Developments in the ocean industries during the Government’s term of office
Johan Sverdrup Phase 2. Photo: Equinor.
The Government’s ocean policy aims to unlock the potential for continued sustainable job and value creation in the existing ocean industries, and facilitate the development and growth of new ocean industries.
A high-tech oil and gas industry creates jobs across the entire country
The petroleum industry is Norway’s largest and most important industry when measured in terms of value creation, government revenues, investments and export value. It contributes to economic activity across the country, while also stimulating positive commercial, technological and social development. Over the past few decades, the industry has had a profound and positive impact on the mainland economy and the Norwegian State’s financial situation. It is estimated that the industry (excluding the supply industry) will account for 14 per cent of total value creation, approximately 40 per cent of total exports in 2021, and contribute approximately NOK 154 billion in net revenues to the Norwegian State in 2021, equivalent to 14 per cent of government revenues.26
We now have a world-class, high-tech, oil and gas industry. Learning effects and knowledge transfers also stimulate increased productivity and innovation in other parts of the business sector.
In June 2020, the Storting adopted temporary amendments to the Petroleum Tax Act. The purpose of the amendments was to stimulate investments in the petroleum industry, and contribute to maintaining the level of activity that supports the supply industry with jobs and technological development along the entire coast. Knowledge and technology developed in the oil and gas industry will not only be able to be broadly applied in other ocean industries, but also in other sectors such as medicine and onshore infrastructure projects.
Total oil and gas production in 2025 is expected to be at the same level as at the start of the 2000s, before production is expected to gradually decline. Investments until 2030 are expected to be slightly below the level seen in recent years. The Norwegian petroleum industry will continue to play an important role in the Norwegian economy over the next few years, however the industry is no longer expected to be an equally strong engine for growth up to and beyond 2030. Consequently, the favourable developments in productivity and wages that the rest of the economy experiences due to petroleum activities may decline. We cannot expect that one single new industry will take over from the petroleum sector as the growth engine.
Electric high-speed vessel in Oslofjord. Illustration: Aero design by Brødrene Aa.
Greener and smarter shipping for lower emissions
Since taking office, the Government has strengthened its commitment to green shipping. Norway led the negotiations, which resulted in the IMO’s 2018 climate strategy of reducing total emissions from international shipping by at least 50 per cent by 2050 compared to 2008. The Government is also committed to the ambition of halving emissions from domestic shipping and fisheries by 2030 compared to 2005.
Norwegian maritime players are now world leaders in green shipping, and international companies are establishing themselves in Norway to be part of these developments. There are presently more than 70 ferries in operation with fully or partially electric propulsion systems. By the end of 2022, it is expected that there will be over 80, which is close to one third of all ferries in Norway. MF Hydra, the first hydrogen-electric ferry, will be put into service in 2022, and the first ammonia vessel will be ready for operations in the offshore sector in 2024. Despite a great deal having been done, we are still in the starting phase of the transition to green shipping. The Government announced a new policy in the white papers on maritime policy27 and climate plan 2021-2030.28 Among other things, low and zero-emission criteria will be introduced for new tenders for ferries and high-speed vessels when this is feasible. Efforts are being made to develop policies that contribute to the green transformation for service vessels in the aquaculture and offshore industries, and climate requirements will be assessed for public procurements of maritime transport services. In order to contribute to the development and use of low and zero-emission solutions in multiple segments, in 2020 the Government established new schemes focussing on short-sea shipping. All of these measures are in line with the Ocean Panel’s conclusions relating to sustainable shipping.
ASKO and Norgesgruppen's autonomous and electric sea drone that will operate between Moss-Horten. Illustration: ASKO and Naval Dynamics.
Zero-emission high-speed vessels with batteries in the Oslofjord
In collaboration with Brødrene Aa, Slemmestad Brygge, and several regional partners, the shipping company Norled has been awarded NOK 30 million through Pilot-E29 to develop, build and operate battery-electric high-speed vessels that offer routes to urban areas along the Oslofjord.
Autonomous vessels is another area in which Norwegian companies are at the forefront of developments. Digitalisation has enabled the development of automation solutions for vessels and can primarily be used for remotely operated or more or less autonomous ships. Several geographical test beds and test arenas have been established in Norway.
