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OIL FUND

Norway’s wealth fund to double green energy investment cap

Norway's sovereign wealth fund, the world's biggest at more than $1 trillion, will soon be able to invest in unlisted renewable energy infrastructure projects, such as wind farms and solar parks, the government said on Friday.

Published: 6 April 2019 12:03 CEST
Norway's wealth fund to double green energy investment cap
Minister of Finance Siv Jensen. Photo: Conelius Poppe/Scanpix
Currently 66.3 percent of the fund is invested in shares, 30.7 percent in bonds, and three percent in real estate.
 
While the fund already owns stakes in listed companies in the renewable energy sector, Friday's announcement means it will now have more latitude to invest in infrastructure projects at an earlier stage, thereby allowing it to maximise its gains. 
 
“Allowing for unlisted renewable energy infrastructure is not a climate policy measure, but is a part of the investment strategy for the fund,” Finance Minister Siv Jensen said in a statement. “These investments shall be subject to the same profitability and transparency requirements as the other investments of the fund.”
 
Fuelled by the Norwegian state's oil revenues, the fund already has an envelope of a maximum 60 billion kroner ($7 billion) reserved for climate investments. That ceiling will now be doubled to 120 billion kroner.
 
According to consulting firm McKinsey, the global renewable energy market is currently valued at $2.9 trillion, and is expected to rise to $4.2 trillion by 2030.
 
Norway is the biggest oil and gas producer in Western Europe, but the fund has in recent years gone increasingly green — moves hailed by the environmental lobby though the changes are usually based on purely financial considerations.
 
In March, Oslo announced it was selling off its stakes in oil and gas exploration and production companies to reduce its exposure to black gold.
 
That decision could affect more than a hundred companies specialised in upstream operations, including Chesapeake of the US, China's CNOOC, Canada's Encana, France's Maurel and Britain's Tullow. But companies involved in downstream operations or which also invest in renewable energies, including all the oil majors, will be spared.
 
The fund has already partially pulled out of the coal industry, both for environmental and financial reasons, but some companies had until now fallen through the cracks, such as Germany's RWE.
 
On Friday, the Norwegian government said it was beefing up its criteria.
 
“It's a decisive step for the health of the fund and the planet,” said Tom Sanzillo, head of the IEEFA think tank. 
 
The fund will also be able to scrap its bonds in 10 emerging economies (Chile, Czech Republic, Hungary, Israel, Malaysia, Mexico, Poland, Russia, South Korea and Thailand).
 
On Friday, the fund's value was almost 9.04 trillion kroner ($1.05 trillion).

OIL FUND

Norway oil fund loses 18 billion euros in first half of 2020

Norway's huge sovereign wealth fund, the world's biggest, lost 188 billion kroner (18 billion euros, $21 billion) in the first half of the year as the global economy reels from the Covid-19 pandemic, the central bank said Tuesday.

Published: 18 August 2020 15:48 CEST
Norway oil fund loses 18 billion euros in first half of 2020
Unusually empty slopes and ski lifts in Hemsedal in April. Photo: AFP

The fund, in which the Norwegian state's oil revenues are invested, was hit by plummeting share prices, with stocks accounting for 69.6 percent of its investments.

Its share portfolio posted a negative return of 6.8 percent in the first six months of the year.

At the end of June, the fund was valued at 10.4 trillion kroner (989 billion euros), up from the 9.98 trillion kroner seen at the end of the first quarter.

“The year started with optimism, but the outlook of the equity market quickly turned when the coronavirus started to spread globally,” the fund's deputy chief executive, Trond Grande, said in a statement.

“However, the sharp stock market decline of the first quarter was limited by a massive monetary and financial policy response,” he added.

Real estate investments, which represent 2.8 percent of the portfolio, also posted a negative return, of 1.6 percent, while bond investments, which account for 27.6 percent of assets, posted a gain of 5.1 percent.

“Even though markets recovered well in the second quarter, we are still witnessing considerable uncertainty,” Grande said.

The fund is meanwhile still mired in controversy over the appointment of a new chief executive.

Nicolai Tangen, a billionaire who founded the AKO Capital hedge fund in London, is due to take over the fund on September 1st, replacing Yngve Slyngstad who is retiring.

But critics have complained about Tangen's possible conflicts of interest, as well as his use of tax havens.

The central bank has meanwhile been criticised for irregularities in the recruitment process.

As a result, some major political parties are opposed to Tangen's appointment, and it remains up in the air.

READ ALSO: Norway's oil fund loses 1.3 trillion kroner ($125bn) in coronavirus crash

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