Norway pledges $8.2 bn to drive industry CO2 cuts

Oslo, 29 June 2012 - Thomson Reuters Point Carbon

Norway is building a massive cash pool to help its big emitters design and build clean technology to cut emissions of heat-trapping gases and help the nation meet its future emissions goals, according to environment minister Bard Vegar Solhjell. Solhjell said the government will double its existing energy efficiency fund to 50 billion NOK ($8.2 billion) and expand it to develop technology that cuts industry emissions after six of the seven major political parties approved a white paper in parliament earlier this month.

“For a country the size of Norway, that is a substantial amount of money,” he told an industry event in Brussels this week.

Lawmakers have yet to decide how much of the fund will be deployed each year, though local media reports suggest 600 million NOK. Industry association Norsk Industri welcomed the move as a key step to ensuring the country can continue to make domestic emission cuts alongside funding cheaper abatement abroad to help limit its carbon footprint.

“This fund will be available to help fund the new technologies that will be necessary to meet any future emissions requirements, looking beyond 2020,” said Norsk Industri’s Trygve Ostmo.

Norway’s carbon-intensive industry is dominated by oil and gas refineries, which represents three-quarters of the country’s emissions covered by the EU Emissions Trading Scheme, according to Thomson Reuters Point Carbon data.

Installations regulated under that market emitted 19.2 million tonnes of carbon dioxide last year.

Norway’s oil and gas sector is the heaviest taxed in the world after the government nearly-doubled levies to 51 euros per tonne of CO2 for off-shore installations.

Cutting emissions in Norway’s energy sector is expensive as the country sources almost all of its power needs from its hydro plants, which do not emit carbon dioxide. That means the transport, manufacturing and oil and gas sectors will shoulder most of the burden of emission cuts to meet the nation’s 30 percent emissions cut by 2020.

Solhjell said part of this effort will come from a pledge to ensure average emissions of new cars don’t exceed 85g of CO2/km by 2020, a goal 10g below the EU’s current aspiration.

The document also re-confirmed a pledge to meet at least two-thirds of the national cuts domestically, though Norsk Industri is confident that this will not affect ETS sectors which can currently meet around half of their required reductions to 2020 using U.N.-backed offset credits.

Norway’s total greenhouse gas emissions were 52.7 million tonnes of carbon dioxide equivalent (CO2e) in 2011, down 1.2 million tonnes from 2010, but 2.9 million tonnes or nearly 6 percent above 1990 levels.

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