OSLO (Reuters) - Norway plans to drop investments in companies emitting unacceptable amounts of greenhouse gases in a sharpening of environmental rules for its $885 billion sovereign wealth fund, the Finance Ministry said on Friday.

The proposed rules would stop short of a blanket divestment from coal and oil by the world's biggest sovereign wealth fund, it said. The fund is itself built on revenues from Norway's offshore oil and gas production.

"The government will introduce a new criterion to exclude companies whose conduct to an unacceptable degree entail greenhouse gas emissions," it said.

The proposal would target the "worst climate offenders" and both "acts and omissions" that led to emissions, it said. It gave no examples of the type of companies that might be affected.

The plan by the minority right-wing government requires approval by parliament, where some opposition left-wing parties want even stricter environmental rules.

Last year, the fund dropped investments in about 50 coal mining companies, including 14 mining coal for electricity generation and 11 in Indonesia judged to be causing deforestation. Previously, it has outlawed investments in areas including nuclear weapons and tobacco.

But the ministry said there would be no overall ban on fossil fuels by the fund, which invests in 9,000 companies and holds over 1 percent of all stocks globally.

"Ethically motivated exclusion of all coal and petroleum companies based on their products would not be appropriate," the ministry said.

"The energy production, energy use or carbon dioxide emissions of such companies cannot per se be said to be contrary to generally accepted ethical norms," it said.

Some left-wing parties have also urged the right-wing government to work out a wider mandate for the fund to influence environmental policies by foreign companies.

But Finance Minister Siv Jensen said that an expert advisory group was "of the opinion that use of the Fund as a climate policy tool would be both inappropriate and ineffective."

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Norway's own greenhouse gas emissions were 3.7 percent above 1990 levels in 2013, defying repeated promises to cut.

The government on Friday also proposed appointing a new central bank deputy governor to oversee the oil fund.

(Reporting By Alister Doyle; editing by Susan Thomas)