The Norwegian government is looking at making more green investments. Seeing as Norway runs a sovereign wealth fund worth around $700 billion and is the majority owner of the oil major Statoil (NYSE:STO), its investment decisions impact the real world. It is unlikely that Statoil would be forced to make unprofitable investments just to tickle Oslo's fancy, but it is still important to examine all of the options.

Statoil's history in renewables
The company has had small interests in renewables for a number of years. The encouraging news is that a number of its green investments are in wind-related resources. It recently acquired a 70% interest in the Dudgeon wind project in the U.K. It also has joint ownership of the Sheringham Shoal offshore wind farm.

Wind is quite promising
Recent U.S. levelized costs of energy (LCOE) estimates place onshore wind as one of the cheapest resources, right after advanced combined cycle natural gas plants. These estimates do not include tax credits, allowing for government rebates to make wind even more attractive. 

In the long run Statoil's renewable investments are a risk mitigation technique. Statoil is a major natural gas producer. In the second quarter of 2013 it produced 1967 thousand barrel of oil equivalent per day (mboe/d), and 807 mboe/d of its production was from natural gas. In many markets wind is the cheapest fuel after natural gas, and Statoil is hedging its bets by investing in wind assets and gaining experience in the field. If natural gas prices soar worldwide, Statoil would already have its hands on one of the next best alternative resources. 

Statoil is very conservatively run with no debt and a healthy upstream portfolio. It expects to increase upstream production to 2,500 mboe/d by 2020. The company is growing and profitable, but it does face some threats from the expanding LNG market based on volatile spot rates. Regardless, growth in oil and liquids helps to reduce Statoil's dependence on natural gas.

Big oil can invest profitably in green energy
There is historical precedent that big oil can invest profitably in renewable energy. The French major Total (NYSE:TOT) took a majority position in the solar manufacturer SunPower (NASDAQ:SPWR) and has helped provide financing on SunPower's latest unsubsidized utility projects. Total is a large integrated oil firm, and its profit margin of 4.8% and EBIT margin of 10.8% are thinner than Statoil's, but Total's revenue is so large that it has no trouble financing medium size solar plants. 

Energy inflation is boosting solar's prospects around the global. In some areas like Chile's Atacama Desert, unsubsidized solar projects can offer a big advantage over imported energy sources. Even with all of this growth, solar is still a small side show for Total. SunPower's market cap of $3.8 billion is less than 3% of Total's market cap. 

With a boost from strong rooftop demand, SunPower is expected to return to profitability in 2013 with earnings per share of $1.05. By investing in SunPower, Total is hedging its other unconventional bets like the Fort Hills oil sands project.

The other side of the coin
Success in green investments is not universal. As the world moves closer to 2030, BP (NYSE:BP) projects that renewables will provide a greater share of primary energy than uranium. Even with this positive outlook, BP shut down its solar operations and tried to sell of its U.S. wind assets.

It is important to remember that BP faced a huge bill from the Macondo disaster and had to sell off a number of assets to help cover damages. Its profit margin of 6.6% and EBIT margin of 9.2% are not horrible, but Macondo is estimated to cost the company up to $65 billion and may cripple the company's growth for years to come. 

Bottom line
Norway's government is pushing for renewables, and it is highly likely that Statoil will be pressured to make more green investments. Given the precedent set by Total and SunPower, this should not be a big cause for concern for Statoil's minority investors. Considering Statoil's large size, it can easily invest in a few wind farms here and there while it continues to grow its traditional hydrocarbon-based assets.

Joshua Bondy has no position in any stocks mentioned. The Motley Fool recommends Statoil (ADR) and Total SA. (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.