Norway's ethical dilemma

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Release of the Norwegian government’s expansive state budget proposal this week shows without a doubt that Norwegians will keep splashing around in a near embarrassment of riches. The oil and gas flowing out of the North Sea, and Norwegians’ until-now strict control of the revenue it brings, already has enabled the country to almost sail through the global financial crisis. Norway’s oil, though, is also at odds with the country’s lofty environmental goals, and questions are rising over how much longer Norwegians can nurture their oil industry in good conscience.

The proposed budget calls for unprecedented use of oil revenues to fund everything from new nursing homes to more police on the streets.

Fully NOK 154 billion (about USD 27.5 billion) of the petrokroner will be pumped into the economy in an effort to keep unemployment low and invest in projects that most Norwegians agree are needed: More nursing home beds to serve an aging population, more police to fight rising crime, better train lines and roads, and a long list of other projects.

Norway’s oil industry, celebrating its 40th anniversary this year, lifted the country out of hard times and helped make it, by some standards, the best country in the world in which to live. Norwayonce produced record numbers of emigrants,people leaving the country as economic refugees because of poverty at home. Today the country is attractingrecord numbers of immigrants,although struggling to integrate them all.

The oil wealth has been carefully managed over the years, unlike the situation in several other countries where oil wealth is squandered or disappears into the pockets of corrupt leaders. Norwegian governments since the mid-1990s have used what they call handlingsregelen , a rule that limits use of oil revenues to 4 percent of the returns on a fund (popularly called the “Oil Fund”) into which oil revenues are deposited and invested for future generations.Finance Minister Kristin Halvorsen is now breaking that rule (which aims to save most of the petrokroner and keep the economy from overheating) to offset any ill effects coming from the global financial crisis. This year the government has used about NOK 39 billion more than the rule allowed, through its stimulus programs. Now Halvorsen is proposing using nearly NOK 45 billion more than the rule allows in her budget for 2010. That will enable a huge jump in government spending on all sorts of desired projects and programs, and Halvorsen smiled all the way from the Finance Ministry to the Parliament on Tuesday. Many have said Halvorsen is probably one of the luckiest finance ministers in the world.

Ironically, though, Halvorsen was facing a chorus of critics on Wednesday. She was using too much money, they claimed. Even though she is doing precisely what the opposition parties called for in their own election campaigns (“invest NOW in nursing homes and schools, before prices go up and needs become acute,” railed Siv Jensen of the conservative Progress Party just two months ago). One would have thought Halvorsen’s budget would silence the critics who always complain about any lack of social services “when we live in the richest country on earth.” Still many found something to pick at.

The biggest irony of all, though, in Halvorsen’s budget is perhaps how she, as a committed environmentalist from the Socialist Left Party, can allow herself to benefit so much from the very industry that can be among the most polluting on earth. That’s where the dilemma comes in.

Nagging questions

No one can expect that Norway should shut down its oil wells and go back to relying on other sources of income, wrote one analyst last week. But as he questioned in newspaper Aftenposten , “how much longer shall we be among those who contribute to increased greenhouse emissions, which our own leaders and researchers warn against? How much more oil can we tolerate?”

Terje Osmundsen, a former executive at Saga Petroleum and Norway’s employers’ association NHO, wrote that Norway can’t avoid such uncomfortable questions. He cites UN warnings that especially the world’s wealthy nations must do their utmost to cut emissions from all possible sources.”

Osmundsen readily admits that he’s been at the forefront of promoting and building up Norway’s “oil adventure.” But now, he claims, “we must ask how much longer we can keep searching for even more oil and gas.” If emissions reduction goals are to be met, he argues, most of the world’s remaining oil and gas should be left underground. The emphasis now should be on non-fossil fuels and renewable energy sources.

Halvorsen would likely readily agree, but in the meantime she’s using the money coming from Norway’s oil and gas. Prime Minister Jens Stoltenberg has promised Norway also will cut emissions at home, in addition to funding cuts elsewhere.

Signs of hypocrisy

Some disturbing facts have bubbled to the surface, though, regarding Norwegians’ willingness to follow through on environmental rhetoric. The government is not putting a ban on oil exploration off scenic Lofoten. Halvorsen’s party, which campaigned on an environmental platform, performed poorly in last month’s parliamentary election. Even though many Norwegians love the great outdoors and think of themselves as environmentally aware, they didn’t cast their ballots for either of the two most environmentally conscious parties: Venstre and the Socialist Left.

Moreover, a new study reported in newspaper Dagens Næringsliv on Wednesday suggests thatmost Norwegians seem to put the responsibility for emissions cuts on everyone but themselves.They don’t put much faith in “green” products, and aren’t willing to pay more for them, according to the study by the Copenhagen Consulting Co.