Explaining why it was not excluding giant oil companies from the fund, the Finance Ministry said it anticipated that nearly all the growth in renewable energy over the next decade would come from diversified companies that did not focus exclusively on renewables.
Energy stocks represented 5.9 percent of the fund's equity investments at the end of 2018 and were worth about $37 billion, fund data showed.
But much of that amount is invested in integrated firms rather than smaller, dedicated explorers and producers.
"There's nothing of size when you look at the percentage of total shares outstanding", he said, while cautioning that the impact could worsen if other large funds follow the Norwegian fund's lead. (At the end of previous year, oil and gas stocks made up about 6 per cent of the fund's stock portfolio.) These companies are making investments in renewables that, while sizable, are modest compared with the amounts of cash they continue to pump into oil and gas. "It's not a debate about climate, it's about financial risk". It has been a hot-button issue in Norway, which is seeking to project an image as a responsible environmental steward while pumping oil and gas at a fast clip.
On March 8, it announced that it will phase out oil and gas exploration companies from its portfolio.
Big oil "victory" Parliament, which still needs to approve the proposal, is expected to the back the plan as the ruling center-right coalition has a majority in the assembly. However, the statement noted that permanent reduction in the crude prices "will have long-term implications for public finances".
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The fund, which derives its income from the country's own oil and gas industry, is divesting in oil and gas in an effort to reduce the risk oil prices might have on Norway's economy. The central bank originally suggested excluding all oil and gas companies, including integrated firms.
The decision is also likely to embolden activists that are continually pushing for other funds, and even fossil fuel companies themselves, to move away from so-called "dirty" fuel and toward renewable energy.
"We cheer for this decision and the government deserves tribute", says Gaute Eiterjord, leader of Nature and Youth.
The fund is managed by the Norwegian central bank.
"This advice is based exclusively on financial arguments and analyses of the government's total oil and gas exposure", the Bank's Deputy Governor Egil Matsen said at the time.
'It's not enough, but we should do this now and then we might see (what to do) in the future, said Svein Roald Hansen, Labour's finance spokesman, adding that the state was right to keep its stakes in Equinor and oilfields. Officials in Norway, which has enjoyed the bonanza of its North Sea oil fields, made clear the proposal was about good investing, as opposed to environmental concerns.