Norway has proposed to double investment in environmental companies to US$ 8.4 billion as part of its plans to restructure its huge sovereign wealth fund.
Announcing an overhaul of the fund, the Ministry of Finance said that the amount of money invested into environmental stocks would increase from US$3.34bn and US$5bn to between US$5bn and US$8.4bn.
The increased finance represents only about 100th of the fund’s total worth, but is nevertheless a significant step.
Valued at around US$868bn, Norway’s sovereign wealth fund is the largest in the world. It is made up of income from the country’s lucrative oil industry.
“Even those nations that made their fortune on oil are starting to see it’s not the future, the race to the exits is starting,” said environmental campaign 350.org co-founder Bill McKibben.
Environmental news website RTCC reports campaigners have long highlighted the fund’s capacity to challenge the fossil fuels and promote renewable energy through its investment decisions.
Despite the increase, the announcement was seen as a disappointment to some, who had hoped the government would earmark up to five per cent of the fund for renewable energy investments, which they would invest directly in projects, rather than through stocks.
“This is a sovereign wealth fund that has invested in real estate in London and in Formula One,” Samantha Smith, head of climate and energy at WWF, told RTCC.
“Our view was that the mandate for investment in renewables should be like the mandate for real estate. It should be five per cent of the fund’s assets.
“They should be able to invest in hard assets, not just in the stock market, so directly into solar and wind projects.”
She added that Norway’s new centre-right government had “failed to deliver” on hints it delivered last month that renewable energy would receive a boost from the overhaul of its wealth fund.
Christa Clapp, a senior adviser on finance at the Centre for International Climate and Environmental Research Oslo, told RTCC: “It’s a very positive move to start thinking about climate impacts and the renewable energy increase is an important first step but it needs to be more broadly incorporated.”
The Ministry of Finance said it would continue to review further increases to the fund’s investment in renewable energy, as this could potential reduce returns on the fund.
The fund “is not a tool to boost government investments in emerging markets of renewables,” Minister of Finance Siv Jensen said at a press conference in Oslo.
The government is also under pressure to stop investing in oil and coal.
The finance ministry announced it would set up an expert panel to review these investments, and it would present its findings in November.
“It’s great that the world’s biggest investment fund is moving more money into renewables but there is little point if they’re spending huge sums of money digging up more fossil fuels at the same time,” said 350.org European divestment coordinator Tim Ra
