Norway urges EU to spell out its long-term energy goals

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Business leaders from Norway’s energy sector urged Europeans to spell out their climate and energy goals, saying clearer policy objectives could provide a basis for the Scandinavian country to act as a stabiliser for the EU energy market.

European energy policies have a profound impact on Norwegian businesses even though the country does not belong to the European Union, according to Tore Ulstein, president of the Confederation of Norwegian Entreprises (NHO).

At an NHO conference in Brussels yesterday (1 October), Ulstein spoke of the Norwegian economy's dependence on the energy sector, which represents 30% of the country's GDP. As much as 85% of Norway’s exports to the EU is energy or energy-related products, he said.

Norwegian enterprises have voiced scepticism of the EU's climate ambitions, which were scaled down in the aftermath of the 2008 financial crisis. Furthermore, the large scale exploitation of shale gas in the United States has brought down the price of coal, encouraging its use over less-polluting gas, Ulstein said.

“This [the use of cheap coal] is influencing Norwegian’s gas sales, and Europe’s climate ambitions."

A ‘stabiliser’

Ulstein added that Norway could act as an energy “stabiliser” or “buffer” for Europe if it was better integrated into the EU energy market.

He called for the European Union and Norway to “build a bridge”, pointing to the discrepancy between speed of development of high-voltage transmission infrastructure and the building of solar farms or wind turbines.

Germany's transmission capacity had also not kept up with the development of renewable energy, he said, adding that imbalance was difficult to avoid.

“From 2018 added [power] production capacity could go to waste,” the Norwegian warned.

But when there is no wind in the north of the European Union, Norway’s hydro-storage capacity could provide a potential solution, he said. Some 98% of Norway’s electrical production comes from hydropower, and the country has predicted a big surplus of electricity, which could be redirected to the rest of the continent.

“If you turn out the hydropower turbines in Norway when there is surplus of energy in the northern part of the EU, Norway could rely on EU wind. And it could turn on its hydro-turbines when the wind drops,” he said.  

But the first stage should be to improve usage of the existing infrastructure, which should be prioritised, he stressed, saying a completed energy market should be at the heart of this transition.

But Europe needs to maximise the potential of its existing infrastructure and establish a single market for energy.

“Completing the EU internal energy market is a major goal and Norway can be a steady partner in this process,” Ulstein said.

Kjetil Hove, vice-president for operations at Statoil, the Norwegian oil and gas giant, said that the European Union could count on gas supply from Norway for many years to come.

EU 'lacks sense of urgency'

“The challenge is the lack of sense of urgency,” Hove said, calling on the EU to make a decision on its energy mix for 2030.

But energy investments take time, he conceded. Hover was responsible for the development of a gas field that was discovered in 1979 but not exploited until 1996, meaning that it took at least 15 years to reach the market.

Industry officials say that huge investments are required to tap remaining large oil and gas resources in the Barents Sea.

Hove said that decisions on the EU's 2030 energy mix should be made “today”.

The European Commission said that it was up to each company to take their own commercial decisions based on risk analysis. Pressed by EURACTIV to elaborate, the director general of the Commission’s energy directorate, Philip Lowe, explained that it was not the role of the EU to say how many trillions of cubic meters of oil and gas would be needed in 2030, and that the market approach would continue to prevail.

Hove called for the Commission to make clear to the Norwegian gas sector how far it would push its climate policy and whether it would continue to subsidise the renewable energy sector.

Norway is the world’s third largest exporter of oil and gas after Saudi Arabia and Russia. Norway is a member of the European Economic Area Agreement. It applies most of the EU acquis including legislation on the internal energy market and related flanking policies (competitions, environment, consumer protections, research and development programs etc.)

Since the discovery of North Sea oil in Norwegian waters during the late 1960s, exports of oil and gas have become very important elements of the economy of Norway. With North Sea oil production having peaked, disagreements over exploration for oil in the Barents Sea, the prospect of exploration in the Arctic, as well as growing international concern over global warming, energy in Norway is currently receiving close attention.

At a conference last June the chief economist for the British Petroleum Group said that Norway overtook Russia as the main supplier of the EU’s natural gas in 2012, a first for the Scandinavian country.

>> Read: Norway overtakes Russia as EU's biggest gas supplier

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