20110228-IEA-Energy_Policies_of_IEA_Countries_Norway_2011_Review_146页_4mb

Summary of Norway's Energy Policies (2011 Review)

Core Content

Norway plays a dual role as a major oil and gas producer and a global advocate for climate change mitigation. It is the third-largest energy exporter globally, contributing significantly to international energy security. At the same time, the country is committed to environmental sustainability and has set ambitious climate targets, including a 30% reduction in greenhouse gas (GHG) emissions by 2020 compared to 1990 levels, and a goal to become carbon-neutral by 2050.

Main Points

• Economic and Environmental Balance: Norway's economy is heavily reliant on oil and gas production, which accounts for a large portion of GDP and exports. However, the country is also focused on reducing emissions and promoting sustainable energy policies.

• Energy Mix and Sources:

  • Hydropower is the dominant energy source, accounting for nearly 40% of total primary energy supply (TPES) in 2009.
  • Oil and natural gas contribute 34% and 20% respectively to TPES.
  • The share of fossil fuels in TPES is relatively low at 55%, compared to other IEA countries.

• Climate Policy:

  • Norway has pledged to reduce GHG emissions by 30% of 1990 levels by 2020 and to achieve carbon neutrality by 2050.
  • The country's climate strategy is supported by public funding for clean energy RD&D, which more than tripled from 2007 to 2009.
  • Norway has a strong commitment to carbon capture and storage (CCS) and is a leader in the development of such technologies.

• Electricity and Market Integration:

  • Norway is part of the Nordic wholesale electricity market, which is a model for cross-border integration.
  • The country's large hydropower capacity and planned cross-border interconnections can enhance electricity security and efficiency in the regional market.
  • Gas-fired power plants could serve as backup for variable renewable energy, but they are currently restricted unless equipped with CCS.

• Renewable Energy:

  • Norway has significant untapped potential in offshore wind and hydropower.
  • The country has adopted an offshore wind strategy and is working towards developing its renewable energy capacity.
  • A green certificates market with Sweden is planned to unlock hydropower potential.

• Energy Efficiency:

  • The government has implemented strict building codes and promotes energy efficiency in transport through incentives for electric vehicles.
  • Norway's low electricity prices and high per-capita use pose challenges for promoting energy efficiency, but the government is using cost-effectiveness as a key criterion for prioritizing policies.

Key Recommendations

• Stimulate Safe and Sustainable Petroleum Production: Norway should continue to increase natural gas and petroleum production through environmentally sound operations and by opening new exploration areas.

• Promote Further Electricity Market Integration: The government should facilitate cross-border interconnections and demand-side measures to improve efficiency and security in the Nordic and European electricity markets.

• Develop a Carbon Neutrality Roadmap: A clear roadmap is needed to guide Norway towards its 2050 carbon neutrality goal, including measures to internalize the costs of CO₂ emissions from key sectors.

Important Policies and Measures

• Petroleum Sector:

  • Norway has a transparent and predictable regulatory framework for exploration and production.
  • It manages petroleum resources and revenue effectively, setting a model for other countries.

• Climate Change Mitigation:

  • Public funding for clean energy RD&D is substantial, with a focus on CCS and renewable energy.
  • The government is promoting energy efficiency and renewable energy through Enova, a national agency.

• Electricity Sector:

  • Hydropower is central to Norway's electricity generation and supply.
  • The country is investing in cross-border interconnections to enhance market integration and security.
  • The government should consider temporary approval of gas-fired plants without CCS to meet regional energy demands while preparing for future CCS deployment.

• Renewable Energy Development:

  • Offshore wind and hydropower are key areas for expansion.
  • Norway has launched initiatives such as the green certificates market with Sweden to promote renewable energy.

• Energy Efficiency:

  • The country has implemented strict building codes and aims to achieve the passive house standard by 2020.
  • Incentives for electric vehicles include tax exemptions, toll road exemptions, and infrastructure funding.

Challenges and Critiques

• Meeting Emission Targets: With electricity and building energy already decarbonized, the focus must shift to sectors like oil and gas production, manufacturing, and transport.

• Balancing Energy Security and Sustainability: Norway's reliance on hydropower exposes it to supply constraints during low availability periods, necessitating backup solutions like gas or interconnections.

• Policy Design for Renewables: Some measures targeting electricity may not reduce emissions effectively, as the supply is already low-carbon.

Conclusion

Norway's energy policy is a unique blend of economic development and environmental responsibility. Its role as a major oil and gas producer is balanced with a strong commitment to climate change mitigation and renewable energy expansion. The country's efforts in RD&D, particularly in CCS and offshore wind, are commendable and set a global example. However, to achieve its ambitious climate goals, Norway must continue to innovate, integrate energy markets, and ensure that policies effectively address emission reduction across all sectors.