Norway’s Soveriegn Wealth Fund looks like it’s trying to put a down payment on carbon offsets before the rest of the world forces carbon caps on it.
The SWF, the second biggest in the world with nearly $400 billion in assets plans on spending 1%, or just $4 billion on sustainabilty investments. This seem like a negotiating strategy ahead of the UN meet on Climate Change in December in Copenhgen.
Norway is the EU’s biggest exporter of oil and natural gas. It stands to loose the most if a global cap and trade or emissions reduction program with tight limits. This shows the rest of the world that there is more than one way to reduce emissions, says FT’s Lex:
Debate in Copenhagen will centre on how to distribute assistance to developing countries. China, now the world’s largest polluter, has proposed reparations by wealthy countries of 1 per cent of gross domestic product. Although the size of Beijing’s proposal has been largely ignored, it highlights that financial aid will be a reality. This could be paid by various means, such as a tax on oil production. Pre-empting this, Norway has publicised its preferred method.
The size of Norway’s SWF makes it the easiest mechanism for the country to make good its share of any assistance, with little impact on its broader economy. The fund has already targeted developing markets, with $1.2bn committed to India. As India is widely seen as the major country more likely than China to agree to a climate deal, this investment is hardly a coincidence.
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