Norway oil subsidies hampering renewables: green group

STAVANGER, Norway (Reuters) - Norway's renewable energy sector is hampered by the limited subsidies it receives while the oil industry gets five times as much, a leading environmentalist group said on Tuesday.

Marius Holm, deputy director of the Bellona Foundation, said in an interview that petroleum firms received some 9 billion Norwegian crowns ($1.4 billion) in subsidies in 2009, compared with 1.8 billion that went to the renewable sector.

"I am quite convinced this is hampering renewables from developing," Holm told Reuters. "The capacity of the Norwegian economy, the whole industry, is busy drilling for oil."

The environmentalist said subsidies policy had to be reformed.

"Imagine the situation if renewable firms received the same kind of incentives," Holm said. "Investors would rush to the renewable arena if there was something even slightly similar."

Holm said that oil subsidies had increased from 6.3 billion crowns in 2008 and 5.4 billion crowns in 2007.

The subsidies for renewables increased as well, from 500 million crowns in 2008, but are expected to plateau next year at between 500 million and 1 billion crowns, he said.

Holm said the figures came from the Norwegian tax office and a government agency responsible for renewables.

The oil subsidies include tax write-offs for companies that have hit dry wells during exploration as well as direct payments to firms that have not yet made revenues from exploration, Holm said.

"It is questionable whether this it is profitable for Norway to give subsidies for this," Holm said.

"The problem from an environmental point of view is that it is a huge incentive for oil drilling, more than what the market is willing to risk itself."

(Editing by Jane Baird)