A £2.5bn pension fund should pull out from fossil fuel companies within two years and invest in local renewable energy schemes instead, Carmarthenshire councillors have said.

The non-binding motion put forward by Labour group leader Rob James about Dyfed Pension Fund was passed at a meeting of full council.

While there was broad support for the aims of the motion, Plaid Cymru put forward an amendment which excluded the two-year and local renewable elements.

Following lengthy debate Cllr James’ motion won the day after it was made clear that decisions would continue to be made by the Dyfed Pension Fund committee on behalf of its 51 public sector beneficiary groups, of which Carmarthenshire Council is one.

Cllr James said the council must ensure it didn’t “pay lip service” to the climate emergency it had declared earlier this year, and that divesting from fossil fuels was the biggest lever local authorities had.

He said: “We believe two years is ample time that we can divest in a prudent manner.”

Introducing the amendment, Councillor Carys Jones said she agreed with the points raised by the Labour leader, but said two years was “not sufficient enough to complete a process which is so complex”.

She added: “The plan B needs to be in place before we get rid of plan A.”

Councillor Aled Vaughan Owen said he could not support his party’s amendment.

He said Dyfed Pension Fund’s fossil fuel and tobacco investments were larger in 2016 than 2009, and that Wales’ Future Generations Commissioner Sophie Howe had told public sector pension funds they should demonstrate how they consider climate risk in their investment decisions.

Climate change had been on the agenda, he said, for more than 30 years.

“Dyfed Pension Fund has not taken its commitment to climate change as seriously as we would have hoped,” said Cllr Owen.

Councillor David Jenkins said the pension fund recognised the “significant risk factor” of climate change, and that it engaged with a pension forum which was calling for an orderly carbon transition.

He said the fund’s investment managers also pushed the carbon reduction case at company AGMs, while investing more in low-carbon products.

Cllr Jenkins said the fund “was clearly on a journey” but that the council could not make a unilateral decision on the fund’s investment decisions and direction.

Fellow Plaid member, Councillor Darren Price, also said the council was not a decision maker in this matter but added: “All we can do is lobby, and lobby we must.”

Cllr James said many people wanted action on climate change, and he urged Plaid to withdraw the amendment.

Cllr Jones said she was happy to withdraw it on the basis that the motion was non-binding, and the original motion was then passed by a large majority.