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Week 29: Norway's oil and gas commitment is a punch in the face
In this issue: ▸ Norway is committed to oil and gas ▸ Norway’s climate targets are “insufficient” ▸ The Saudi Prince of Oil vows to drill ‘every last molecule’ ▸ And much more...
After 20+ years in this space I usually don’t get punched in the face when I read the news. However, recently this has happened a number of times, and just this past week I got two left hooks in a matter of days.
This was not by any means any extravagant reading or any off-the-shelf news that I came across. It was more like a casual Tuesday morning nothing-new and blue skies reading.
The first hook was steady, hard and landed on my jaw. I took a step back to find a solid ground. I read it again. And again.
After a couple of seconds I realised that this hook, for whatever reason, was not unexpected. It was there all the time, it had been lurking for many years. A self-righteous me, myself and I type of hook that explains more about the state of the world than many other things.
As Mike Tyson once said: “Everyone has a plan until they get punched in the face.” That was how it was. Violence can have many shapes and forms, this one was mental and this hook took me out for a couple of days.
Understanding why Norway, one of the most democratic countries in the world with a quality of life unreachable for 99.9% of the world population, has decided to tell rest of the world, politely and jolly, to fuck off (pardon my French) in relation to the climate emergency is the ambition of this newsletter.
Norway is committed to oil and gas
We start with the very article that threw a punch at me. It’s a FT piece about Norway’s prime minister who says that Norway remains committed to oil and gas. Here it is:
Essentially, Norway’s prime minister Erna Solberg insisted the country would continue to drill for oil and gas, ahead of a re-election campaign in which the future of the fossil fuel industry will be intensely debated.
But she refused to back calls from the International Energy Agency, the oil watchdog, to stop all new petroleum projects to keep climate change in check.
She insisted there was a continued need for Norwegian oil and gas, including to make hydrogen.
What felt like a blow above anything else is this quote: “There is a big change going on, and that will happen anyway. The question is just how fast it will go. We don’t intend to speed it up politically.”
I mean, well, what to say in this context? When reading this I started looking for real clues, real material that will point me in another direction, tell me that all of this is just pre-election positioning in Norway. But then I came across the news that Norway has awarded four exploration licences to seven oil companies, including three for the Arctic Barents Sea, even though fewer oil companies applied for the permits than in previous licensing rounds.
The awards were part of Norway’s so-called numbered licensing rounds that cover previously unexplored frontier areas of the country’s continental shelf, expanding the geographical reach of its oil and gas industry.
This is the Arctic, the same Arctic that world needs to keep intact from drilling.
Norway’s climate targets are “insufficient”
So what is really going on in Norway? According to environmentalists, the Norwegian oil drilling in Arctic waters violates the national Constitution’s Article 112 that states that the State has an obligation to take measures guaranteeing the citizens’ rights to a secure climate, including for the descendants.
Norway is home to the biggest hydrocarbon reserves in Europe, making it the world’s fifth largest exporter of crude oil, and its offshore drilling activities have been subject to a carbon tax since 1991. In 1999, these were increased, and in 2005 Norway joined the EU ETS. By 2018, around 80% of greenhouse gas emissions were taxed, with the highest tax charged on domestic aviation and mineral oil.
Since 1990, GHG emissions in Norway have decreased only slightly – by around 3% - reaching 51 MtCO2eq in 2019 (excluding LULUCF). Under current policy projections, Norway will not be able to reach its 2030 target, as GHG emissions are projected to reach 41-44 MtCO2eq by 2030 or around 14-21% below 1990 levels. This illustrates the need for further policies and measures to reduce emissions.
The Norwegian government is taking some big steps on climate, but it still has a way to go. In February 2020, Norway submitted its enhanced Paris Agreement target (NDC), which sets a target of reducing emissions by at least 50% and towards 55% below 1990 levels by 2030. If the European Union’s enhanced NDC sets a less ambitious target than Norway, the government intends to achieve the difference between its own target and that of the EU through voluntary cooperation under Article 6 of the Paris Agreement. The CAT rates this target as “Insufficient”. Read more here.
Using renewable energy to extract fossil energy
Norway, climate emergency, insufficient. Norwegian oil is better then Russian oil, from a climate perspective. It made me laugh although I still had a pain in my face.
