Press Release

30.04.98

Norwegian government proposals for following up the Kyoto Protocol

On 23 April 1998, the Norwegian Government submitted a Report to the Storting on national implementation of the Kyoto Protocol and a Proposition to the Storting on green taxes. These provide a good starting point for a coherent Norwegian climate policy. It will be a major challenge to develop patterns of production and consumption that can reduce emissions of greenhouse gases, and we can only succeed in this task if all sectors play their part. All industrial countries will inevitably have to respond to the threat of climate change, and early response can also give Norwegian industry a clear competitive advantage. It is therefore important to start as soon as possible, said Minister of the Environment Guro Fjellanger. In the Government’s view, the two planned 380 MW gas-fired power plants should not be built.

In Report No. 29 (1997-98) on Norway’s implementation of the Kyoto Protocol, the Government proposes a set of policy instruments as the first step towards meeting Norway’s commitment under the Protocol. The Government’s strategy also includes a long-term perspective to allow for a response to more stringent requirements at a later date. Within a relatively short space of time (2-5 years), the Government proposes to introduce instruments that will act as an incentive to carry out the least costly national measures to combat climate change. The Government considers it important to apply the polluter pays principle. The overall use of policy instruments must also be efficient, to ensure that Norway’s commitment is achieved, and as cost-effective as possible. Taxes, licensing requirements, voluntary agreements and grant schemes for new and improved technology are instruments that will be used to reduce emissions. In addition, active efforts will be made to find joint international solutions. The Government plans a gradual expansion of the scope of its policy instruments, and will return to this matter, for instance in its report on the state of the environment.

Norway’s commitment

According to the Kyoto Protocol, Norwegian emissions of greenhouse gases may not be more than one per cent higher in the period 2008-2012 than in 1990. In practice, this means that Norway must reduce its emissions by about six per cent from the 1996 level to meet its commitment. Without the introduction of new measures, it has been calculated that emissions will rise by 23 per cent from the 1990 level in this period. According to these calculations, Norway must reduce its proposed emissions by a total of 12.3 tonnes by 2010. If the instruments proposed in the Report to the Storting are introduced and Norway refrains from building the planned gas-fired power plants, the growth in emissions is expected to be reduced by 5.6 - 7.1 million tonnes CO2 equivalents. Operation of the two planned 380 MW gas-fired power plants (at Kårstø and Kollsnes in Western Norway) will result in emissions of 2.1 million tonnes CO2 in 2010.

If the planned gas-fired power plants are built, it will be even more difficult for Norway to meet its commitment under the Kyoto Protocol. Thus, the Government cannot recommend their construction using currently available technological solutions. Instead, the Government intends to give greater priority to energy efficiency measures, renewable energy sources and the use of heat pumps.

Taxes

The most important climate policy instrument will be a shift in the burden of taxation towards green taxation. This includes raising taxes on pollution and environmentally harmful forms of energy and reducing taxation of labour and income. Taxation will be the most important instrument for the reduction of CO2 emissions. The Government proposes the introduction of a tax of NOK 100 per tonne CO2 in sectors that are currently exempt or where the tax rate is lower than NOK 100 per tonne. Companies in the processing industry, the fishing fleet and air transport will be compensated for the tax. The compensation paid to the processing industry and the fishing fleet will be gradually reduced. No compensation has been proposed for other sectors. Current CO2 taxes on petrol, mineral oil and for the petroleum sector will continue to apply.

To limit methane emissions, a tax of NOK 300 per tonne waste delivered for final disposal (by incineration or landfilling) is proposed. This will be differentiated to encourage energy recovery from waste. It may also be appropriate to impose a tax on HFCs to encourage the use of environmentally-friendly substitutes for CFCs (which deplete the ozone layer).

Other instruments

Taxes will be supplemented by other instruments. The Government proposes that major point sources of greenhouse gas emissions should be subject to licensing requirements, as is the case for other types of air pollution. A catalogue of measures to reduce emissions will be drawn up to ensure that emission reductions are made as cost-effectively as possible. Licensing requirements can be introduced in order to implement low-cost measures that are not carried out as a result of taxation. Where appropriate, the Government intends to enter into voluntary agreements with the industrial sector. This is of particular interest in sectors where agreements are expected to give greater reductions than the use of other instruments, where the number of enterprises involved is limited, or where new technology needs to be developed. Other countries are evaluating national systems for tradable quotas. The Government will also review this approach.

The Government will also encourage research and development, pilot projects, and investment in energy-efficient technologies and the introduction of innovative uses of energy to the market. Information, further education and the development of expertise will also be given priority. The Government has appointed a committee to analyse Norway’s energy balance up to the year 2020, which is to submit a report in June this year. The Government will follow this up with a Report to the Storting on energy policy, which will deal with the necessary instruments and measures to meet the challenges in the energy sector.

The public sector is to take substantial steps to reduce energy use. This will be organized through the project "Green State". Norway’s cross-sectoral environmental policy will also become more active with the introduction of sectoral environmental action plans and a national result monitoring system, involving regular reports on the state of the environment. This will be an incentive to other sectors to take responsibility for energy and resource use, and will clarify the distribution of responsibilities. The Government also intends to give the municipalities more responsibility for planning energy use and heating solutions, for instance through Local Agenda 21 work.

Flexible implementation mechanisms

The Government will also cooperate with other countries in order to fulfil its commitment as cost-effectively as possible using flexible implementation mechanisms. This can be done by means of joint implementation projects with other industrial countries, by financing emission reductions in developing countries and by means of trade in emission quotas. The use of such methods shall be a supplement to national measures. The guidelines for use of flexible implementation mechanisms must be further clarified internationally. The Government would like to see active participation by Norwegian business and industry in such activities, but adaptation to national policy instruments must be further reviewed.

Contacts:

Adviser Anne Beate Tangen, tel. + 47 22 24 60 33

Head of Information Eva Nordvik, tel. + 47 22 24 57 18