Main moments
A new Civita memo proposes that Norway should spend 0.25 percent of the Oil Fund each year on global climate finance. This is what DN believes in its leadership position that can be “a recipe for wasted money”.
I am more afraid of the opposite: that too much of an increased climate finance will go to self-interest initiatives for Norway. We tend to think of ourselves first, even when we take on a helping role.
A significant part of Norway's climate finance goes through state-owned Norfund and its Climate Investment Fund. Although its mandate is to invest in high-risk developing countries, Norfund's energy investments over 25 years have delivered an average return of six per cent. This is better than the Oil Fund, that is profitable climate measures.
A new master's thesis at the Barcelona School of Management has assessed Norfund's risk management and strategy. DN need not worry. The conclusion is not erased that Norfund is too daring. Quite the opposite.
The two authors, Ine Sofie Kristiansen and Cecilie Fuglesang Ensrud, conclude that Norfund is too conservative in relation to the mandate, and suggest that further risk acceptance could have given greater development effect. The rationale becomes clear when one knows how Norfund is funded.
Norwegian governments have a habit of doing creative budget tricks. Climate investment is no exception. When the government invests one billion in Norfund's climate investment fund, it counts only 25 percent of the amount as an expense in the budget. The rest they lead as a capital placement (“below the line”). This is fair enough in itself, as the fund is expected to yield market returns over time.
But why then does the government count 100 percent of the amount as aid? Shouldn't the money whether It is considered a wealth investment. or an expense?
And worse it gets. As climate finance, the government can report more than 100 percent. A reinvested penny will be counted several times, and contributions mobilized from others will also be counted.
Et written question from Parliamentary Representative Dag-Inge Ulstein tries to clarify how much Norway actually spends on climate finance. Today's development minister has said several times that Norway last year spent 16 billion over the state budget, but Ulstein's rationale suggests the minister is buzzing with his own figures.
Some connections are nonetheless simple: One additional climate crown reported as aid, one penny less means to other aid, as long as the percentage target in the aid remains. Thus, the Climate Investment Fund is currently eating up the budget of other aid donors.
The government should stop “aid-laundering” what is in effect a wealth placement. These are investments that benefit all of humanity, owned by Norway, but paid exclusively by the world's poorest. It doesn't hang on to grips.
Norfund has a portfolio of 36 billion NOK, and last year the Climate Investment Fund's investments contributed to an annual emission reduction equivalent to One sixth of Norway's annual emissions. It could have been even more.
Increasing Norway's climate investments can be the key to a better future for all of us, good returns and a better reputation in the world. It's not a waste. But we should pay for it ourselves.
For the record: I am one of the interviewees in the aforementioned master's thesis, but have otherwise not contributed to its content.
