NEWS ANALYSIS: Norway nurtures an environmentally conscious image, but the country still has a long way to go in tackling its own climate challenges. Its oil and gas companies, offshore sector, farmers, airline passengers and commuters have a lot more changes to make if the country is to meet the climate goals to which it’s committed.
It was perhaps ironic that just after the latest marathon UN climate meeting adjourned in Poland, oil companies Equinor and Wintershall were announcing their production start on the Aasta Hansteen field in the Norwegian Sea. It’s the deepest offshore venture developed so far on the Norwegian Continental Shelf, and as Wintershall reported, it’s designed as a hub to support other discoveries in the area that’s located around 300 kilometers northwest of Bodø.
Production of its first gas began on Sunday, and Equinor (formerly Statoil) called it “a big day,” since Aasta Hansteen is a “strategically important project” that opens “a new gas region.” The Equinor-operated field has been developed with Norway’s first floating SPAR platform, with a 482-kilometer-long pipeline taking the gas to Nyhamna near Kristiansund in Møre og Romsdal for export to Europe.
Natural gas is viewed as a more climate-friendly alternative to coal, and thus long justified as an important part of Norway’s overall offshore business. Environmentalists and climate advocates aren’t convinced: “This is perhaps a big day for those generating income from the field in the short term,” former government minister and Member of Parliament Bård Vegard Solhjell told state broadcaster NRK on Monday, “but for the Norwegian economy it’s a considerable challenge that the state is taking 80 percent of the risk” through exploration incentives within state tax regulations.
Solhjell, who now leads WWF in Norway, stresses that if Norway is to meet its climate goals, it needs to cut production and consumption of oil and gas. Lower prices for both when demand sags in the future can leave a field like Aasta Hansteen unprofitable. The state will bear most of that risk, not the companies, Solhjell argues.
Cuts demanded, from oil and gas to meat
So goes the climate debate over gas and oil in Norway, as it also flares, for example, within the agriculture sector. Environmental groups like Framtiden i våre hender (The future in our hands) want farmers to cut their meat production: “It has to decline, there’s no way around it,” the group’s leader Anja Bakken Riise also told NRK on Monday. “Agriculture stands for a large portion of carbon emissions, and it’s difficult to cut emission without producing less meat.”
Agriculture is arguably the most protected industry in Norway, with farmers receiving large subsidies and tariff advantages to keep much cheaper imports out of the country. Norwegian farming organizations claim they’re climate conscious and trying to avoid using all fossil fuels for transport or warmth by 2030. “You can certainly eat less meat, but that won’t save the climate,” Anders Felde, leader of the farming organization Bondelaget in the county of Sogn og Fjordane, told state broadcaster NRK on Monday. “Then you have to talk about all the driving and airline trips we take.”
Few suffered more during last summer’s drought than farmers whose fields quickly dried up and they didn’t have enough feed for their livestock. Norwegian agriculture isn’t prepared for extreme weather, either droughts (because of a lack of irrigation systems) or floods, both of which are more common with climate change. Newspaper Aftenposten editorialized earlier this autumn that the farmers were happy when the rains finally came after the hot, dry summer, but especially when it rained money from the government. Instead of constantly relying on taxpayer bailouts, though, Aftenposten argued that the farmers need to do more to hinder climate change themselves, if only because it’s in their own interests.
The government, meanwhile, has shut down two of its three coal mines in the Arctic, encourages electric vehicles and imposed a controversial seat tax on airline flights. Climate change still, however, threatens not only lifestyles and resources but Norwegians’ collective fortunes as stashed away in the Oil Fund. Aftenposten argued last week that Norway may be taking unnecessary risks by having so much of its fortunes tied to the oil industry. “What happens to Norway’s biggest (oil and gas) business if climate policies in fact succeed?” queried the paper’s political editor Trine Eilertsen. The debate is split between those who want to start phasing out the oil and gas business and those who argue in favour of extracting as much oil and gas as possible before the market collapses.
State commission evaluated climate risks
Last week a state commission released its report on climate risks facing Norway. “Even if the world reaches its goals in the Paris Agreement, the climate will continue to change for decades ahead,” stated commission leader Martin Skancke. “We thus must prepare ourselves both for climate change and the economic effects of the transition to a low-emission society.” He thinks Norway is fairly well-prepared to deal with both, given its “well-functioning political institutions, high income levels and an economy capable of restructuring. His commission recommended establishment and maintenance of scenarios for oil prices, gas prices and carbon prices. The commission did not examine the oil company-friendly tax incentives that lately have come under criticism because of the risk they create for the state.
Meanwhile oil companies including Equinor claim they’re “going green” themselves, with more activity within alternative and renewable energy, not least wind power. Equinor has actively been investing in wind projects, most recently off the US coast of Massachusetts but also around the UK and elsewhere. More and more fields are being electrified and Equinor recently became the third-largest shareholder in Scatec Solar and other solar energy projects. It’s also, like other oil and energy companies, making efforts to cut emissions at all operations.
Tax schemes up for government debate
A proposal in Parliament to re-evaluate Norway’s currently advantageous tax schemes for oil and gas exploration was voted down, however, by the very party that claims to be the greenest member of the government coalition, the Liberals. They also have control over the ministry in charge of climate and environmental issues, and earlier have opposed the tax system that favours investment in oil and gas. The Liberals say they prefer to bring up the issue during negotiations over a new government platform in January, when the Christian Democrats may join the government as well.
Last week, right when the UN climate talks were underway in Poland, Norwegian officials formally agreed to start the process that will make Norway part of the EU’s climate goal process. Climate and enviroment Ola Elvestuen said the agreement with the EU will “provide a framework that’s so strong” that Norway won’t be able to backtrack on its emission reduction goals.
“This will make our commitments even more clear and more binding,” Elvestue said. It will strengthen Norway’s climate contributions, and make sure that as many of the emissions cuts as possible are made within Norway. “If we don’t manage that, we have to make sure (and pay) that the rest is cut somewhere else in Europe,” Elvestuen said. The Parliament will vote on the commitments this spring.