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Climate Change: North Atlantic Comparisons

NORWAY

Introduction

3.38 Information was obtained primarily from the Norwegian climate change programme (Norway’s Ministry of the Environment, 1999a), the Commission report on emissions trading (Norway’s Ministry of the Environment, 1999) and the submission of the Confederation of Norwegian Business and Industry to the emissions trading Commission (NHO, 1999). In addition, the Second National Communication (Norway’s Ministry of the Environment, 1997) and its associated review (UNFCCC, 1999b) provided detailed background information. This national information is compared with approaches to climate issues developed by the other study countries in Chapter Four.

Figure 3.3 Outline map of Norway (shaded)

Climate Impacts and Adaptation

3.39 Climate models predict temperature increases in Norway of the order of 3-4° C by 2100, which is higher than the global mean. Precipitation is expected to increase by 1-2% per decade, with most of the increase likely to occur in spring and in the western parts of the country. Eastern Norway may become drier because of increased evapotranspiration. There is however still considerable uncertainty in such regional estimates of future climate.

3.40 Norway funds a climate-modelling programme, 'RegClim'. Climate models are run at the national meteorological offices (DNMI) with programme participation by a number of Universities and other institutes. In each of these programmes, there is a heavy emphasis on dynamic downscaling of global model scenarios on the time scale of 50-100 years. The results have been used for some impact assessment and co-operation with external users of the regional scenarios. Climate modelling studies in the various Nordic projects have started a common effort to analyse their regional scenarios. Norway is also providing a substantial contribution to a forthcoming linked UK-Norway programme considering ‘Rapid Climate Change’ as a result of shifts in North Atlantic ocean currents. The UK Natural Environment Research Council takes the UK lead on this work.

3.41 Sea level rise is not a particular concern for Norway as the country is still rising, in some places faster than sea level, after removal of the weight of the Scandinavian ice sheet 15,000 years ago. The geography and long coastline of Norway may however make it particularly vulnerable to changes in the frequency of extreme events such as storms, floods and spring tides. Increasing storm frequency could be especially damaging to fish farming: escapes of farmed salmon in Norwegian rivers are already a problem, allowing inter-breeding with wild fish, and the possible transmission of pests and diseases. More storms would be likely to increase the risk of shipping accidents and oil spills along the coast. Flood prevention measures have been in place for many years, so adaptation should occur autonomously over time.

3.42 Nordic Council of Ministers' studies have examined the effect of climate change impacts on hydroelectricity generation. It was found that increased rainfall could raise electricity production and that some changes in infrastructure might be required. Warmer temperatures could also reduce demand by lowering heating requirements (Nordic Council of Ministers, 1998).

3.43 There could be particularly adverse effects on the flora and fauna of the marshes in eastern Norway and the northern county of Finnmark, as the drier, warmer climate will reduce the rate of formation of bogs and speed up the decomposition of organic matter.

3.44 There is no indication that the predicted rise in temperature is critical for marine ecosystems. Most marine species are able to move quickly to favourable growing and spawning areas; this is likely to result in a general northward shift in the distribution and changes in the stocks of most edible fish species.

Mitigation of Greenhouse Gas Emissions

3.45 Norway’s primary instrument for tackling greenhouse gas emissions has been the use of taxation. ‘Green’ taxes, which are environmental and energy related, account for approximately 5% of total Government revenue. Norway has recently published its Climate Change Programme (Norway’s Ministry of the Environment, 1999), which makes clear the desire for a further shift in taxes from labour and income to pollution and harmful energy production.

3.46 More recently, the Commission on Greenhouse Gas Emissions Trading has reported the results of its deliberations. The Commission advises a major shift in climate policy from taxation towards a national trading scheme in greenhouse gas emissions, which will replace all carbon dioxide taxes. The implementation of the scheme will depend on the ratification of the Kyoto Protocol at COP-6 this autumn or on bilateral agreements with neighbouring countries. Norway is likely to push for full use of Kyoto’s flexible mechanisms in order to meet its obligations under Kyoto and an international trading scheme that encompasses all sectors and emissions and includes the option to buy credits overseas.

