Norway plans to spend heavily on renewable energy

windpowerNorway plans to use some of its vast sovereign wealth fund to develop sustainable energy. Despite being flush with oil, an unspecified proportion of Norway’s USD 400 billion savings account called the Government Pension Fund is being earmarked for investment in environmental projects that not everyone in the government approves of.

As one of Europe’s main producers of gas and oil, Norway has decided it has an ethical obligation to help reduce carbon emissions. Carbon capture and storage is a particularly hot issue right now. Deputy Finance Minister Henriette Westhrin recently told a conference on green energy that “we believe we see a trend developing among large, institutional investors in the direction of setting up smaller funds earmarked for special purposes [such as] environmental issues.”

Norway’s banks, which safeguard the fund and have quite different opinions on how the sovereign fund should be used, don’t share Westhrin’s passion for balancing the nation’s oil and gas windfalls with investment into sustainable energy research. A battle appears to be forming in Norway between conscientious visionaries and traditional investment bankers. But Westhrin is standing firm on her position that Norway has an obligation to give back.

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