Climate legislation to prevent an oil-lubricated collapse

Investment bank HSBC’s risk calculations show Statoil is among those that take the greatest risks with their investments, writes WWF's Nina Jensen in her energy commentary.

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Today’s government has no intention of cutting Norwegian greenhouse gas emissions, even though Norway has everything to gain from a new political course, writes Nina Jensen.

  • Nina Jensen
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HSBC Securities’ analysis shows that oil companies will lose up to 60 percent of their value if a policy aiming for the internationally-recognised two-degree climate policy objective is implemented.

Working less, demand more, emit more CO2

Today’s government has no intention of cutting Norwegian greenhouse gas emissions, even though Norway has everything to gain from a new political course. This is why Norway needs a climate bill.

The coalition government published its Perspectives 2013 whitepaper not long ago.

It examines the challenges and opportunities for Norway over the next 50 years. The whitepaper shows that we’ll be working less and producing less as we demand more of health and care services and higher wages.

At the same time, the whitepaper shows that Norwegian greenhouse gas emissions will actually increase until 2030. ## The oil-lubricated path to economic decline

Hydrocarbon-related income helps hide these challenges, but what would actually happen if demand for oil drops?

A dramatic economic downturn in Norway could become apparent.

It is worrying that this type of whitepaper states that current consumption and production patterns are unsustainable without presenting measures to transform Norway into a sustainable low-carbon society.

It is clearer than ever that Norwegian politicians need help to implement their own goals.

Climate legislation: A blessing

The British, Finns, Danes, Mexicans and many more are in full swing. They have all adopted, or are preparing, national climate legislation that obliges politicians to long-term planning for a climate-friendly future.

A climate bill legislates for national climate targets requiring all sectors to work together to achieve these. A climate bill will be a blessing for Norwegian politicians.

The debate will change from whether we should cut to how when everyone is obliged to follow legislation on emissions cuts.

It opens a political action space to find good solutions across the sectors. Meanwhile, companies will be given a long-term policy they can trust, so that they dare to invest in new value creation and green jobs.

Transition to renewable

A shift towards renewable energy in the world energy markets is currently forcing itself to the fore because of the threat of climate change and a growing need for sustainable energy.

Our vast renewable natural resources provide the basis for taking strategic positions in new markets and create new jobs and income.

We have all our eggs in one basket with today's oil-driven economy. Norway's investments will quickly fall in value if the world's politicians begin to act in accordance with adopted environmental goals.

A Norwegian climate bill will unleash the power of innovation in Norwegian industry and start the change. Norway will still be at the mercy of other countries' climate policy without a climate bill.

Statoil at highest risk

World leaders have agreed on the goal of preventing global temperatures rising more than two degrees.

Investment bank HSBC has shown that oil companies will lose up to 60 per cent of their value if a policy is implemented that provides us with only a 50 per cent chance of achieving the internationally acclaimed two-degree objective – which Norway has committed itself to.

Statoil is cited as the company with the greatest risk regarding their investments.

Its projects on the Norwegian Continental Shelf, deepwater projects in Angola and the Gulf of Mexico, and the outrageous investments in tar sands in Canada are in danger.

Threatening the welfare state

The HSBC report bases it forecasts on slightly over a halving of the oil price. Economics Professor Hilde Bjørnland has researched the impact of low oil prices will have on the Norwegian economy.

She claims a halving of oil prices will lower the Oslo stock exchange by 30 to 40 per cent. The ripple effects will kick the legs out from under industry by industry in Norway and eventually hit household purchasing power. Norway’s GDP would fall by two to three per cent in the course of a year.

Government policy is thus a threat to the welfare state. Fortunately, the future does not have to be so gloomy: renewable natural resources give us every opportunity to establish ourselves as a progressive nation.

Renewable cheaper than fossil

It is not true that renewable energy is expensive. According to the International Energy Agency (IEA), fossil-based energy gets five times as much subsidy as renewable on a global basis.

There would have been no doubt about the profitability of renewable energy without these fossil subsidies.

Even with the predominance of fossil fuel subsidies, we have many examples where renewable energy outperforms its fossil counterpart: Europe's solar energy backing has out-competed gas in the course of just a few years.

Statkraft has lost billions on gas in Europe, but is still operating at a solid profit due to long-term investment in renewable energy worldwide. We see the same trend in Australia, where power from wind farms outperforms coal.

Supports a Norwegian climate bill

An increasing number of countries are now adopting their own climate legislation in order to create new jobs and position business for a sustainable future.

The WWF has got many supporters aboard regarding demanding a Norwegian climate bill. Last year’s cross-Party climate compromise states there should be an assessment as to how a climate bill can work in Norway.

It is now the government's responsibility to implement this public assessment.

Prime Minister Jens Stoltenberg rejoices over the oil revenues but forgets the risk.

A climate bill will help anyone in government to think quite differently: Making a plan for the transition to renewable society is the only way to prevent the Norwegian economy collapsing due to oil addiction.

Nina Jensen, generalsekretær i WWF Foto: WWF


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