Norway's Energy Policy: "Putting Energy To Work"

Norway's Government outlines new energy policy

On Friday, Norway’s PM, Erna Solberg and Energy Minister, Tina Bru, proposed a new energy policy (“Putting energy to work” or “Energi til arbeid” in Norwegian). The policy followed hot on the heels of the IEAs report showing that no new development of oil and gas was a necessity if the world was to adapt to the Paris Agreement. Consequently, the international press has focused its coverage on the fact that Norway’s government intends “to supply energy to the markets as long as demand is there”. Underlining this point, on Thursday, Bru released 84 new oil and gas exploration licences, saying this was “important to maintain the level of activity on the Norwegian shelf”.

Main policy highlights

The scope of the policy review was extremely broad, covering areas as diverse as the power grid, offshore wind, hydrogen, CCS and the future of the oil industry. Bru said that the Governmnet’s message was built around four goals for long-term value creation:

1. Value creation that provides a basis for jobs in Norway, through clean renewable energy at affordable prices, noting that the Government had already changed taxation to facilitate few profitable investments in hydropower
2. Electrification to make Norway greener and better, with the report presenting a strategy for “smart and efficient electrification”.
3. Establishment of new, profitable industries through the production and use of hydrogen, offshore wind power, carbon capture and storage, battery production and other businesses where access to clean renewable energy is a competitive advantage
4. A petroleum policy that facilitates profitable production of oil and gas in a long-term perspective within the framework of Norwegian climate policy and our climate goals, and which will provide a basis for jobs and activity throughout the country also in the future.

Solberg highlights power efficiency and hydrogen opportunities, but defends Norwegian oil

In her remarks, PM Solberg elaborated on what was meant by smart and efficient electrification. “Norway has a very good starting point for using electricity for several purposes. The main challenge in the years ahead is the need for increased capacity in the power grid in parts of the country where consumption is increasing rapidly. At the same time, we must ensure that the power system has the ability to cover the need when many people use electricity at the same time ... In addition to facilitating more renewable power production, we must ensure that our processes for providing access to our grid are good enough … and improve government processing to keep pace with the needs of the business community. We have a clear goal that a lack of network connection should not stand in the way of establishing new businesses and jobs.” Therefore she announced the establishment of a fast-working public committee, to assess and propose new measures within three clear areas:

1. Measures to reduce the time it takes to develop and license new network facilities.
2. Principles for safeguarding the socio-economic development of the power grid (i.e. how to ensure that we do not build too much or too expensive a grid, and that it is user-financed).
3. Improvements to the system of connection obligation (i.e. an assessment of whether it is appropriate to introduce criteria for how Statnett and the grid companies can prioritize competing demands for new connections)

Solberg also highlighted her earlier announcement of a framework for the development of profitable offshore wind projects to help the players get the predictability they need to develop a competitive industry.

Solberg acknowledged the IEA report, but said “we are concerned that if we were to say no to new fields, it would have to be part of a larger plan and agreement. If we do it alone, the demand we do not cover will only be filled with more polluting production elsewhere. She argues that her policy of electrification of the Norwegian shelf is providing a 70% reduction in CO2 emissions by 2040, and providing cleaner fossil fuels than produced elsewhere in the world. Norsk Olje & Gass, an industry association, declared itself happy with the strategy for providing predictability.

And Solberg also announced the establishment of five hubs and one to two hydrogen production facilities by 2025. Exactly where they will be established has not been decided, but three possibilities are the establishment of ferry connections on hydrogen in Stavanger and between Bodø and Moskenes and the establishment of a hub at Kollsnes outside Bergen. The government will also establish five to ten pilot projects for the development of cheaper hydrogen solutions. In addition, a new HEILO portal was established to make it easier to find the right support scheme for hydrogen projects.

NGO reaction

Environment NGOs were very critical, with Karoline Anduar, CEO of WWF Norway, saying it was “embarrassing how Norway is placing itself on the wrong side of the transition”. Frode Pleym, Head of Greenpeace Norway, said: “The scientists and the IEA have made it utterly clear that there is no room for new oilfields, if the world is to reach it’s climate goal under the Paris Agreement.”

Another criticism of the Government’s proposal is that it is not detailed enough to be actionable by industry, and that precious time has been wasted in getting to a point which is not quite ready. The Association of Consulting Engineers (RIF) described the report as a paper tiger, influenced by politics and silo thinking.

(Reuters, Climate Home, Altaposten, speeches on Government website)

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