliament voted plans into law on Wednesday for the fund to dump investments in eight coal companies and an estimated 150 oil producers.

The divestment plan means the fund will drop coal investments worth an estimated $6bn, which could include shares in the mining companies Anglo-American, Glencore and the German energy firm RWE.

The Government Pension Fund Global, which is built on Norway’s legacy oil earnings, will also move ahead with plans to scrap investments worth $7bn in oil exploration and production companies.

It will, however, retain stakes in oil companies which are limiting their exposure to fossil fuels by investing in clean energy technologies. These include BP and Shell, but rule out London-listed North Sea companies including Premier Oil and Tullow Oil.

It will also step back from any company which generates more than 10GW of electricity from coal, or mines more 20m tonnes of thermal coal a year.

Alongside the breakthrough for fossil fuel divestment, the fund will for the first time have a legal mandate to invest directly in renewable energy projects rather than listed energy companies. The legislation empowers it to invest up to $20bn, beginning with wind and solar projects in developed markets.

Mark Lewis, the head of sustainability research at the investment bank BNP Paribas, said the laws would allow Norway to “join the vanguard of giant solar and wind power investors”.

“The big story in energy economics over the next decade will be the storming of the bastions of fossil fuels by renewable energy sources that are cheaper to build and run, orders of magnitude cleaner and also much easier and quicker to deploy,” he said.

Norway’s finance ministry estimates that the value of the global renewable energy infrastructure market will grow by almost 50%, to $4.2tn by 2030, driven by a surge in new solar and wind power capacity.

The fund’s blow to fossil fuel companies comes as calls increase for investors to end their contribution to the climate crisis.

In an open letter to the European Investment Bank published on Thursday, 80 civil society organisations and academics called on the central bank to end its fossil fuel financing, which topped €2.4bn (£2.1bn) in 2018.

The letter, which was coordinated by the campaign group Oil Change International, accused the bank of “lagging behind the science” underpinning the climate crisis. It was published ahead of a key meeting of European finance ministers.

“Public pressure is stronger than ever because we are in the midst of a climate emergency, and we know the EIB must finally stop funding all fossil fuels,” the letter said.

Governments and investors are increasingly turning their backs on coal, which emits twice as much carbon as burning gas and has triggered a deadly air quality crisis in China’s cities.

Stephanie Pfeifer, head of the Institutional Investors Group on Climate Change, an alliance of investors with assets worth $26tn, said the fund’s move out of fossil fuels into renewables “sends a clear signal to the rest of the market”.

“Other investors will take note when a fund built on oil shows the future is in clean energy,” she said on behalf of the group’s 170 investors. She said institutions with $8tn in assets had already divested from the coal sector, while investors with $11tn under management were calling for the companies to end coal use by no later than 2030.

Oil companies must align with the climate goals of the Paris agreement “or face increasing investor pressure” too, she said.

Norway’s oil fund has for years told the government that failure to sever ties with high-carbon companies could squander Norway’s state pension fund if they rapidly lose value in a lower-carbon world.

The financial risk facing fossil fuel investors has also been raised by Mark Carney, the governor of the Bank of England, and François Villeroy de Galhau, the governor of the Banque de France.

The fund has not named the ompanies it will drop, but is expected to reveal its divestments as part of its official reporting early next year.