UPDATE 3-Norway wealth fund to ramp up renewable energy investments

April 5, 2014 by  
Filed under Green Energy News

* Government says fund should invest more in renewable

* Says sum should rise to between $5-8.3 billion

* Critics say ramp-up is inadequate

* Plans to get rid of fund’s independent ethics council

* Government may struggle to win consensus on ethics reforms

(Adds reactions)

By Camilla Knudsen and Gwladys Fouche

OSLO, April 4 (Reuters) – Norway’s $860 billion oil fund
should scale up its investments in renewable energy and weigh
the risk to future returns posed by climate change, the finance
ministry said on Friday, a shift green groups said was

The switch is part of government reforms of the fund – the
biggest of its kind in the world – that also include changes to
its ethical guidelines and a review of its activities in
emerging markets.

It has undershot its 4-percent return-on-investment target
since it was established in its current form in 1998.

“The increased scope we give on green investments will help
the fund’s ability to actively manage investments in this area,”
Finance Minister Siv Jensen told reporters.

But critics said the rise in renewables investments – to a
range of between $5-$8.3 billion from $3.3-$5 billion currently
- was insufficient.

“It’s incredibly disappointing,” Samantha Smith, head of the
WWF conservation group’s global energy and climate initiative,
told Reuters. “It’s peanuts relative to the overall size of the

She said the government, a coalition of the centre-right
Conservatives and the populist Progress Party, had raised
expectations by putting investments in renewables on its joint
political platform.

Critics also question a second planned change that would see
the fund take over responsibility from an independent ethics
council for excluding firms that break its investment mandate,
which they argue might undermine its ethical commitments.

“I am very sceptical about the closing down of the ethics
council,” Christian Democrat Hans Olav Syversen, who heads the
legislature’s finance committee, told Reuters.

That suggests the government, which announced the reform of
the fund when it took office in October, may struggle to win
consensus support for its proposals in parliament, where it has
a minority and relies on the support of the Christian Democrats
and a second small centrist party, the Liberals.


The finance ministry decides the mandate of the fund, which
invests Norway’s surplus tax revenues from oil and gas
production and is managed by a division of the central bank.

Other commentators responded more positively to the
ministry’s pledge on renewables.

“Siv Jensen wants to expand green investments a little,
which we applaud,” said Janne Stene, head of climate change
policy at Norwegian green group Bellona. “But there is a long
way to go before our oil money will contribute to the green
shift our planet needs.”

Jensen did not propose letting the fund invest in unlisted
assets or infrastructure, despite expectations in some quarters
that she would give the fund more tools on top of its equity,
bond and real estate portfolio.

But the ministry did propose appointing a panel of experts
to assess the fund’s stance on ethical investments.

Both the Christian Democrats and the Liberals have told
Reuters the fund might need to tighten its regulatory framework,
following discussions about its investment in Formula One, which
its chief has acknowledged has been problematic.

The fund has excluded 63 companies for not meeting its
ethical mandate, including Walmart, Boeing, Rio
Tinto and Lockheed Martin. Exclusions
were recommended by the ethics council.

Removing the council was problematic, said Sony Kapoor, a
close observer of the fund, who is a senior visiting fellow at
the London School of Economics.

“It is right for the government to strengthen the ethical
oversight capacity within NBIM (the fund’s management) so fewer
inappropriate investments will be made in the first instance,”
he said. “But that is not a substitute for an independent
outside body.”

Another reform will see the appointment of a panel that will
examine whether the fund – which invests exclusively outside
Norway – should exit its investments in foreign coal, oil and
gas companies.

That measure was announced earlier to defeat a parliamentary
motion put forward by the opposition, and backed by a majority
of parties, to make the fund quit its investments in coal firms.

“The fuzzy mandate of the expert panel misses the elephant
in the room, which is the fact that the majority of the increase
in the fund by 2030 will come from the sale of oil and gas,”
said Kapoor.

(Additional reporting by Nerijus Adomaitis, Alister Doyle and
Balazs Koranyi,; Editing by John Stonestreet)

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