Hilde Roed, senior vice-president of climate and sustainability for Equinor, on Feb. 2.Nathan VanderKlippe/The Globe and Mail
For years, Norway has courted a certain kind of climate infamy with its paradoxical promises to tackle global warming while keeping the taps wide open on the oil and gas platforms that have made it rich.
The seeming incompatibility of a petrostate espousing green goals will be familiar to Canadians, as Ottawa and the provinces face a similar conundrum. The federal government’s promise of a “just transition” to a more sustainable economy has raised alarm especially in Alberta, which worries that its energy industry, and many thousands of jobs, hang in the balance.
Norway’s leadership, however, displays little sense of unease.
Even under a centre-left coalition that took power in 2021, Norway’s embrace of the paradox remains unapologetic. Late last year, it pledged to cut carbon emissions to 55 per cent below 1990 levels by 2030. Meanwhile, its energy industry is still pouring money into new drilling, and companies expect production to rise well into this decade. The fossil fuel revenues the country has stuffed into a US$1.3-trillion oil fund continue to be used to hold global oil and gas investments, with stakes in Shell RYDAF, ExxonMobil XOM-N, TotalEnergies, Chevron CVX-N and BP.
But Espen Barth Eide, Norway’s Minister of Climate and the Environment, says the country intends to heal the climate while continuing to explore even greater output of fossil fuels.
“We don’t think our key role is to stop the supply, and then the world will just start behaving,” he said.
“You actually have to look at what oil and gas is used for and try to change the use.”
Norway is already a leader in electrifying transport, with batteries powering 80 per cent of new cars sold there last year, amounting to one in five cars on the road. Nearly a quarter of the country’s ferry connections are electrified. It plans to electrify offshore platforms, too – a central element of its bid to cut emissions from the production of oil and gas.
Mr. Eide does not see that as being at odds with the concept of a just transition. If global climate policies succeed, petroleum demand will eventually wane. He believes that the heavy industrial skills that made Norway a petroleum power can also be used to build new forms of energy.
That, he said, is the message to Alberta: “Think whatever you like, but this is going to change. Because the world is not going to commit collective suicide. And if we don’t decarbonize, that’s what we’re doing.”
But Norway’s approach has not won it universal plaudits.
Mark van Baal, the founder of activist shareholder group Follow This, likened the country’s strategy to that of a cigarette-maker that says its employees have quit smoking, even as it keeps producing and selling cigarettes.
Equinor, the state-owned company formerly known as Statoil, has promised to cut its operating emissions in half by 2030, mostly by making actual greenhouse gas reductions, rather than buying carbon offsets. But it has no plans to stop searching for new reservoirs, despite the International Energy Agency warning in 2021 that no new fossil fuel exploration or development should take place if the world is to meet its climate goals.
“The situation we’re in right now is the oil industry is making so much money they want to hold on to this business model as long as possible,” Mr. van Baal said.
Earlier this month, BP trimmed some of its climate goals and said it would increase oil and gas investments by US$1-billion a year.
In Norway, meanwhile, production of natural gas increased by 8 per cent last year, as the European energy crisis created new demand for the country’s hydrocarbons.
Few find fault with Norway supplying that energy, although critics say it should use its windfall to help Ukraine.
“But that does not justify exploring and investing in new platforms and new oilfields, which is what is also happening,” said Sigrun Gjerlow Aasland, managing director of the Zero Emission Resource Organisation, a Norwegian non-profit climate advocacy group.
A pandemic oil package passed in 2020 lowered Norwegian taxes to spur increased spending in the sector, and attracted commitments for more than $50-billion in investment. As a result, the country’s oil and gas output is likely to increase for the coming half-decade, or perhaps longer.
Last year, global spending on renewable energy for the first time equalled investment in fossil fuels.
In Norway, by contrast, 80 per cent of Equinor’s capital spending went to oil and gas. The country’s fossil fuel sector’s emissions remain at 2005 levels, and the Norwegian Oil and Gas Association expects a slight rise in 2023 as more gas is sent to Europe.
Norway is a “well-oiled society,” Ms. Aasland said. But when it comes to further wedding the country to a product in decline, “I think we will look back at this as a huge mistake.”
Among the key backers of the oil package were the powerful labour unions that represent oil and gas workers in Norway, including Industri Energi, which represents large numbers of Equinor workers.
Some of those people will lose their jobs if fossil fuel exploration declines, said Sindre Kvil, a special adviser with the union. Besides, Norway already has the lowest per-barrel carbon emissions in the world among major producers, he noted. (Canada is highest.)
“Norway should be the last country to shut down their production,” Mr. Kvil said.
The pursuit of hydrocarbon production may involve trade-offs. Electrifying offshore platforms will quickly dent Norway’s long-standing surplus of hydroelectricity. That portends battles over who has a better claim on existing electrons, and how best to generate more.
Yet even fierce critics of Norway’s petroleum dependence acknowledge that the country should be able to do exactly as it has said: dramatically cut its own emissions, while selling fossil fuels.
“They can do that without closing down any oilfields,” Ms. Aasland said.
In part, that’s because rigorous carbon taxes have created economic incentives. Some projects to electrify offshore platforms are cheaper than paying those taxes.
But the fossil fuel industry also says its actions depend in large measure on others. Will the grid agree to sell large volumes of electricity to petroleum companies over other users? Will local interests block onshore wind projects? Will government speed approvals of offshore wind farms, despite concerns over what that might mean for fisheries?
“There is a lot of capital that wants to go into renewables, but there are constraints,” said Hildegunn Blindheim, director general of the Norwegian Oil and Gas Association.
And financial incentives still lean heavily in favour of fossil fuels. “On the renewables side, we’ve said 4-to-8-per-cent return on investments,” said Hilde Roed, senior vice president of climate and sustainability for Equinor. “Which is considerably lower than oil and gas.”
The company hopes it can wring more profit from renewables by trading. “But I think there is a challenge currently around profitability in that sector,” she said.
Independent studies and even the Norwegian government’s own reports suggest the country is on track to reduce its emissions by 25 per cent by 2030 – far short of its 55-per-cent goal.
Between 1990 and 2021, Norway cut emissions by 4.7 per cent. To make its 2030 target, it must exceed that amount every year. “There are no signs today that we will reach those targets,” said Lars-Henrik Paarup Michelsen, director of the Norwegian Climate Foundation, a think tank.
Mr. Eide, the Climate Minister, countered that those forecasts do not account for new projects that will meaningfully change emissions.
“We think it can work,” he said.
He thinks Norway will be able to continue making its paradox work, too.
If the country were encouraging more oil and gas use, “we should be very worried about our own role in history,” he said.
But, he added, “we are an oil and gas producing country that is actively striving to reduce the demand for our key product.”