When it was established in 2016, Trondheimsfjorden was the first test bed in the world for testing autonomous and remotely operated vessels. In recent times, the industry has promoted several projects based on new technology and digitised solutions for approval by the Norwegian Maritime Authority.
For example, ASKO and Norgesgruppen have established a shipping company and signed a contract for the construction of two autonomous and electrically powered vessels, which will operate along the Moss-Horten route, and be part of a fully electric transport chain.
Scandinavian Reach Technologies AS (ScanReach)ScanReach from Øygarden in Vestland develops wireless technology, sensors and software for digitalisation of the maritime sector. ScanReach has developed unique technology for sending data wirelessly through complex offshore steel structures. Combined with sensors and proprietary software, this enables full wireless connection and digitalisation onboard ships, offshore rigs and offshore wind farms. In May 2020, Innovation Norway contributed NOK 18.5 million to five innovation projects through extraordinary innovation grants. ScanReach has teamed up with six different pilot customers from shipping, rigs and offshore wind to further develop and test new solutions for personnel safety, fuel monitoring, and detection of emissions of hazardous gases.
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Illustration: Scandinavian Reach Technologies. |
Enova is supporting the project by contributing NOK 119 million. Customised rules are required in order to ensure that the regulations will not hinder technological development.
Norway was one of prime movers behind the International Maritime Organization (IMO)30 commencing work on a system of rules for autonomous vessels in 2018. In Norway, the Harbours and Waterways Act now allows for permits for autonomous coastal voyages for compulsory pilotage vessels, and the Norwegian Maritime Directorate is working on developing a function-based and technology-neutral regulatory framework.
Fishing boat near Nordnesøy. Photo: Johan Wildhagen, Norwegian Seafood Counci.
A sustainable seafood industry along the entire coast
Norway is an ocean economy rich in fish stocks, and is also the world’s foremost producer of Atlantic salmon and rainbow trout. The seafood industry consists of many large and small enterprises spread out along the entire coast, and some of the larger companies have also established operations in other countries. The large quantities of fish in Norwegian waters have always provided the country with food, employment and income. In 2020, the aquaculture industry exported approximately 1.2 million tonnes of seafood. The export volume for the fisheries sector was 1.5 million tonnes. In 2020, the value of these exports from Norway was NOK 105.7 billion.
In order to support municipalities that make areas available to the industry, the Government has established an aquaculture fund. In the first few years, much of the remuneration for allocating new licences went to the host municipalities and county municipalities.
2021 saw the introduction of a production tax of NOK 0.40 per kilogram of salmon, trout and rainbow trout produced. This will result in increased revenues to the municipal sector of approximately NOK 500 million per year from and including 2022. In addition to the production tax, the host municipalities and county municipalities will receive 40 per cent of the revenues from future auctions from and including 2022.
Salmon cages. Photo: Johan Wildhagen, Norwegian Seafood Council.
NCE Aquaculture
NCE Aquaculture is an aquaculture cluster in Nordland that focuses on increased value creation and innovation associated with commercial production of salmon and seafood for the global market. The cluster is a “locomotive” for further developing Norwegian aquaculture and related enterprises, and is a good example of the aquaculture industry gaining an increasingly stronger position in the region. The cluster is collaborating with Nord University, the regional processing industry and the authorities to develop biomarine ingredients for new, third-generation feed ingredients. The initiatives will use CO2 as an input factor and contribute to circular economic use of residual and waste products from the aquaculture industry for new bioproduction.
Open ocean aquaculture provides new opportunities
The aquaculture industry is undergoing rapid technological developments. These developments are being driven by both research communities and the industry’s need to solve environmental challenges such as escaping and sea lice. The authorities have used the allocation system to stimulate technological development through the 2013 allocation round involving “green salmon licenses”, and through the scheme for development licenses that was introduced in 2015. The latter contributes to significant innovation in the development of installations in more exposed waters and in the open ocean. These developments mean that more areas will become available for the production of seafood. The scheme has received a great deal of attention, and many applications have been received. The result of this will be many exciting and innovative projects, which can help promote the environment and area access. However, aquaculture production being able to take place in more exposed areas also entails new challenges relating to operations (including health, safety and environment), fish welfare and logistics.
Salmar ocean farm. Photo: Thor Nielsen, Innovation Norway.
