A worthwhile backgrounder on Norway and relevant lessons for the rest of the world. Beginning with a nice summary of Norway’s energy transitions, plural, it also covers how the current one has been stalled.
Norway is ahead on electrification at a consumer level. If you are interested in that, here’s another video on the electric city of #Oslo:
However, increased consumption hasn’t led to increased production:
Since 2021 just 0.5 TWh of new power has been added in Norway in a country that consumes 139 TW
Many Europeans don’t know there is an immense push back against new power in Norway ironically because the world is going electric
Norway has been proud that they seemingly have avoided the oil curse, but have they really?
My own home country the US over the past 10–15 years, because of the shell gas revolution, has become the largest producer in the world. If you look at that percentage of GDP wise you come up with uh the extraction industry contributing about 1% of GDP in the US in 2023, and if you extrapolate that to include the supplier industry you come up with somewhere between 5 and 7%.
I think the number that you’re talking about for Norway is close to 20% so that’s interesting when you put it into that perspective, and then you ask the question “What does that mean?”
Chapter 2: A squandered opportunity?
The oil and gas comfort blanket uh is heavy and comfortable … recent commentary also suggests that Norway Norway’s oil shame has gone, and the country no longer pretends to be as ambitious on climate commitments. Jens Stoltenberg recently stated that offshore wind may not be viable in the short term and that Norway should prioritize affordable electricity and hydro, reflecting a more cautious, potentially oil and gas first, tone.
A question that I have is if Norway had applied the same “profit now” in the short term to things like hydro or fossil fuels when those things happened, would they have become the national projects that they have and the legacies that they’ve become since? What are some of the costs of sticking to the path that Norway is on at the moment?
There’s a few facts here that we have to think about in this country. First and foremost all international oil and gas investments are dropping. The IEA published two weeks ago the new energy investment report. Then Offshore Norway, a trade association, says that there is about a 29% reduction in oil and gas investments till 2029. I would probably say it’s probably higher than that, and if you ask any of the major supply chain companies in Norway “How’s your order book for the next three years?”, you’re going to get a pretty grim look on your face.
Carbon capture storage is a restoring itself in Norway. I would say it has been a technology success story. It has taken time, it has taken money. It has taken 40+ billion NOK [3.4 GEUR] over the last 20 years. But the European Union has made legislation as they’ve calculated the emissions from European oil and gas companies and said “OK, you have to store this much of CO2 by 2030–35”.
[Norway] could be doing that if we could avoid the political flip-flopping and have a bit more of a consensus around the direction what they had in the 70s.
What’s an example of a country that is in a way an analog to Norway that’s doing something like what you’re suggesting?
Let’s pick Ireland. Irish politicians are extremely savvy. They are used to talking to multinational companies and negotiating with them. You can tell that when you start speaking to them and when they see offshore wind they don’t talk about the price of offshore wind, but what’s the prosperity to our country offshore wind can give us.It could be that Ireland read the history books of Norway and said “My gosh we’re not installing offshore wind capacity, we’re not building the electrical power generation capacity of our country in order to sell electrons. We’re building it for something else, the indirect thing, the fertilizer production etc that you talked about at the very beginning. That’s an important um that’s an important mindset shift and maybe not completely dissimilar to the way that Sam Eyde was.
Chapter 3: How China is converting electrification into jobs, exports and global influence
Now China’s also seeing that that’s a huge opportunity and aiming to own all of those value chains and being very successful, so if we think about the potential for Norway to make some moves that are not measured purely by short-term returns. And then also expand the picture and talk about Europe in the same regard.
A couple years ago when the IRA was launched we were thinking wow Europe is going to be left behind. This is going to be between the US and and between China. Now there’s a question mark obviously with the US and we read time after time after time here in Norway or in Europe generally, “this project is canceled”, “this project is waiting”, “this project has too few bidders”. A lot of battery companies etc, because they’re just not going to be profitable immediately, means we’re going to buy all that stuff from China.
Also see: The natural gas trap (Bård Harstad, FT)
In a forthcoming article, Katinka Holtsmark of the University of Oslo and I uncover what we refer to as “the gas trap”. This is as follows. In the short term, gas will outcompete coal. The capacity to produce energy with renewables takes time to develop. So, for any given capacity to produce renewables, it is tempting to raise the production of gas to replace coal — due to urgent concerns about climate change.
But the long-term consequence of this is more emissions, not less. Investments in renewables will fall as soon as it is anticipated that we will use gas to outcompete coal. The increased production of natural gas reduces our willingness to pay for additional sources of energy, driving down prices for renewables and other energy sectors.