OLF is satisfied that the Government has presented a Climate Report that provides predictable, long-term framework conditions for the oil and gas industry.
«Now we have the foundation we need to make decisions that will shape the future of the industry,» says Gro Brækken, Director General of OLF, the Norwegian Oil Industry Association.
For quite some time, the oil industry has lobbied for the establishment of a climate measures fund controlled by business and industry, modelled on the NOx fund. In the Climate Report, the Government is now proposing that such a fund be established, to be financed via the fiscal budget.
“We are very pleased that the Government is proposing the establishment of a climate and energy fund. However, since the fund will be handled by Enova, with funding via the fiscal budget, there will be restrictions in how the fund can support good measures when the State is to provide the funding. However, we think it is extremely positive that the Report emphasises that business and industry will also contribute to following up this initiative in cooperation with Enova and the relevant official agencies,” says Brækken.
Experience from the NOx fund shows that the industry achieves results when the right conditions are in place; we have the expertise and the experience that is important in achieving the necessary greenhouse gas reductions in Norway.
Uncertain effect of increased CO2 tax
The petroleum industry has paid a CO2 tax since the beginning of the 1990s. Starting from 2008, the industry has also purchased emissions trading quotas for all of its CO2 emissions. During these years, many good measures have been triggered, yielding substantial reductions in CO2 emissions offshore. Norway will become part of the European quota market from 2013, at which time the oil industry will receive free quotas for parts of its CO2 emissions on an equal footing with comparable industries in other European countries.
“The tax hike of NOK 200 per ton of CO2 increases the petroleum industry’s overall costs for CO2 emissions. However, it is uncertain whether such an increased tax will trigger many new measures in the oil industry. The most reasonable measures have already been triggered, and many of the possible remaining measures in the oil sector are very expensive. The most important step for the climate must be to ensure that we direct our efforts towards the measures that yield the greatest effect,” says Gro Brækken.
OLF supports the proposal to link the CO2 tax to quota prices. The European quota market is an important instrument in reducing greenhouse gas emissions, and while the price of quotas is currently low, it is expected to rise over the longer term.
“It’s gratifying that the Government is acknowledging the oil industry’s need for predictable framework conditions in tax levels in order to make the best decisions about future investments,” says Gro Brækken.
One of the stated goals in the Climate Report is electrification of Utsirahøgda. This is an area with several new stand-alone developments. The conditions are in place for several of these developments to procure renewable power from land. It makes good sense that the Climate Report emphasizes that such a decision presumes that sufficient power is available on land, and consideration must be given to the various factors that are important when choosing a power solution offshore. It is also positive that the Norwegian Petroleum Directorate will play a role in identifying potential areas that can be electrified. Here too, the industry wants to contribute to good cooperation that enables us to illuminate the various factors that will be important for such decisions.
“The oil industry works tirelessly to reduce its emissions through considerable investments in development of technology. Here there are a number of exciting things taking place in subsea technology that results in substantial reductions in energy consumption, and thus also greenhouse gas emissions. Exports of this kind of technology will contribute to reducing global greenhouse gas emissions while also increasing recovery on the Norwegian shelf and maintaining low emissions per produced unit,” says Gro Brækken.
It is gratifying that the Government has opted not to change the current regime for exploration for and production of oil and gas. Norwegian natural gas can thus continue to be a part of the EU’s strategy for achieving its climate targets, such as phasing out coal power plants. Using gas instead of coal cuts greenhouse gas emissions by more than half. Moreover, gas pairs excellently with renewable energy sources, as illustrated by the development of these sources in the EU over the last ten years.
“We are also pleased that the Climate Report also focuses on the Government being a driving force in the work to develop and organise the international carbon market. It is important to maintain the global perspective in the work on national measures,” says Gro Brækken
Roger Pedersen, Communications Manager, tel. +47 911 55 961