Oil revenues held in sovereign wealth funds (SWFs) based could become key to states' efforts to diversify into alternative energy sectors, according to the report published this week by the Geneva-based non-governmental organization World Economic Forum (WEF). The report said SWFs – in addition to their role as stabilization funds to counteract the high volatility of resource prices and longer-term uncertainty – could decrease states' dependence on traditional energy resources by investing in renewables. The International Energy Agency last year forecast global energy demand would reach $38 trillion (€28.7 trillion) by 2035. The WEF report cites the three largest SWFs – all oil funds and all investors in green energy projects. Masdar, a subsidiary of the $620 billion Abu Dhabi Investment Authority's Mubadala company, is developing Masdar City, a "zero-carbon, zero-waste city based on solar energy and other renewable technologies". The $560 billion Norway Government Pension Fund Global's nine energy-related environmental mandates require investments in assets that promote clean energy, water management and environmental technology anticipated to deliver high yields. The third largest, Saudi SWF is looking to solar energy as a way to diversify its energy sources. Khalid Al-Falih, Saudi Aramco president and chief executive officer, said: "It would be a mistake to believe environmental protection and economic growth are mutually exclusive… Instead, resource-rich states can take several actions that advance economic development and minimize environmental impact, (including) introducing renewables in a deliberate and pragmatic manner as their economic viability improves." The number of funds has increased from 22 to 42 over the past six years as a result of oil revenues. They now include those in oil-based economies including Angola, Kazakhstan and Azerbaijan.
