While Norway has built much of its sovereign wealth through oil and gas development in the past-six percent of the fund is invested in fossil fuels-it's now home to a fast-growing solar power sector, with solar installations rising by 366 percent from 2015 to 2016.
The $1 trillion fund that Norway has amassed pumping oil and gas over the past two decades wants out of petroleum stocks.
Norges Bank Investment Management, which runs Norway's $1tn oil fund, has recommended that the sovereign wealth fund ditches its investments in oil and gas stocks.
The sovereign wealth fund, fuelled by the state's oil revenues which have dropped sharply in recent years, is now worth around 8.24 trillion kroner (854 billion euros, $1 trillion), invested primarily in shares (65.9 percent) as well as bonds and real estate.
The oil and gas sector now spans a broad range of energy-related activities, including companies classified as integrated oil and gas, oil service and renewable energy.
"Our perspective here is to spread the risks for the state's wealth", Egil Matsen, the deputy central bank governor overseeing the fund, said in an interview in Oslo. In periods of stable oil prices, the returns on oil and gas stocks have largely moved in tandem with the broad equity market.
"Nothing is imminent and even if the advice is fully implemented we believe this will have limited impact on the oil and gas producers, as the holdings of Norges Bank are relatively small and no doubt will be disposed of over an extended time frame", she said.More news: Chinese Envoy To North Korea 'A Big Move', Says Trump
Norway's largest private pension by value said that if the fund did ditch oil and gas stocks, the action could influence other investors. It also has shares worth more than $1bn in oil services firm Schlumberger and Italy's Eni, whose share price slumped 0.86%.
In addition to its holdings via the fund, Norway has exposure to oil and gas via large untapped offshore hydrocarbon reserves, as well as its 67 per cent stake in the national oil company, Statoil. "We can do that better by not adding oil-price risk".
Oil and gas stocks would be replaced by investments in other companies.
The aim is primarily to reduce the fund's exposure to oil price fluctuations.
"But clearly the direction is that. if the ministry and the politicians think it is good advice and they say yes to it, clearly the investments in the oil and gas sector will decrease over time", he added.
Any proposal by the finance ministry must be approved by Parliament.
If it backs the central bank's proposal, Parliament could vote on it in June 2019 at the earliest.