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Business

Norway shifts away from coal investments

In a move that is viewed as a victory for environmentalists, the Norwegian parliament has voted to stop its sovereign wealth fund from making investments in firms which earn their profits from coal-based businesses.

Legislators unanimously voted on Friday that the fund - which is fuelled by Norway's state oil revenues and is worth some 793 billion euros ($890 billion) - must sell its holdings in mining and power companies that generate more than 30 percent of their output or revenue from coal.

The new guidelines will take effect from next year and are expected to affect between 50 and 75 international companies.

Environmental groups advocating divestment from fossil fuels celebrated the move as a critical step in the shift towards cleaner forms of energy, given the size of the Norwegian fund.

Economic considerations

Norwegian MPs, however, pointed out that their decision was not just a response to climate change, but also based on financial considerations: coal assets are bound to plunge as climate change efforts increasingly call for coal use to be reduced.

In a paradoxical decision linked to geopolitical considerations, Norway's government recently agreed to rescue the mining company Store Norske, which extracts coal in the pristine Svalbard archipelago in the Arctic, with a capital injection of about 500 million kroner (56 million euros, $62.7 million).

Norway deposits surplus wealth from its oil and gas sector in the sovereign wealth fund as a buffer for when its offshore wells run dry. The fund, which is one of the world's largest, has investments in over 9,000 companies worldwide.

sri/uhe (AFP, AP)

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