NEWS ANALYSIS: Just days after the Norwegian government announced controversial plans to drill for more oil and gas in new areas of the Arctic, came news that Norway’s own carbon emissions have increased for the first time since 2010. The increase was blamed almost entirely on the country’s oil and gas industry but political and industrial leaders are undaunted and their message is clear: Norway’s oil age is far from over.
Despite all the rhetoric about omstilling (restructuring) and diversification of Norway’s oil-fueled economy, the government is now gushing forward in its zeal to open up new areas of the Arctic for oil and gas exploration and production. That has infuriated environmentalists, several of whom held protests last week with banners reading what can roughly be translated as “What the hell are you (government leaders) doing?”
The bad emissions news came on Friday, when state statistics bureau SSB reported that Norway’s emissions rose 1.5 percent from 2014 to 2015. The increase amounted to around 800,000 tons of carbon equivalents.
Norway’s minister for the environment and climate, Vidar Helgesen of the Conservative Party, said he wasn’t surprised and indicated the rise was even expected. Helgesen also suggested the higher emissions were not a problem: “They’re going in the wrong direction, overall, but it’s wrong to say that our (climate) measures aren’t working,” Helgesen told newspaper Dagsavisen over the weekend. “If we hadn’t imposed measures, our emissions would have been 17- to 20 million tons over today’s numbers.”
He claimed the increase in carbon emissions, widely blamed for climate change and rising temperatures worldwide, could be blamed on those from oil fields that have been opened during the past decade. Helgesen seemed unconcerned about the consequences of even more new fields now opening up in the senstive Arctic.
“There’s no conflict between the 23rd licensing round (which awarded field licenses on 57 blocks in the Norwegian- and Barents Seas) and the climate goals for 2030,” he insisted, contending that since the oil and gas fields lie within the EU’s quota system, “when emissions go up in Norway, the (oil industry) pays for quotas that can help reduce emissions in other areas of Europe.” He claims that the EU’s climate goals are the same as Norway’s within 2030, and that the agreement struck in Paris late last year allows Norway to adjust them upwards every fifth year.
Environmental groups like Naturvernforbundet, Bellona and Natur og Ungdom scoff at such logic and want real emissions cuts to be made at home in Norway by restricting the oil industry, not letting it expand. The youth environment group Natur og Ungdom, which demonstrated in the park around the Royal Palace and at the government’s Arctic expansion announcement in Hammerfest last week, claims the Norwegian government has destroyed whatever climate credibility it might have had earlier.
‘Still a need for oil and gas’
Helgesen’s ministry responds that Norway is concentrating on five areas in its climate policies: Carbon capture and storage, investment in renewable energy, incentives for more climate-friendly transport in Norway including more investment in public transportation, railroads and bike lanes, “green” shipping and lower emissions from industry.
Asked why Norway is allowing more oil and gas activity, not least in new areas of the Arctic, if the goal really is to reduce fossil-fuel use and emissions, Helgesen told Dagsavisen: “There’s no doubt that the overall direction in the world’s energy consumption will be that oil use goes down and other renewable sources of energy go up, but in this process, the world will still have a need for oil and gas in the future.”
Norway’s minority government coalition therefore intends to continue generating oil and gas revenue, despite all the environmental criticism, also from its own support party in Parliament, the Liberals. Party leader Trine Skei Grande was suddenly threatening to hold the state budget hostage, in an effort to force concessions. “The state budget for 2017 has to be the most environmentally and climate-friendly budget ever,” Grande claimed. “If not, this government has no future.”
Industry bullish, and gearing up again
Oil industry executives, along with political and business leaders in Norway’s far north who see economic growth potential from oil drilling in the Barents Sea, remain bullish. “The oil sector is cyclical and plagued by large, historic swings,” wrote Steinar Riise, chief executive of Ocean Installer, in newspaper Dagens Næringsliv (DN) on Saturday. Despite some tough times lately since the price of oil plummeted, “the oil age (in Norway) is not over.” Riise also noted how oil prices have risen in recent weeks, and some companies like oil service firm Malm Orstad at Klepp in Western Norway are hiring again, or bringing back workers laid off last year.
“We’ve brought back all 20 of those we put on furlough, we’ve hired four more and are set to hire another two,” Lauritz Haringstad, chief executive of Malm Orstad, told DN. Increased activity in the company’s oil service sector is the reason. Riise believes the oil and gas sector is “rising up again” from the slump it’s been in, claiming that electric cars remain a novelty outside Norway, that new technology won’t replace the need for transport, and that wind turbines and solar panels will only make a “modest” contribution to fulfilling global energy needs.
“Those of us who work within oil and gas will continue to be among Norway’s largest wealth creators,” Riise wrote. “We won’t be replaced by companies within solar, wind, batteries, electric cars or the Internet. Our oil capital of Stavanger will continue to be the oil capital for many decades ahead, more than anything else.”