* Government says fund should invest more in renewable energy
* Says should nearly double to between $5-8.3 billion
* Plans to get rid of fund's independent ethics council
* Government may struggle to win consensus on ethics reforms (Adds new investment mandates, Christian Democrats' reaction)
By Camilla Knudsen and Nerijus Adomaitis
OSLO, April 4 (Reuters) - Norway's wealth fund should nearly double its investments in renewable energy to a range of $5 billion to $8.3 billion and assess the risk to future returns posed by climate change, the finance ministry said on Friday.
The investment shift is part of a series of government reforms of the fund - the biggest of its kind in the world - also including changes to its ethical guidelines and requiring it to prepare reports on its activities in emerging markets.
Finance Minister Siv Jensen said the fund should take over responsibility from an independent ethics council for excluding companies that break its investment mandate - a change that critics have said might undermine its ethical commitments.
"We suggest that Norges Bank will be both responsible for corporate governance and the exclusion mechanism," Jensen said in a statement.
The finance ministry decides the mandate of the fund, which is managed by a division of the central bank.
Jensen did not propose letting the fund invest in unlisted assets or infrastructure, despite some expectations she would give the fund more tools on top of its equity, bond and real estate portfolio.
The centre-right government announced a major reform of the $860-billion fund after it took office in October.
But it may struggle to win consensus support for the new ethical guidelines from parliament, where it has a minority of seats and relies on the support of two small centrist parties, the Christian Democrats and the Liberals.
"I am very sceptical about the closing down of the ethics council," Christian Democrat Hans Olav Syversen, who heads the legislature's finance committee, told Reuters.
FOCUS ON INVESTMENT RETURNS
A government-appointed commission said in November the fund, which invests the Nordic country's revenues from oil and gas production, should prioritise increasing its investment returns over ethical considerations.
The fund, which has excluded 63 companies for not meeting its ethical mandate, has undershot its 4-percent return-on-investment target since it was established in its current form in 1998.
Until now the exclusions, including Walmart, Boeing , Rio Tinto and Lockheed Martin, have been recommended by the council and applied, in most cases, by the finance ministry.
Oeystein Doerum, chief economist at Oslo-based bank DNB Markets, said last year that dispensing with the ethics council could lead to the fund excluding fewer companies on ethical grounds.
"The more independent the council on ethics is, the better," Doerum told Reuters in November. "In other words, it should not be made into a section of the Norwegian central bank."
Among Friday's others reforms, the ministry proposed appointing a panel of experts to assess the fund's stance on ethical investments.
Another reform will see the appointment of a panel that will examine whether the fund - which invests exclusively outside Norway - should exit its investments in foreign coal, oil and gas companies.
That measure was announced earlier to defeat a parliamentary motion put forward by the opposition, and backed by a majority of parties, to make the fund quit its investments in coal firms.
Both the Christian Democrats and the Liberals have told Reuters the fund might need to tighten its regulatory framework, following discussions about the fund's investment in Formula One, which its chief has acknowledged has been problematic. (Reporting by Camilla Knudsen and Nerijus Adomaitis, writing by Gwladys Fouche; Editing by John Stonestreet)
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