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Tuesday, April 23, 2024

Offshore wind stirs up a new industry

As school students all over the world were roaring about climate change again on Friday, Norway’s state oil company Equinor could announce contracts for huge new offshore wind projects. They can help move Equinor away from oil, spawn a whole new, much greener industry rooted in Norwegian offshore expertise, and quell critics who already were assailing Equinor’s top executive in charge of oil projects in Brazil.

Huge wind turbines off the coast of England will be able to power 4.5 million homes in the UK, after Norway’s Equinor won contracts on Friday to help build the world’s biggest wind power project. PHOTO: Equinor

Wind power and the huge turbines needed to capture it remain controversial in Norway. Several wind power projects in Norway have been met massive protests and even civil disobedience. The quarreling dies down, however, when the turbines don’t mar scenic mountain and coastal landscapes, scar untouched nature, threaten birds or disturb quiet open areas.

There was thus some genuine cheering when authorities in the UK announced that Equinor and its UK partner SSE Renewables were awarded contracts that will invest as much as NOK 100 billion (USD 11 billion) in what’s dubbed as the largest wind power project in the world. It will be developed in the Dogger Bank region of the North Sea around 130 kilometers northeast of Yorkshire and produce enough energy to power 4.5 million annually.

(See Equinor’s announcement here, external link to Equinor’s own web site, and Dogger Bank Wind Farms announcement here.)

The Dogger Bank Wind Farms will consist of three wind energy projects with production of what SSE calls “low-cost, low-carbon” power, beginning around 2023, according to Equinor. An Equinor spokesman called the project “an historic milestone” in the redevelopment of the former Statoil as an energy company, not just a gas and oil company.

While Equinor chief executive Eldar Sæter called the project “a game-changer for our offshore wind business,” which also has had its share of criticism, analysts were saying much the same. “It’s a clear signal that the world is changing,” Norwegian energy analyst Thina Saltvedt of Nordea Markets told state broadcaster NRK. “The green shift is underway.”

Nordea’s energy analyst Thina Saltvedt thinks the “green shift is underway.” PHOTO: Nordea

That was probably music to the ears of Pål Eitrheim, Equinor’s head of new energy solutions, who called Friday “a fantastic day for Equinor when it comes to our investment in becoming a broad energy company.”

Saltvedt said she thinks traditional oil companies are “screwing up the tempo” of their attempts to develop alternative and renewable energy projects as fossil fuels become increasingly unpopular. “Some are investing in solar, others in biofuels or electricity,” said Saltvedt, who has predicted for years that the market for oil and gas will decline.

Offshore wind projects present “huge potential” for Norway as it struggles to find “the new oil” to eventually replace the oil industry and create new sources of jobs. Equinor itself said it expects its wind energy projects to be profitable and that the huge investment needed will ultimately pay off.

Norwegian firms that have been active in the country’s offshore oil industry have a good base for applying their expertise to developing and mounting offshore turbines instead of platforms on the seafloor. “The projects offer advantages and synergy effects that can further strengthen our global competitiveness,” Eitrheim told NRK.

A new report from Menon Economics in Oslo pays special attention to floating wind power potential, and some seem blown away by the results. Norwegian companies today have 3-5 percent of the market for wind energy projects bound to the sea floor, Arvid Nesse of the Norwegian Offshore Wind Cluster that commissioned the Menon study told newspaper Stavanger Aftenblad earlier this week. Nesse argues that floating wind power suits the maritime industry and oil and gas milieu even better, not least since installation and anchoring can be provided by the country’s oil service industry.

Offshore windmills like these can help the UK, Norway and other countries move away from oil and gas as a source of energy. PHOTO: Equinor

Nesse firmly believes that wind energy can stir up a new industrial fairy tale for Norway that can create billions of kroner worth of value and more than 100,000 new jobs. Norwegian firms must be able to grab 11 percent of the global market for floating offshore energy in order for the industry to make economic sense, but Nesse thinks that’s “extremely realistic.” He hosted Prime Minister Erna Solberg at a wind energy summit in Bergen this week, while another conference on the topic was underway in Oslo.

Equinor in trouble for boasting about Brazil
Equinor intends to position itself as a major player in offshore wind and that may help boost its image this week after one of its top executives, Margareth Øvrum, had to apologize for some remarks she made to Norwegian media this week that seemed to defend Brazil’s disputed management of its rain forests. Øvrum, who’s now in charge of Equinor’s substantial operations in and off Brazil, also praised Brazil’s controversial president, Jair Bolsonaro, for being “very industry friendly.”

Norwegian government officials, who technically own 67 percent of Equinor on behalf of the state, reacted negatively when newspaper Dagens Næringsliv (DN) presented Øvrum’s remarks in which she seemed to dismiss the possibility of any pressure on her work in Brazil from the Norwegian government. Some government ministers and others have suggested using Equinor and its investment in Brazil as a means of pressuring the Brazilian government to especially take better care of the Amazon.

Margareth Øvrum has been executive vice president in charge of development and production in Brazil since October 2018. PHOTO: Equinor

“I have never experienced any interference from Norwegian authorities and I can’t see that being a challenge in the future,” Øvrum told DN. “As a stocklisted company, we have other shareholders whom we must consider as well.”

Environment Minister Ola Elvestuen of the Liberal Party, who recently withheld Norwegian funding for rain forest preservation in Brazil as fires raged out of control, did not take kindly to Øvrum’s remarks. He firmly believes Brazil has let the world down in its rain forest management, not least after receiving so much financial aid to do so for many years.

The head of Norway’s rain forest fund, Øyvind Eggen, was also upset by Øvrum and Equinor itself, not least since even Norwegian farmers and salmon producers are dropping Brazilian soya to protest its lack of climate-friendly production. “It’s amazing when most all of Norwegian business wants to do something (climate positive) in Brazil, that the biggest play of all (Equinor) has been silent” until Øvrum made her unfortunate remarks, Eggen told DN. “It amounts to a big belly-flop for Equinor as a company with public responsibility.”

On Friday DN reported that Equinor has hired a new “brand management communication,” the former head of successful Oslo PR firm Zync, Anniken Haugen Jebsen. It’s believed the move is aimed at improving Equinor’s climate and environmental profile.

Quick ‘clarification’
DN also reported on Friday that Norwegian war hero Erling Lortenzen, businessman and husband of Norway’s late Princess Ragnhild, has expressed concerns for the Brazilian rain forest. too. The now-96-year-old Lorentzen, who has lived in Brazil for many years, attended a seminar this week on the threat of the Amazon fires and said that it wasn’t correct for anyone to think that all was well in Brazil.

Øvrum ultimately felt compelled to “clarify” her remarks when confronted with the criticism against her. In a written response to DN, which was also published as a letter to the editor, Øvrum claimed that she “fully shares the great concern about deforestation that we now see in Brazil.” She apologized for her earlier remarks and insisted that both she and Equinor take the criticism of Brazil and its deforestation seriously.

“We have taken it up with Brazilian authorities and we will continue to do so,” Øvrum wrote. She also claimed that Equinor was “ready to contribute” towards strengthening preservation of tropical rain forests. Berglund



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