Norway’s sovereign wealth fund opens up to unlisted renewable energy

Norway’s $1trn (£0.8trn) sovereign wealth fund will now be able to invest in unlisted renewable energy projects, the country’s finance minister announced last Friday.

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The Government Pension Fund Global will only make the investments under ‘environment-related mandates’, with the upper limit for these doubling from $7bn to $14bn.

And an additional cap of 2% of the fund’s value has been proposed for unlisted renewable energy infrastructure investments in order to limit risks.

Finance minister, Siv Jensen, said: “Allowing for unlisted renewable energy infrastructure is not a climate policy measure, but is a part of the investment strategy for the fund. 

“These investments shall be subject to the same profitability and transparency requirements as the other investments of the fund.”

These will form part of Norges Bank’s active management, which has stated that it will first consider investments in developed markets, and in projects that are relatively low risk.

“The proposed regulation will enable Norges Bank to adopt a gradual approach in a relatively small market and to invest in a cost-effective manner,” Jensen continued.

“We are not stipulating that the fund shall be invested in unlisted renewable energy infrastructure, but are enabling Norges Bank to make such investments if deemed profitable.”

This comes after a report from the World Economic Forum (WEF) revealed that just 0.2% of sovereign wealth funds’ assets are currently invested in green or renewable energy.

It warned that more than a dozen fossil fuel-rich economies risk becoming “stranded” as the world shifts to sustainable energy, and that sovereign wealth funds will be crucial to addressing this.

“To protect their economic futures, countries whose economies rely on fossil fuels need to prepare now for the impending global shift,” WEF senior director, Maha Eltobgy, said. 

“Nations that have diligently built large sovereign wealth funds to manage the economic challenges of the ‘age of oil’ must now consider how to use this vast wealth to prepare for the age of green energy.”
 

Image credit | Shutterstock
Author: 

Chris Seekings is a reporter for TRANSFORM

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