It’s not often that Norwegian industrial firms, labour and business organizations are all in agreement but they were collectively celebrating this week after the government came through with financial support to offset the higher costs of environmental measures. The state will effectively sponsor new EU carbon emissions taxes the firms have to pay.
The goal is to spur new industrial investment, preserve jobs in the mainland industrial sector in Norway and reduce global carbon emissions, all at the same time. The annual cost to the state has been estimated at around NOK 500 million, but the state hopes to recoup the cost by avoiding plant shutdowns and the higher welfare costs they would bring.
Norwegian industry is mostly powered by environmentally friendly hydroelectric plants, but remains subject to carbon emissions taxes imposed by the EU that are aimed at reducing emissions. Norwegian companies along with those elsewhere now must pay what’s locally called the CO2 avgift on the energy they use in production, even though their energy may come from Norway’s relatively clean hydroelectric sources.
The higher costs they face have prompted some firms to consider shutting down production in high-cost Norway, threatening jobs at companies like Sør-Norge Aluminium AS (Søral) in Hordaland on Norway’s west coast and at forestry firm Norske Skog Skogn in Nord-Trøndelag.
Now the state has offered to compensate firms that are forced to pay high amounts of CO2 taxes. The offer runs from July 1 next year through 2020 for firms involved, for example, in aluminum, chemical and forestry production and which have long-term power agreements that incur CO2 taxes.
“For us, this has been an acute situation,” Per Øyvind Sævartveit of aluminum producer Søral told newspaper Aftenposten. Søral’s plant at Husnes between Bergen and Haugesund, owned by Norske Hydro and Rio Tinto Alcan, employs around 400 workers and has a power contract coming due in December. Now it presumably can renew and stay at Husnes, since the state will cover its higher costs.
“This is, of course, very positive,” Halvor Molland, information director at Hydro, told newspaper Dagsavisen. It provides important industrial support also for plants like Hydro’s at Årdal and around 80 other firms in total around the country.
Government, business, labour and environmental officials all made it clear that they now expect the industrial firms to show their appreciation by investing in their plants to further secure jobs. “The government has delivered, now Hydro and the others in energy-intensive industry must invest,” said Leif Sande of labour organization Industri Energi. John Bernander, outgoing head of employers’ and business organization NHO, agreed. He said NHO fully backed the compensation plan “and now we hope more companies will look at their investment plans anew.”
Norway appears to be the first country in the world to offer such compensation, with Germany reportedly working on a plan of its own as well. Both Norwegian industry and the government, led by Prime Minister Jens Stoltenberg, have been worried that the global finance crisis will eventually hit Norway’s still-strong economy and NHO has warned of rising pessimism among its industrial members. Stoltenberg said the compensation plan rolled out Tuesday “is part of our policies for meeting the finance crisis.”
Views and News from Norway/Nina Berglund
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