Green industry investments pose challenges

The Norwegian frame conditions for renewable energy projects do not match the Norwegian ambitions for emissions reduction. That was made clear by key financial players during a meeting in Arendal Wednesday.

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In an event hosted by Arendals Fossekompani and Pareto Securities, environmental, political, and financial organizations and companies met to discuss the role of the capital market in the green transition.

Achieving the Norwegian ambitions linked to the green transition require huge investments. Pareto Securities estimates that there is a need to invest NOK 420 billion in Norwegian power and electricity grids alone.

Even Norway cannot finance the green transition without access to private capital. Lately, it has been reported that changes in political frame conditions have made green investments in Norway less attractive for private capital.

“Our history shows that it is possible to build and develop green industry without subsidies. However, the green transition requires some very heavy lifting. Private capital and government must work together if we are to achieve the stated goals,” said Benjamin Golding, CEO of Arendals Fossekompani.

He offered offshore wind as an example. Being an emerging industry in Norway, offshore wind is subject to significant uncertainty that financial investors tend to shy away from.

“As a result, the numbers don’t always add up. Yes, we would like to make more green investments. We believe in the green transition, and we want to be an enabler of it. But at the same time, our investments need to be profitable,” said Golding.

Asked how to couple public and private efforts, Golding concluded: “Norwegian frame conditions must to a larger extent match Norwegian ambitions.”

His message was echoed by Finn Øystein Bergh, Chief Economist and Strategist at Pareto Asset Management.

“Investments must be profitable, and investors must be confident that governmental frameworks remain stable. The sudden, retroactive changes in Norwegian tax policies last year, have – unfortunately – added a premium on investments in Norway,” said Bergh.

Member of Parliament Nikolai Astrup (Conservative Party) pointed to the international competition for capital and the need for international investors to invest in Norway.

“There is not enough private capital in Norway to fund all the things we need to do. Added political risk for investments in Norway is a cause for concern,” said Astrup.

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Arendals Fossekompani's roof-top terrace was the venue for the event.
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Nikolai Astrup