Saturday

8th May 2021

Feature

Paradox or hypocrisy? Norway's renewables vs oil and gas debate

  • Now a major player in renewables, especially hydroelectricity, Norway's nearly €1.1 trillion sovereign wealth fund largely derives from its oil and energy bonanza (Photo: Benedicte Meydel)

Environmental awareness is high in Norway. Spending time outside in nature is for many a rule of life, and holidays are often spent in their 'hytter' – cabins in the forest or on the coast, known for their minimalist style.

Norway recycles 97 percent of its plastic-drinks bottles. In Oslo as in Stavanger, the country's oil capital, or in Tromsø, in the Arctic, people prefer to travel by public transport, bicycle or electric car. Some 54 percent of all new cars sold last year were electric; the parliament has decided that all new cars sold by 2025 should be zero emissions.

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  • Oslo's New Bjørvika district. Norway recycles 97 percent of its plastic-drinks bottles, and 54 percent of all new cars sold last year were electric (Photo: Benedicte Meydel)

And by 2040, all civil domestic flights will be on electric planes.

That Norway loves electricity is no surprise. The country is a hydroelectricity powerhouse. Russia aside, it boasts the largest annual hydroelectric production in Europe. But Norway also cherishes oil and gas. Almost all of its North Sea field operations ends up abroad.

Climate hypocrite?

In 2020, Norway's export of crude, condensate and natural gas exceeded €30bn. About five percent of total employment is directly or indirectly within petroleum and petroleum-related industries.

The huge financial resources of the Statens Pensjonsfond Utland, Norway's nearly €1.1 trillion sovereign wealth fund, also derive from the oil and energy bonanza.

Here lies the Norwegian paradox: one foot in the rich fossil industry, and the other in the up-and-coming renewable sector. Crossing these paths simultaneously may have caused accusations of Norway being a "climate hypocrite", such as CNN news producer Ivana Kottasová did in February.

A generation gap may also be apparent in the way Norwiegians receive such criticism.

"Being involved in the oil and gas sector is a bit shameful, now" admits Mette, 37. "I guess it is important for us Norwegians to receive this kind of criticism, although I think it is a bit too harsh.". Kaia, 34, recalls: "I only agree with the criticism to a certain extent. There are many hypocrites out there when it comes to violating the climate". Ivar, 72, is from a suburb of Oslo, and has a different opinion. "The oil and gas sector has done a great job, if you ask me. Other countries are jealous. That's why we need to protect this sector. And quite frankly, I'm afraid the EU is interested in controlling it".

Petter Osmundsen, professor of petroleum economics at the University of Stavanger, dismisses such criticism. "Natural gas is needed to cut CO2 in the short to the medium term, and to secure stable energy in a time of increasingly-volatile energy production from renewables. Oil demand will not reduce as a consequence of a potential Norwegian oil cut."

Osmundsen also points out that "Norway is using petroleum revenue to fund carbon capture and storage, hydrogen and floating windmills. No other countries with significant petroleum production is initiating cuts."

However, Norway's decision-makers know the world is changing. "We acknowledge that the petroleum demand is declining in line with EU green initiatives, Biden's decarbonisation plans in the US and similar trends in key Asian countries. This means that petroleum will become less dominant in the Norwegian economy" says Labour party's Espen Barth Eide, a member of the Oslo parliament's energy and environment committee.

That is why the Labour party (currently in opposition to the centre-right coalition ruling Norway) "is set on an active, long-term business policy to re-industrialise Norway for a renewable future". Eide mentions the hydrogen industry, battery-production, and the offshore wind industry, where Norway has technological expertise and is investing.

"We have opened two areas in Norway you can apply to build offshore wind. There's no doubt that this is a big opportunity", Tina Bru, minister of oil and energy, tells EUobserver.

Earlier this month, Norway's sovereign wealth fund made its first investment in infrastructure for renewable energy, in a Dutch offshore wind farm.

Oil shock

Despite its strength in green technologies, Norway's economy remains "very dependent on the petroleum sector. It provides profitable jobs and the building of off-shore and on-shore constructions provides contracts to high-tech firms, ship yards, builders, consultants, lawyers and construction companies. If the oil sector was turned off overnight the shock to the economy would be massive" notes Halvor Mehlum, professor of economics at the University of Oslo.

In the view of Roberto Iacono, associate professor of economics at the Norwegian University of Science and Technology, "it is primarily the huge oil revenues that allowed the Norwegian welfare system to maintain its high level of generosity, especially in comparison to other Scandinavian countries. The possibility of using oil revenues instead of issuing public debt to cover increasing expenses on pensions and public services has undoubtedly helped the Norwegian government in times of economic downturns."

Bru is frank: "I think there will be a demand for fossil fuels in many years to come, also in a world that meets the Paris Agreements. Even if we manage to phase out all forms of fossil transport, and fossil energy production, there will be a demand for fossil resources in the petro-chemical industry, which is currently increasing."

The Norwegian paradox is also a European matter.

"People calling Norway hypocritical tend to forget that there is an energy-security dimension to Norwegian petroleum, and that no EU country would like Europe to become more dependent on Russian petroleum", observes Espen Moe, professor of political science at NTNU.

Only one Green MP

The Norwegian media is increasingly talking about the 'green turn'. But voters seem to care less about this than journalists and pundits. Unlike in Sweden, Denmark or Germany, the Green party in Norway has only one seat in parliament.

Ask Ibsen Lindal is the energy policy spokesperson at the Norwegian Green party. He is very confident about the possibilities for renewables, and in particular the offshore wind industry. "It is a great opportunity. If it's one thing our country has, it's competency within offshore. We're a shipping nation, with the sea at our core. And we can really lead the development within this field".

His party is against oil drilling in untouched areas, especially the Arctic. Last December, a supreme court verdict opened the Arctic to more oil drilling, a blow to a historic battle of Norway's environmentalism. "We should look for zero new oil resources. We must rather stick to the fields we have already found and that's it" says Lindal.

This is what is happening in the Tyrihans field in the Norwegian Sea. The Norwegian energy giant Equinor have, in collaboration with two partners, struck oil and gas in a new segment of the field that has been active since 2009. Recoverable resources are so far estimated at between 19 and 26 million barrels of oil equivalent.

Oil is still part of Norway's destiny.

Author bio

Benedicte Meydel is a freelance journalist mainly writing about Norway, the Arctic and Mediterranean countries, with a focus on gender issues and human rights. Gabriele Catania writes about Nordic countries, the Arctic, and Italy for several European media. He is also a geopolitical analyst and is currently working on his third non-fiction book.

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