Offshore wind provides national and international opportunities
New offshore industries are emerging in the wake of the petroleum industry. On 1 January 2021, the Government opened up the Southern North Sea II and Utsira North areas for offshore renewable energy. One of the objectives of Norwegian offshore wind policy is to support the ability of Norwegian exporters to compete in a growing global market, as well as facilitate sustainable resource management in the long-term. Due to both our strong maritime sector and experience from the petroleum sector, Norway has a competitive advantage when it comes to floating offshore wind. Hywind Tampen, which will be the world’s largest floating offshore wind farm, is under development. Hywind Tampen has recieved a grant of NOK 2.3 billion from Enova. The next step in the commitment to offshore wind will be to realise offshore wind on an industrial scale in order to achieve economies of scale. Norwegian companies are already involved in international projects. In 2019, Norwegian companies had sales of just over NOK 11 billion in the offshore wind market. Exports and activity abroad have increased by 50 per cent since 2018 and account for more than 80 per cent of sales. Norwep31 estimates that Norwegian companies can achieve international sales of NOK 50 billion in offshore wind by 2030.
Offshore wind farm. Photo: Allan O'Neil/Equinor
Supplying anchoring solutions for floating offshore wind turbines
MacGregor supplies anchoring solutions for floating oil and gas installations. The company is now eyeing opportunities in the rapidly growing offshore wind market.
MacGregor Norway AS, (formerly Aker Pusnes AS), is one of the world’s leading companies in the development, design and delivery of deck machinery and anchoring systems for ships and offshore installations. The company was contacted by Equinor in connection with the latter upscaling a pilot project based on one floating offshore wind turbine to a farm with five floating offshore wind turbines – Hywind Scotland.
The solution was to create as simple a system as possible for solving a relatively complicated task. The challenges are somewhat different from traditional floating oil and gas installations. The dimensions are slightly smaller, but the number is higher. There is a major focus on costs and strong efforts are being made to keep the levelized cost of energy as low as possible.
Carbon Capture and Storage cuts emissions and creates new jobs
Carbon Capture and Storage (CCS) may contribute to cutting emissions in industrial processes where currently no alternative technologies exist. CCS could also enable conversion of natural gas into zero-emission hydrogen gas. Extensive experience from oil and gas activities, 25 years of experience with offshore CO2 storage, a world-class supply industry and research community, all give Norway a leading position within CCS.
The Government’s “Longship” initiative, where CO2 will be captured from Norcem’s cement factory in Brevik and possibly from Fortum Oslo Varme’s waste incineration plant and permanently stored under the seabed on the Norwegian continental shelf, is a Norwegian large-scale demonstration project encompassing capture, transport and storage of CO2. Longship will demonstrate that CCS is safe and feasible, and will facilitate learning and reduce costs in subsequent projects. The initiative will establish infrastructure for transport and storage of CO2 with surplus capacity, and facilitate commercial development by preserving, transforming and creating new industries and businesses. In the future, the Norwegian continental shelf may play an important role in reducing CO2 emissions from both Norwegian and European industry. The Norwegian Petroleum Directorate estimates that it is possible to store more than 80 billion tonnes of CO2 in reservoirs on the continental shelf.
Technology Centre Mongstad (TCM) has been in operation since 2012. A wide range of technology suppliers have tested, or plan to test, their carbon capture technology at the centre. The CLIMIT32 Programme supports the development of several different technologies and solutions, which may contribute to making CCS more efficient and safer. Through extensive international work, Norway has also contributed to global developments in capture, transport and storage of CO2. Through CLIMIT’s participation in ACT (Accelerating CCS Technologies), Norwegian researchers can apply for funding for projects with international partners. In addition to this, a research centre for environmentally friendly energy (FME) has been established, which is dedicated to CCS.33
Northern Lights' CO2 receiving terminal in Øygarden municipality is a vital part of Longship. Illustration: Northern Lights.
Hydrogen may contribute to reduced emissions and increased value creation
The Government’s hydrogen strategy was launched in June 2020. The strategy paves the way for the continued commitment to hydrogen. A new roadmap for hydrogen specifies this commitment, and will be launched in a white paper on long-term value creation from Norwegian energy resources before summer 2021.
