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OSLO Feb 25 (Reuters) - Norway's $830 billion oil fund should not, as proposed in parliament, shun the coal sector as that would discourage investment in sophisticated technology needed to cut emissions, the head of the global coal lobby said on Tuesday.
Norway's parliament is considering a motion to ban its oil fund, which owns more than 1 percent of all global shares, from investing in coal firms because of environmental concerns.
The motion is opposed by the minority government but the majority of the parties support some sort of ban, raising the chance that parliament would pass a motion.
"Banning investments in coal assets will do nothing in reducing demand for coal," Milton Catelin, Chief Executive of the World Coal Association told Norway's Parliament on Tuesday. "But it will reduce the investments in companies that are interested in reducing their environmental impact."
"Our concern is about the quality of the investors," Catelin told a parliamentary committee hearing. "(If the fund were to sell out) it would be a sign that the shares should move to another tier of ownership.
"It will reduce investments in companies that are focused on reducing their environmental impact ... it will make them less likely to invest in clean technologies."
Coal is used to generate 41 percent of the globe's electricity. High gas prices and cheap coal have encouraged the use of coal in recent years, resulting in surging demand.
During the question-and-answer session with parliamentarians, Catelin said the margins for coal companies were low. Catelin told Reuters after the hearing they were the lowest for companies that produce fossil fuels.
For campaigners pushing to get the fund out of coal, this was a key point backing their view.
"Investing in coal is financially risky, based on Catelin's own arguments," Nina Jensen, head of the World Wildlife Fund in Norway, told Reuters after the hearing.
That argument was also noted by the leader of the finance committee, whose party the Christian Democrats will be key in deciding whether the motion will pass.
"Many (in the finance committee) are interested in getting a clear picture of what the consequences of a ban would be should the fund pull out, not only from the point of view of the environment but also financially," Hans Olav Syversen told Reuters. He declined to say whether Tuesday's hearing had changed his view.
The finance committee must decide by March 4 what its position on the motion will be. Until then, the different political parties will discuss positions and negotiate.
The committee will then decide whether to put the motion to a vote to the rest of parliament. (Reporting by Gwladys Fouche; editing by Keiron Henderson and David Evans)