Kennedy Graham

National Climate Policy – 3. Norway

by Kennedy Graham

And what of Norway?

It’s oil on troubled waters.  Norway has the oil.  And it has hydro.  Both are, to some extent, problematic.

Oil makes it rich – what some say is the ‘divided economy’.  There is the oil-driven part that revs up prices (a dinner out for two in Oslo is over 50% higher than Wellington or Auckland).  And there is the traditional rural economy of agriculture and fishing, which doesn’t.

The tension seeps through into Norway’s climate policy. They are, essentially, purchasing their way to redemption.

Norway, at least according to the local climate and economic researchers, ‘never really had a climate policy’ prior to 2000.  Although they have carbon taxes, during the ‘90s they were, along with the US, gung-ho for a market-driven solution to global emissions. This put them at odds with the EU, something that has never really bothered them.  As early as ’98, Norway was considering a national ETS.

Unlike the US, having secured a market approach to UNFCCC/Kyoto implementation, they did not withdraw, leaving the Europeans to carry the can.  They saw China as an integral part of the CBDR principle.  Norway has integrity.  So, post-Marrakesh, Norway has developed a mix of regional (EU) and national climate policy that is working well – according to its ‘respective capability’.

Norway’s net emissions, from 1990 to 2010, dropped 49.1%.  New Zealand’s rose 59.5%.

Norway’s target is the same as Denmark/Sweden – 40% off ’90 by 2020.  The difference is that they allow themselves huge latitude to purchase foreign credits as part of that.  That eases the ‘burden/opportunity’ of domestic reductions, big-time.

It’s all about the oil.  Norway ranks 14th with 3% of global production.  But it exports almost all of it and is now the 5th largest exporter.   And there is the Nordic electricity grid to complicate things.  And they have placed huge importance on CCS (carbon capture and storage), with big investment and experimentation.  It has not worked brilliantly well. Less is heard of it, now.

They have a tradition of a strong Finance Ministry and influential economists, so it is all reduced to numbers and business outlook.  And they tax the oil companies hugely – 78% compared to Canada’s 2% for tar sands.  They make money as a result. Norway has the wealthiest pension fund in the world. All 5 million of them.

So essentially, Norway has an excellent track record of national mitigation while contributing massively to global emissions recorded by others who consume Norwegian oil. Most importers are developing countries which have not had to report to UNFCCC.

Should Norway be named and shamed?  New Zealand exports oil – we rank 79th but the principle is the same.  And we do not reduce our domestic emissions, which Norway does.  Nor do we enter ambitious targets that are faithful to 2°C.

Does Norway seek to atone for its oil?  Yes and no.  Does Norway plan to halt production and export?   No. But it pays massively overseas in ODA and to green climate initiatives elsewhere.  And, as noted, it will buy its way also to redemption through foreign credits.  Assuming redemption is possible in terms of current global policy, which of course it is not.

And now Statoil has just been granted an exploration licence by the NZ Government which ups the ante for our bilateral relations.

The Norwegian Greens, who have only recently entered Parliament, argue for change.  They cite a number of arguments: mitigation responsibility, the stranded assets warning to business, and the social skew of the ‘divided economy’.  They are being heard by others.

Nothing is simple, on planet Earth.