NEWS ANALYSIS: It was no coincidence that Norway’s state oil company Equinor launched a new initiative to cut its own carbon emissions earlier this week. The ambitious cuts were announced just before the ceremonial but controversial opening of its huge new oil field Johan Sverdrup, and just before Norwegian business leaders were being told to make their own cuts, or risk losing financing and customers.
“When the politicians don’t succeed (at forcing through cuts), business and finance leaders have to take over,” the leaders of Norway’s biggest bank (DNB) and insurance firm (Storebrand) wrote in newspaper Aftenposten on Monday. DNB’s new chief executive, Kjerstin Braathen, noted how DNB already is tying its interest rate offers to how customers are cutting emissions. Lower emissions, according to DNB, yield lower risk and lower rates.
She and Storebrand CEO Odd Arild Grefstad also noted how the main theme of the national employers organization NHO’s annual conference, which got underway on Wednesday, centers on how Norway’s climate goals can be met. They haven’t been met so far, and it will be terribly embarrassing for the country if they’re not met in 2030 either.
NHO boss Ole Erik Almlid chose climate and sustainability to top the NHO conference agenda. He minces few words in claiming that businesses themselves will have to solve the climate crisis, since politicians can often be guilty of short-term thinking and are often most concerned with promoting themselves. Almlid told newspaper Dagens Næringsliv (DN) that he thinks businesses started taking climate problems seriously last year. 2020, he said, is when they need to find solutions.
“The solution isn’t that we should shut down the oil rigs,” the NHO leader, acutely aware of the oil industry’s impact on the Norwegian economy, told DN. “Many in the oil industry are already far ahead in trying to solve their climate problems.”
Stein Lier-Hansen, leader of NHO’s industrial organization Norsk Industi, agrees. He told newspaper Klassekampen that the government lost its momentum regarding industrial policy last year, not least when imposing new carbon taxes that he argues can reduce competitiveness. “We have proposed solutions, but nothing happens,” Lier-Hansen said.
Enter Equinor, with its announcement (unusually on a Sunday night) that it intends to be basically emissions-free by 2050. Equinor, Norway’s biggest generator of carbon emissions and which (as the former Statoil) balked at the expense of carbon capture and storage at its Mongstad facility several years ago, now claims it will cut its emissions by 40 percent by 2030, 70 percent by 2040 and nearly 100 percent by 2050.
The cuts won’t come cheaply. Equinor is already powering its new Sverdrup oil field with electricity from the mainland. Now the company and its various partners in other offshore fields plan to invest around NOK 50 billion (USD 5.5 billion) by 2030 to reach its goals, mostly through more electrification of their offshore production.
Critics already point out how that will likely raise electricity bills for most Norwegians, and it will involve much more development of wind energy and more controversial windmills. Equinor will also invest in energy savings measures and relevant digitalization.
“We’re actually not asking for more contributions from society (ie: Norwegian taxpayers) at all, just stability in our regulatory framework,” Equinor’s CEO Eldar Sætre told reporters at a press conference on Monday.
Newspaper Klassekampen later pointed out that such “stability,” however, includes a continuation of the generous and controversial tax incentives the oil industry enjoys regarding exploration and drilling for even more oil and gas, not least in the Arctic. That’s already raising objections from the Socialist Left party (SV), the Greens, the Labour Party’s youth organization and others who want to scrap the incentives that finance more exploration. They object to ongoing exploration, nor do they want taxpayers to take the risk of covering exploration costs when oil and gas isn’t found.
Equinor’s emission-cutting goals were otherwise generally well-received, also among some environ-mental organizations. Frederic Hauge of Bellona called them “an historic shift” in business policy. “It’s very positive that the oil industry finally understands that they have to get a grip on climate issues,” Hauge told business news website E24. “When we look back to the time when Statoil (now Equinor) and the Progress Party fought against electrification of oil fields (because of the extra costs), this shows they’ve really changed their attitude.”
Prime Minister Erna Solberg, whose Conservative Party supports Norway’s oil industry, was predictably positive as well. “This is a good start for 2020 and good news for the climate, also for Norwegian job creation and technology development. Equinor and Norwegian industry are showing that they’re at the forefront of economic restructuring.”
Others weren’t so impressed, with the environmental organization Natur og Ungdom (Nature and Youth) calling Equinor’s emission-cutting program “a press stunt in favour of fossil fuels, not climate policy that will really matter.” That’s because the vast majority of emissions come from the use of oil, they contend, not the production of it. They won’t be happy until oil exploration ends and production of oil is curtailed.
Nor will Norway’s Greens Party, which refused to acknowledge any celebration of what Equinor itself calls its “gigantic new oil field, Johan Sverdrup.” Greens leader Une Bastholm called it a “gigantically wrong investment,” adding that neither top politicians nor King Harald V should have participated in Tuesday’s opening ceremonies. The monarch ended up dropping the helicopter trip out to the new Sverdrup platform, with the Royal Palace citing the recent “ordeals” he’d been through following the suicide of his former son-in-law Ari Behn. The king is supposed to remain non-political, although he did refer in his New Year’s address to over-exploitation of the earth’s natural resources,
Lars Haltbrekken, a Member of Parliament for the Socialist Left party who formerly headed Norway’s chapter of Friends of the Earth, said Sverdrup should become “the last dinosaur” on the Norwegian Continental Shelf. “Norway can’t continue to make itself dependent on revenues from oil, which the rest of the world needs to liberate itself from,” Haltbrekken told news bureau NTB this week.
All indications, however, are that Sverdrup will play a huge role in the Norwegian economy for at least another 50 years. It’s expected to yield around 2.7 billion barrels of oil and oil equivalents and generate revenues of around NOK 1,400 billion, of which another NOK 900 billion will flow into state coffers. It can operate profitably even if oil prices fall again to relatively low levels, and it will generate thousands of jobs over its lifetime. Several Norwegian newspapers editorialized on Wednesday that Sverdrup should be hailed, and applauded, not least because its own carbon footprint from production will be relatively low at a time when the world still needs oil and gas.
As new Oil & Energy Minister Sylvi Listhaug also gushed over the virtues of Sverdrup, Equinor itself remains as committed to oil and gas production as ever before. Its new climate- and emissions-cutting goals also show how the company that’s still 67 percent-owned by the Norwegian state will fight for its business as debate over it hardens.
“Equinor’s strategy can be read as it banking fully on oil and gas as the core of its business and its identity, even after removing ‘oil’ from its name,” Bård Lahn, a climate researcher at the Norwegian Cicero Center, told DN. Equinor still wants to keep exploring for new oil and gas fields and maintain production, with CEO Sætre claiming that the Norwegian Continental Shelf remains “full of opportunities.” As for its emissions-cutting goals, Sætre referred to them simply as “good business.”