Norway Sticks to Guns on Oil Even While Boosting Green Energy

Norway, Western Europe’s biggest oil producing nation, plans to expand its green energy industry and strengthen its power grid, but isn’t willing to budge when it comes to exploiting its oil and gas resources.

Petroleum and Energy Minister Tina Bru today presented the government’s white paper on energy resources, a document outlining how Norway will meet its energy needs and reach climate goals. Despite increased pressure from smaller parties to change oil policy and a warning from the International Energy Agency that new oil, gas and coal fields need to be scrapped if the world is to reach net-zero by 2050, the government isn’t willing to halt developing new fields.

“We will facilitate a future-oriented Norwegian oil and gas industry capable of delivering production with low emissions within the framework of our climate policy,” Bru said in a statement.

The oil-rich Nordic Nation, which produces most of its electricity from hydro power, earlier this week announced that it will start a process to find more areas for developing offshore wind. There are currently two open for development -- one dedicated to floating wind projects and the other to bottom-fixed farms -- and the government sees the technology as a way to make the most of its offshore oil know-how.

“Retaining expertise and technologies in the oil and gas sector is also vital for the development of new industries and technologies such as carbon capture and storage, offshore wind and hydrogen,” the minister said.

Bru wants to develop the industry that provided the foundation for a $1.4 trillion sovereign wealth fund, while keeping emissions from production as low as possible. Work is already underway on powering oil installations with renewable energy from shore, with the giant Johan Sverdrup field already hooked up to the grid.

Global oil demand is set to recover to pre-pandemic levels late next year, the IEA said on Friday. It urged OPEC and its allies to keep markets balanced by tapping their plentiful spare production capacity.

While the Norwegian Parliament agreed on a generous tax package to support the oil and gas industry last year, it also agreed that the industry’s emissions must be cut by 50% within 2030. Bru, representing the Conservative Party, says this can’t be reached without powering the installations from shore, while the opposition Labor Party and the Socialist Left prefer to use offshore wind. That’s not possible before 2030, according to Bru.

The government also announced plans to establish a hub for the use of hydrogen in the marine transport and appointed a committee to look at how to develop the grid to handle the increased demand from industry at a time when Norway’s EV fleet is booming.

With Parliament meeting for the last time next week before breaking for the summer, a vote on the white paper won’t be possible until after the general election in September.

©2021 Bloomberg L.P.

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