Norway's sovereign wealth fund will also offload stakes in oil and gas explorers and producers, but retain investments in integrated energy companies including Royal Dutch Shell and ExxonMobil.
When first proposing the move in March, Norway's finance ministry said it was aimed at reducing the "aggregate oil price risk in the Norwegian economy".
The Institutional Investors Group on Climate Change (IIGCC), a European group representing 170 members with a collective $US26 trillion in assets under management, has welcomed the decision by Norway's parliament.
"The multi-billion-dollar move out of fossil fuels into renewables by the world's largest sovereign wealth fund sends a clear signal to rest of the market," said IIGCC chief executive Stephanie Pfeifer.
"Other investors will take note when a fund built on oil shows the future is in clean energy."
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