The Norwegian government has decided to set up a new climate investment fund, to which it will allocate NOK10bn (€970m) over five years.

The new fund, which will be managed by Norfund, the Norwegian investment fund for developing countries, will invest in renewable energy in developing countries with the aim of reducing greenhouse gas emissions, the government said in a statement.

Prime Minister Erna Solberg said: “The climate investment fund is an essential part of Norway’s contribution to achieve the goals set out in the Paris Agreement and the SDGs [UN Sustainable Development Goals].”

She said that to succeed in cutting greenhouse gas emissions, particularly in Asia, more commercial capital had to be mobilised.

“I urge investors to work with the climate investment fund when it is up and running,” Solberg said.

According to the government, the fund could mobilise around NOK100bn in investments in renewable energy over time.

It said there was an “enormous and growing need” for climate finance worldwide, and that one important outcome of the Paris Agreement was a pledge from developed countries to provide $100bn in climate finance annually to developing countries by 2020, so it was vital that global financial support for climate action be scaled up.

Norway’s Minister of International Development Dag-Inge Ulstein said the fund was the beginning of a new partnership between public and private capital that could yield returns on investments, reduce greenhouse gas emissions and increase climate finance.

The NOK2bn that Norway is pledging to put into the fund every year is to come from the national budget and Norfund - half from each - and will start flowing in 2022, according to the announcement.

The government said the fund would increase investments in renewable energy, particularly in countries with high emissions from coal-fired power plants, with investments being made in line with national climate and energy plans in those countries.

Preparatory work to establish the fund will begin now, the government said.

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