Norway plans to hit oil and gas companies with an increase in carbon taxes to the end of the decade as the major producer nation unveiled a new climate plan aimed at tackling its carbon dioxide emissions.
In the plan unveiled on Friday outlining the Oslo administration's climate ambitions for the rest of the decade, the government is set to increase the total cost of CO2 emissions to a ceiling of Nkr2000 per tonne in 2030 ($235), leading the lobby group for the country's oil and gas industry to warn of a potentially negative impact on activity.
Oil and gas companies currently pay Nkr800 ($94) per tonne of CO2 emitted from production on the Norwegian continental shelf — made up of payments for EU Allowances under the bloc’s Emissions Trading System, and Norway’s own carbon taxes. This total will increase to Nkr2000 per tonne by 2030 (according to 2020 values), regardless of the EU carbon price at the time.
Aiming for low-carbon technologies
At a press conference on Friday, Norway’s Prime Minister Erna Solberg presented the government’s climate ambitions to 2030, arguing that the CO2 tax is the most important means to reduce greenhouse gas emissions from oil and gas production, which represents about a quarter of the country’s total CO2 emissions.
“We are raising CO2 tax (combined with EU ETS allowances) to Nkr2000 to incentivise development of low-carbon technologies for oil and gas production,” she said.
According to Solberg, Norway is not responsible for emissions resulting from the use of oil and gas exported from Norway — so-called Scope 3 emissions.
“A fundamental principle in the Paris Agreement is that responsibility for emissions lies where they occur. Norway is responsible for emissions from production,” she said.
Potential blow to competitiveness of NCS
Industry lobby group Norwegian Oil & Gas Association (Norog) leader Anniken Hauglie told Upstream that the government's proposal of a significant cost increase could have a negative impact on domestic production.
“It will be expensive, increase costs and weaken competitiveness of the Norwegian continental shelf,” she said.
Although Hauglie said the industry supports the Norwegian CO2 tax, she stressed that the totality of regulations, taxes and framework conditions must not be weakened.
“We have to avoid a situation where Norway becomes outcompeted and that companies move their investments to other countries,” she said.
Norog wants financial support schemes for low-carbon technologies and emissions reduction.
“The increased revenues from CO2 tax must be earmarked for measures to reduce carbon emissions,” Hauglie said.
Norway’s new plan to reduce climate-harming emissions towards 2030 will be followed by updates every few years.
The plan also highlighted Norway’s ambitions for offshore floating wind power, carbon capture and storage and hydrogen but lacked much by way of detail about these technologies.
Solberg said that detailed plans for these technologies will be presented in a white paper on Norway’s energy resources, which will be presented during the spring.