3.47 Despite application of various policy measures, Norway’s emissions are projected to be 28% higher than in 1990 by 2008-12. The Kyoto target is 1%. The gap is likely to be filled by a combination of the emissions trading system and full use of Kyoto flexible mechanisms.

Energy

3.48 Norway is rich in natural resources with extensive hydropower as well as reserves of oil and gas. It was the second largest net oil producer in the world in 1998. At present the largest user of energy is the energy production sector.

3.49 Norway, like Iceland, has a near 100% capacity in electrical supply provided by renewables, in this case by hydropower. Renewables also provide nearly 70% of stationary energy use. However, energy demand is rising both nationally and within the Nordic region, to which Norway is connected. Insufficient potential for further hydropower is likely to result in the construction of two new gas-powered stations. Such stations will add approximately 3-4% to the total Norwegian emissions of greenhouse gases.

3.50 Bioenergy contributes about 5% of Norway's total energy supply. Much of this is generated and used by the wood processing industry, which satisfies 30% of its own needs. The potential for wind power is large but the costs of related infrastructure such as road access and grid connections limit its economic potential (UNFCCC, 1999b). The Government has announced a target to have 3TWh of wind power by 2010. Wind power production is exempt from investment tax and only pays half of the electricity tax.

3.51 The Energy Act of 1991 deregulated the energy industry and introduced competition. Electricity can be bought from any supplier and about 60% of households are heated using electricity. As electricity prices rise, some fuel switching to oil for heating is occurring. Norway is expected to be a significant importer of electricity in future. Norway's per capita energy use and electricity use is much higher than the international average though its energy intensity, measured as energy use per unit of gross domestic product, is about two thirds of the OECD average.

3.52 The main policy instrument is the carbon dioxide tax, which applies to all fossil fuels. The tax level varies both by fuel type and economic sector. At present, carbon dioxide taxes are paid by industries emitting about 47% of all greenhouse gas emissions and 64% of carbon dioxide-emissions, with present tax rates set at between 10 and 50 euros per tonne of carbon dioxide. Other industrial emitters of greenhouse gas emissions are exempt for a variety of political and economic reasons.

Transport

3.53 The number of private cars and miles driven has been growing for the past few decades. The road network has expanded while the rail network has remained roughly static. Passenger kilometres travelled by buses have remained unchanged in recent decades. In 1996, 87% of domestic traffic was by road, 7% by air and 5% by rail. The reduction in sea freight has increased freight traffic on roads, particularly for the short-haul sector of less than 150 km.

3.54 Tax is the main instrument for limiting carbon dioxide emissions from the transport sector. Norwegian taxes on fuel are amongst the highest in the world. Fuel consumption fell by 7% between 1990 and 1997, suggesting some success with limiting use, but consumption of diesel, which is less heavily taxed, rose by over a third in the same period.

3.55 A purchase tax dependent on vehicle weight, engine volume and capacity may influence consumer choice toward more fuel-efficient cars, while owners of cars and lorries also pay an annual charge. In addition, economic incentives are provided to recycle scrapped cars.

3.56 Toll rings operate around the largest towns in Norway, which may contribute to lower car usage or reduced congestion. The revenue provides funds for both road building and public transport infrastructure. Further road pricing is being considered.

3.57 Subsidies by regional authorities for local public transport infrastructure have remained fairly stable during the 1990s. The four largest cities have received separate support, which contributes to the construction of public transport infrastructure.

Business

3.58 In 1996, the energy supply industry (29%) and the service sector (20%) were the most important elements of the Norwegian economy. While there has been a shift from manufacturing to the service sector, energy-intensive industry still plays an important role. Norway's GDP per capita is amongst the highest in the world.

3.59 Proposals for emission trading will introduce the costs of carbon dioxide emissions into the service sector. Conversely, the energy supply production sector, which dominates emission of carbon dioxide, will be allowed to buy carbon permits at auction. This approach is likely to reduce their costs from the present.

3.60 In addition, voluntary agreements have been negotiated with major emitters to reduce greenhouse gas emissions. Aluminium producers have agreed a 55% reduction per tonne of output by 2005. The Norwegian Pollution Control Act implements the conditions of EC Directives, such as the Integrated Pollution Prevention Control Directive, as a condition of its membership of the European Economic Area Free Trade Agreement.