A key goal for the Government is to increase the number of pilot and demonstration projects in Norway, and thereby promote technological development and commercialisation. Shipping in particular is a relevant sector, where hydrogen enables zero emissions for voyages in which batteries are insufficient.
In 2020, the Research Council of Norway allocated more than NOK 150 million to 13 projects to develop hydrogen-based technology. PILOT-E has allocated NOK 70 million for zero-emission ocean-going transport solutions. Enova has allocated NOK 219 million to the development of two hydrogen-powered cargo ships under the project name Topeka. The cargo ships will sail between Stavanger and Kristiansund. These increasing allocations testify to the fact that hydrogen is becoming an increasingly more “market-ready” zero-emission solution. The next round of announcements for PILOT-E, with an application deadline in September 2021 and project start-up from January 2022, has zero-emission maritime short-sea shipping, and stakeholder coordination and strengthening of hubs for hydrogen, as two of the three thematic areas.
In the national budget for 2021, the Government has followed up the hydrogen strategy by allocating NOK 100 million to infrastructure and market development for hydrogen. These funds will support the development and establishment of necessary infrastructure, solutions for competitive and energy-efficient supply chains and hubs that facilitate commercial use of hydrogen.
Norwegian participation in IPCEI (Important Projects of Common European Interest) for hydrogen will be an important part of the Government’s roadmap for hydrogen. The link to the EU’s hydrogen initiative may also be important for Longship, which enables large-scale hydrogen production from Norwegian natural gas using CCS.
Topeka will be the world's first zero-emission hydrogen-powered cargo ship and will sail between Stavanger and Kristiansund. Illustration: Wilhelmsen and LMG Marin.
Mineral activities on the seabed open up new business opportunities
Mineral activities on the seabed may become a new and important ocean industry for Norway. These activities will only be permitted in Norway if they can be carried out in a prudent manner. Norwegian industry players are well positioned to become suppliers of knowledge and technology to a future seabed mineral industry, including subsea technology, such as designing equipment and carrying out advanced subsea operations. There will also be demand for maritime services.
Commercial activity related to seabed minerals is at a relatively early stage, however several players are showing interest in such activities on the Norwegian continental shelf. Greater development of renewable energy sources and increased digitalisation of society are particularly strong drivers of a growing demand for metals found on the Norwegian continental shelf.
Digitalisation, technology and the transfer of skills create synergies between ocean industries
Norway’s established and emerging ocean industries operate partly in harsh weather environments, with strong winds, high waves and freezing temperatures, and have developed technology and solutions that are able to withstand these types of challenges. New technological solutions enable learning across industries and allow for more flexible use of labour. The emerging industries build on the expertise and technology developed in established ocean industries, particularly the supply industry to the oil and gas industry. The green transition provides new opportunities for restructuring, innovation and growth across industries.
Digitalisation and automation provide opportunities for the development of new technology in all parts of the ocean economy, and may impact on trading patterns, production methods, localisation, operations and work methods. Increased digitalisation also means that more data is produced from the ocean industries than before. The use and sharing of data between stakeholders enables value chains to be streamlined, increases operational reliability, and facilitates more effective supervision. Digitalisation and automation may also contribute to more climate and environmentally-friendly operations. This provides opportunities for renewing and further developing business models, skills and regulations, and represents market opportunities for Norwegian technology suppliers.
Digitalisation and green shipping shall be assigned particular emphasis, and cooperation and sharing of experiences with associated and ocean-related education programmes, shall be facilitated when the work on strengthening maritime expertise is transferred to the Norwegian Agency for International Cooperation and Quality Enhancement in Higher Education (Diku) in 2022. In 2020, Diku allocated NOK 13.5 million for increased digital expertise in the ocean industries.
OPS Sjømat
(PPP (Public Private Partnership) Seafood) - value chain aquaculture was established in August 2020. This is a partnership between the Norwegian Seafood Federation, the Norwegian Seafood Associations and the public sector (through the Ministry of Trade, Industry and Fisheries), which has the goal of being a driving force for digitalisation and data sharing in the aquaculture industry. The goal is to develop and use digital solutions as tools to increase value creation in the industry, while at the same time providing the authorities with data that is necessary for good and efficient management.
Fish farming - spotted wolffish fry. Photo: Per Eide Studio, Norwegian Seafood Council.