He knows that he is not guaranteed a solid return in the long term, even if the fund is marketed as part of the renewable energy economy. The financial sector has to adapt to climate risk, but does not have effective tools to address the climate issue. It is doubtful whether defining emissions from sectors or individual businesses as unethical will make a difference. The responsibility for measures to combat global warming must rest with the authorities. The solution lies in economic instruments that promote structural change. STRUCTURAL CHANGE GENERATES GROWTH A shift in consumption patterns and production methods towards lower emissions will reduce demand for fossil fuels. This can influence oil and gas activities in Norway. We have always known that oil and gas activities will be phased out sooner or later. Oil and gas are non-renewable resources. A stricter global climate policy may mean that this will occur sooner than foreseen earlier. But Norwegian oil and gas production will remain profitable for quite some time. The supply of clean energy is still limited. Today, coal accounts for a large share of global energy demand. Demand for natural gas may increase as countries move towards a greener economy. In Germany, phasing out coal faster than planned is being discussed. Norwegian gas can play an important role in a transition phase (Chart 7). Chart 7 Important role for Norwegian gas. Annual production. Standard cubic metre of oil equivalents. In millions.
When demand subsequently waned as a result of a deterioration in household finances, at the same time as real interest rates rose and the supply of housing - both new and old - increased, prices fell again. Even substantial price movements can have natural explanations and do not have to be due to unrealistic expectations that are first raised and then dashed. Households have continued to borrow from banks and mortgage institutions throughout the economic decline, which is not the normal pattern of behaviour, but this is of course due to low interest rates. Their debt burden has grown and raised questions about whether we are heading back towards an  2  BIS Review 38/2003  imbalance that sooner or later will have to be corrected. However, I myself do not believe that household debt per se constitutes any immediate source of concern. Households' debt ratio, i.e. debt as a percentage of income, is just over 110 per cent. However, as a result of the historically low interest rates, it appears that households' debt-servicing costs will continue to be manageable. The interest ratio, i.e. households' debt-servicing costs in relation to disposable income, is today barely 5 per cent. The situation for Swedish households is therefore considerably more favourable than at the end of the 1980s and beginning of the 1990s.