Norway doubles investment in renewable energy by sovereign fund

April 6, 2019 per Steve Hanley

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The Norwegian government announced on April 5 that its sovereign fund will be allowed to double its investment in unlisted renewable energy ventures to $ 14 billion. In a statement, he said he is "now allowing the Government's Global Pension Fund to be invested in unlisted renewable energy infrastructure. Investments should be made within the scope of special mandates related to the environment."

The official announcement continued: "The renewable energy market is growing rapidly. An important part of investment opportunities in renewable energy is found in the unlisted market, especially in unlisted infrastructure projects. Expectations of meaningful investments in the future mean that this market is of interest to institutional investors, such as the Global Pension Fund for the Government. "

Siv Jensen, Norway's finance minister, said at the time of the announcement: "We are not stipulating that the Fund will be invested in unlisted renewable energy infrastructure but are allowing Norges Bank to make such investments if it is considered profitable," according to OilPrice.com.

Unlisted projects make up more than two-thirds of the entire renewable infrastructure market, worth trillions of dollars, according to a report The Guardian. Sverre Thornes, CEO of the Norwegian pension fund KLP, said: "This move will likely expand the market faster and faster. Our overall rate of return on renewable energy infrastructure was about 11% last year. Clean energy is what will take us away from the dangerous and devastating path we are currently in. "

The news comes only a few weeks after the sovereign fund decided to end its investments in oil and gas exploration operations. Climate advocates can celebrate the two announcements, but the Norwegian government says the movements are based strictly on sound financial planning and are not inspired by political or ideological considerations.

Also on Friday, the Norwegian government said the sovereign fund would divest more coal companies, a process that began in 2015 when it wiped out nearly $ 7 billion in coal producer investments from its inventory.

"Unlisted renewable energy is a growing industry," said Tom Sanzillo of the IEEFA. "Investments from the Norwegian fund now allow us to leverage this growth and use its resources to develop the market for decades. This is a strong step for the health of the fund and the planet. "

Per Kristian Sbertoli in the Norwegian climate thinktank Zero, account The Guardian the announcement represents a "historic breakthrough." Although the action is not motivated by environmental concerns, "these actions of the world's largest sovereign fund are perceived and contribute to reducing the cost of renewable energy while accelerating global displacement." Around the world, nearly 1,000 institutional investors with more than $ 6 trillion in assets have joined the movement to sell fossil fuels.

Mark Lewis, of BNP Paribas Asset Management, sums it up. "Renewables are the new rust for the oil and gas industry and if the industry does not adapt to this new reality, they will erode future profits just as rust eats oil platforms."

Tag: Disinvestment of fossil fuels, fossil fuels, Norway Sovereign Wealth Fund, Renewable Energy Investment