Norway wants to turn its huge oil fund greener

Apr 04, 2014 by Pierre-Henry Deshayes
Norwegian Minister of Finance Siv Jensen presents the parliamentary report of the Norwegian Pension Oil fund in Oslo on April 4, 2014

Oil-rich Norway moved Friday to target its huge sovereign wealth fund's investments more closely at boosting green businesses, but environmentalists said the proposals were not strong enough.

In its yearly policy paper on the fund—the world's largest—the rightwing government also proposed giving the central bank, which manages the fund day-to-day, more power to decide when to disinvest from a company for ethical reasons.

Fed by the country's oil surplus, the fund is currently worth 5.1 billion kroner (624 billion euros, $856 billion), invested abroad in stocks and bonds and, to a lesser extent, real estate.

The central bank currently has a mandate to invest between 20 billion and 30 billion kroner in green stocks.

According to Friday's announcement by Finance Minister Siv Jensen, that amount could be almost doubled to reach between 30 billion and 50 billion kroner.

But the proposal fell short of environmentalists' expectations.

The head of the World Wide Fund for Nature in Norway, Nina Jensen—who happens to be the 's sister—labelled the announcement a "huge unkept promise" by the two parties in power, the conservatives and the populist right.

WWF had called for the fund's mandate to be broadened to allow it to also invest in climate-friendly infrastructure such as wind power and solar energy, and for five percent of its value—255 billion kroner—to be earmarked for that purpose.

"Norway announced today that it will increase investment in environmental projects, but fell short of setting an increased dollar amount specifically targeting the renewable energy sector," WWF said.

Photo taken on May 15, 2008, shows a gas platform, some 250 kms off Norway's coast in the North Sea

The head of environmental group The Future in our Hands, Arild Hermstad, said 31.4 billion kroner was already invested in environmentally friendly stocks and that the increase would therefore be minor.

Leaving fossil fuels?

The white paper also proposed giving the central bank more power in ethical matters, allowing it to decide what companies to divest from.

Currently, the finance ministry makes such decisions with recommendations from an independent council on ethics, while the central bank is left to execute orders.

Transferring these responsibilities to the —still within an ethical framework defined by the government—would allow the fund to "speak with one voice" abroad and avoid the perception that decisions to exclude certain companies are a consequence of Norway's foreign policy, Jensen said.

But opposition parties objected, asking to keep the council on ethics the minister wants to suppress.

The proposal could face difficulties in parliament, where the government parties are in a minority.

Existing rules prevent the fund from investing in groups involved in rights violations, in makers of "particularly inhuman" arms or tobacco producers.

Some 60 companies, including EADS, Boeing, Safran, Philip Morris and Walmart, are blacklisted from the fund.

The government also released the mandate and the members of a panel of experts set up to assess a possible withdrawal of the fund from fossil fuels.

Environmental groups criticised the selection of experts, arguing they would likely perpetuate the status quo.

Norway relies on oil revenue for nearly a quarter of its economy, and the proposal to divest its sovereign wealth fund from has raised eyebrows.

But climate concerns and economic self-interest may explain the paradox.

Several financial experts have claimed Norway's "oil fund" is doubly exposed to investment risks.

A price drop in the fossil-fuel sector would mean less state money poured into the fund and also lower returns on the stock market.

Explore further: Oil-rich Norway may divest from fossil fuels

add to favorites email to friend print save as pdf

Related Stories

Major pension funds ask for climate change study

Oct 24, 2013

Some of the largest pension funds in the U.S. and the world are worried that major fossil fuel companies may not be as profitable in the future because of efforts to limit climate change, and they want details on how the ...

Recommended for you

Many tongues, one voice, one common ambition

18 hours ago

There is much need to develop energy efficient solutions for residential buildings in Europe. The EU-funded project, MeeFS, due to be completed by the end of 2015, is developing an innovative multifunctional and energy efficient ...

Panasonic, Tesla to build big US battery plant

19 hours ago

(AP)—American electric car maker Tesla Motors Inc. is teaming up with Japanese electronics company Panasonic Corp. to build a battery manufacturing plant in the U.S. expected to create 6,500 jobs.

Simulation models optimize water power

20 hours ago

The Columbia River basin in the Pacific Northwest offers great potential for water power; hydroelectric power stations there generate over 20 000 megawatts already. Now a simulation model will help optimize the operation ...

Charging electric cars efficiently inductive

20 hours ago

We already charge our toothbrushes and cellphones using contactless technology. Researchers have developed a particularly efficient and cost-effective method that means electric cars could soon follow suit.

User comments : 0