The emission intensity of Norwegian oil and gas extraction is with 55 kgCO2 per tonne oil equivalent (toe) lower the world average of 130 kg CO2 (Gavenas, Rosendahl, & Skjerpen, 2015). The Norwegian carbon tax, which was introduced in 1991, is one of the factors that explains the relatively low emissions intensity (Gavenas et al., 2015).
In 2015, Norway was ranked sixth out of 50 countries in terms of the lowest emissions intensity of crude oil extraction. In 2018, 95% of electricity was generated by hydro power plants.
So Norway uses renewable energy to extract enormous quantities of fossil energy. Can you hear the fanfares and the music?
From fishing nation to oil nation
If you want to read more about the history of “Black Gold” in Norway and how it transformed a fishing nation into a power player, you can find it here.
When Norway began drilling for oil off its coast in 1969, it turned the country into one of the world's largest oil producers, and turned Norwegians themselves into, per capita, some of the world’s wealthiest people.
It also funded the Norwegian Sovereign Wealth Fund, the largest such fund in the world – which has recently divested from many oil and gas stocks. The head of the fund said it was not for climate reasons, but because the fund was overexposed to oil prices. You hear the music again.
Maybe Norwegian politicians and business leaders need a lesson in climate geography. From a climate change perspective, it is irrelevant where on Earth fossil fuels are burned. The emissions exacerbate the global climate emergency. There is no such thing as clean coal or clean oil, only varying degrees of dirty.
I would suggest that the Norwegian prime minister travels to Sweden and visit the southern parts of the country. This year the region has once again experienced severe water shortages and drought that hits hard on both people and profits.
She will not do that, of course. Instead, over the next four years, Norway’s petroleum production will increase by 40 percent.
Taste that one, let it land in the frontal lobe. How does it feel?
Oh, but 13% of Norway’s car fleet is electric…
For me, all of this ended in a feeling of being mentally beaten. It is all about money and about power. The climate emergency has by no means any impact on how Norway sees, perceives and acts as country in relations to its enormous impact.
It’s good that 50% of newly sold cars in Norway are all electrical vehicles (still only 13% of the country’s car fleet). It’s something you read and hear again and again. It is after all good PR for a country that tells the entire world to fuck off with their climate panic.
Once you get punched in the face, you know how it feels and you sort of know how it goes.
The Saudi Prince of Oil vows to drill ‘every last molecule’
Now onto the second hook which did not come by surprise. I almost waited for it to happen, and it did. It landed on my left cheek.
Here’s what the Saudi Energy Minister Prince Abdulaziz bin Salmin sees as his destiny: to ensure that the last barrel of oil on the face of the Earth comes from a Saudi well.
As he said in June during a private event organized by Bank of America, according to a person familiar with the meeting: “We are still going to be the last man standing, and every molecule of hydrocarbon will come out.”
Saudi Arabia’s climate plans (Intended Nationally Determined Contribution, or INDC), submitted to the UN earlier this month, state that if the consequences of the Paris agreement were to create an “abnormal burden” on its economy, then the largest oil exporter in the world will weaken its climate commitment between 2016 and 2020.
Yet the Saudi government still has no policies in place to begin – or encourage – this shift to renewable energy. The Saudi climate plans are highly inconsistent with the projected climate impacts for the region, an area where average warming is higher than the global average. In a 3-4°C world, three quarters of the country will suffer from excessive dryness by the end of the century.
Saudi Arabia is projected to move from being the tenth highest greenhouse gas emitter in 2012 to sixth place in 2030, and could become a net importer of oil by 2038.
This is hardly a commitment to tackling climate change. In fact, Saudi Arabia denies its key role in climate change even as it prepares for climate extremes.
When you read all of this and you see what it is going on, I get schizophrenic (apologies for using this term). It’s yet another “fuck off” to climate panic.
A heavyweight match of 12 rounds
So this week I/we got two punches, from two completely different places, but with the same reminder: that money rules the world.
With money comes power, and with power you get “fuck offs” in various shapes and forms. Even when politicians know, even when business leaders know, even when populations know and experience the harsh realities of climate emergency, we are still not who we could be.
I ended this week on the sofa mentally beaten, not for the first and certainly not for the last time. It’s a 12-round heavyweight match, and it is not about who you’re fighting, it is about why. Once we get the why, the how will follow.
That would be all for this week. Yes, there were some articles and news about ESG and this and that, but I was so beaten that I could not really dig into it this week.