The left-leaning government of Greenland will suspend all oil exploration off the world's largest island, calling it is "a natural step" because the Arctic government "takes the climate crisis seriously".
No oil has been found yet around Greenland, but officials there had seen potentially vast reserves as a way to help Greenlanders realise their long-held dream of independence from Denmark by cutting the annual subsidy of 3.4 billion kroner ($A729 million) the Danish territory receives.
Global warming means that retreating ice could uncover potential oil and mineral resources which, if successfully tapped, could dramatically change the fortunes of the semi-autonomous territory of 57,000 people.
"The future does not lie in oil. The future belongs to renewable energy, and in that respect we have much more to gain," the Greenland government said in a statement. The government said it "wants to take co-responsibility for combating the global climate crisis."
The decision was made June 24 but made public on Thursday.
The US Geological Survey estimates there could be 17.5 billion undiscovered barrels of oil and 45 trillion cubic metres of natural gas off Greenland, although the island's remote location and harsh weather have limited exploration.
The government's decision to stop oil exploration was welcomed by environmental group Greenpeace, which called the decision "fantastic".
"And my understanding is that the licences that are left have very limited potential," Mads Flarup Christensen, Greenpeace Nordic's general secretary, told weekly Danish tech-magazine Ingenioeren.
Denmark decides foreign, defence and security policy, and supports Greenland with the annual grant that accounts for about two-thirds of the Arctic island's economy.