3.61 The disposal of waste attracts a tax of 300 NOK per tonne of waste, as a means of reducing emissions of methane from landfills. Tax rebates exist for utilisation of energy recovered from the waste. About 55% of methane emissions from Norway came from municipal landfills. The authorities’ strategy is to minimise waste generation, promote recovery of material and energy from any waste and to ensure sound management of residual waste. Waste management is partly governed by the need to fulfil EC waste directives (UNFCCC, 1999b).

3.62 Some of the most important waste measures are thought to be sorting of household waste at source, collection schemes based on agreements between the authorities and industry and on return schemes for certain products (Natural Resources and the Environment, 1999).

3.63 The Confederation of Norwegian Business and Industry is very keen to see the implementation of a gas-emissions trading scheme. The development of emissions trading across national borders will serve Norway's interests as a supplier of carbon dioxide efficient energy and a manufacturer of energy intensive products in the international market.

Domestic

3.64 Electrical generation in Norway produces negligible emissions. This is substantially different from other countries in the OECD. As a result, the drive for energy efficiency has in the past been tied less to reducing emissions than to reducing costs or ensuring thermal efficiency in housing because of the cool Norwegian climate. The Ministry of Energy is in the process of changing the organisational structure and financing of its approach to energy efficiency. These proposals will be published during summer 2000 and are likely to reflect a desire for a more dynamic and flexible approach to energy efficiency.

3.65 Almost every county has a regional energy conservation Centre set up in co-operation with electricity utilities and financed through a surcharge on consumer's bills. These centres distribute information and offer every household an energy audit.

3.66 The City of Oslo, working through its municipal energy utility, "Oslo Energi AS", has developed the most comprehensive energy conservation programme in Scandinavia. In 1982, Oslo City Council, which establishes the local electricity rate, fractionally raised the price. This resulted in extra income to the utility of about NOK 60 million a year (about $10 million) for a fund to initiate cost effective energy conservation investments. This Oslo Ekon Fund has grown to NOK 600 million. The City now can invest about NOK 60 million a year without further need for fresh capital. It has provided loans for about 6,000 projects, with a 15-year repayment period.

3.67 In line with other European countries, Norway introduced regulations relating to the energy labelling of white goods, such as washing machines and refrigerators. Further labelling schemes are expected in future.

Agriculture, forestry and fishing

3.68 Norway has about 80,000 farms, yet agriculture occupies only 4% of total land area. The agricultural sector produces significant emissions of methane and nitrous oxide, accounting for about 9% of Norway's total greenhouse gas emissions. No specific policies are in place to reduce greenhouse gas emissions from this sector, but a number of measures to reduce nutrient runoff from land and use manure more efficiently are likely to have beneficial effects. Animals and anaerobic decomposition of manure are primarily responsible for agricultural methane emissions, which comprised 31% of national methane emissions in 1997. Regulations controlling animal density per hectare and how and when manure is spread assist in limiting methane emissions.

3.69 The use of nitrogen fertilisers and manure in agriculture account for about 45% of national nitrous oxide emissions. From 1998, farmers must have a fertiliser plan, designed to favour more efficient use. In addition, there is a 20% tax on the price of nitrogen fertiliser. Subsidies are used to promote organic farming, which should further reduce the use of nitrogen fertiliser. Subsidies to reduce nutrient runoff by leaving fields uncultivated over winter and to promote drainage of cultivated land may both tend to reduce nitrous oxide emissions.

3.70 Productive forest, which includes national parks, nature reserves and other protected areas accounts for 23% of Norway's land area. The economic importance of forestry has been declining during the 1990s as a result of low timber prices. The resultant reduction in harvesting in recent years has caused a rise in the net annual uptake of carbon dioxide by productive forests. One of the main objectives of forestry policy has been to maintain and enhance the forest resource to allow continued utilisation for timber. Forestry policy consists of regulations, including requirements for reforestation, economic support schemes, research and information programmes. The Forest Protection Act prohibits the cutting of growing forest and state funding, averaging 30% of project costs, is provided for planting.

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