Our Most Burning Challenges: Climate Change and Energy Security – Why and How the EU and Norway Care

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The Foreign Minister’s words of welcome

President Barroso, Members of the Storting, Ambassadors, ladies and gentlemen,

I am glad to see more than 600 participants at this conference on Climate change and Energy security – Why and how the EU and Norway care, and I am particularly honoured to welcome President José Manuel Barroso.

Mr President, it may be hard to believe, but according to our record, your visit to Norway is the second official visit by a President of the European Commission. Thus, for a European nation with close ties to the European Union – this is an important occasion.

I remember that Mr Jacques Delors was here in 1986 on an official visit, and that he also came to Oslo at the very end of 1988, I think, but – if my memory serves me – this was not an official visit. His visit then took place in the run up to the launching of the negotiations on the Agreement on the European Economic Area (EEA). At that time, some countries wanted to create a comprehensive agreement between “the EFTA 6” and “the EU 12” to be an intermediary step towards membership for the EFTA states. Well – for some – it turned out that way. For others – like Norway – the EEA has been the backbone of our relations with the EU ever since.

To put it briefly: the EEA ensures Norway’s participation in the internal market, with free movement of persons, goods, services and capital – as it provides a level playing field for Norwegians in the EU and for EU actors in Norway.

Besides, although membership of the EEA is quite different from full EU membership, the EEA has proved to be a dynamic agreement. Our extensive cooperation with the EU has expanded as new EU member states have been included, and as new sectors have been covered. One such sector is the environment and the fight against climate change, which is the very topic of the 2008 Conference on Europe.

President Barroso, you have been Prime Minister in Portugal, a most favoured travel destination for many Norwegians, but also an important trade partner for other businesses and industries. Both our countries face the Atlantic Ocean, and shipping and fishing have for centuries been vital sectors in both our economies. More importantly, we also share a desire to look beyond our immediate neighborhood, to develop ties with Africa and Latin America, and an engagement for peace in the Middle East. 

Here, today – and since 2004 – you speak in the capacity as President of the European Commission, appointed by the governments of the EU Member States. 

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The Foreign Minister’s speech 

Mr President, Excellencies, ladies and gentlemen,

First of all, thank you very much for your inspiring and thought-provoking address, Mr President.

I said earlier that the cornerstone of Norway’s relations with the European Union is the EEA Agreement.

This agreement is only one facet of our close cooperation and interaction. What is of fundamental importance is that Norway and the EU share a common culture and history, and a common set of basic norms and values, for example international cooperation based on a legal framework and shared rules, with respect for human rights, democracy, transparency and strong participation of civil society. A Europe where we face and address challenges together.

In a time of globalisation, in a world of increasing interdependence, we need more binding cooperation – not less. And dealing with today’s topic underlines this point.

We are here to address two burning issues of our time: energy security and climate change. They are global challenges and they are interlinked.

And I agree with you, Mr President, when you say that responding to the challenge of climate change is the ultimate political test for our generation.  

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There are divergent views in this country on the desirability of Norway becoming a member of the European Union. What is not contested, though, is the paramount role of the EU in tackling the global challenges of climate change and energy security.

We saw that at Bali. We would not have had a roadmap towards the next milestone at Copenhagen without the EU.

The importance of the EU’s role is not only a function of its size – encompassing as it does 27 member states and nearly 500 million consumers – the EU is also the world’s largest importer of energy and the second biggest consumer.

The importance of the EU’s role is also that EU has set an example, giving force to its convictions, by adopting legally binding targets in the fight against climate change.

This is the great strength of the EU: the ability to develop rules and standards that apply to a group of states. And to have adequate institutions to enforce them.

The far-reaching package of initiatives aimed at addressing climate change and promoting renewable energy that your Commission, Mr President, put forward on 23 January, has been characterised by experts as one of the most radical sets of proposals to come out of Brussels – on a par with the monetary union.

And this we welcome. Many of the proposals will eventually be applied in Norway once they are incorporated into the EEA Agreement.

We are already linked to the EU Emissions Trading Scheme (ETS). Because the EU cooperation is binding, the ETS is regarded as the most effective scheme for achieving major emission reductions. And because the EU is such a powerful economic and industrial entity, it has the potential to set new global trends.

In my view, this is of tremendous political importance. Europe is paving the way.

Gradually, we may also see the United States developing a system of emissions trading. Maybe we will see a similar development in Asia. My point is this: Europe is in a unique position regarding the further development of what is one of the most crucial mechanisms available to reduce emissions.

The proposals for expanding the scope of the ETS are in line with Norwegian thinking. We have already decided to make a larger share of emission allowances available through auctions. We support the inclusion of air transport and other sources of emissions in the scheme. We have also taken upon ourselves to cap our emissions at a level around 20% below our emissions level in 2005.

The ETS is the world’s largest cap-and-trade programme. And although its first phase has been a learning phase, its very existence was important at Bali. It showed the G77 and China that Europe will deliver real reductions at home.

I can assure you that on the road towards Copenhagen, Norway will do its part. Norway shares the vision of creating a low-carbon global economy.  

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Recently, the Norwegian Government and the majority of the opposition parties reached an extensive agreement on Norway’s future climate policy. The policy is built on three pillars:

Firstly, Norway aims for a 30% reduction in carbon emissions by 2020 as compared to our emissions in 1990. Two-thirds of the reduction will be made in Norway.

Secondly, by 2012 – the end date of the first Kyoto commitment period – we aim to reduce our emissions by an additional 10% on top of our initial Kyoto Protocol commitments.

Thirdly – looking further ahead – our overriding goal is to make Norway carbon-neutral by 2030. We will offset our emissions with measures taken either nationally or internationally.

Norway’s emissions of greenhouse gases account for 0.2% of global emissions. In terms of figures alone, our emission cuts will not represent the watershed that is needed.

However, as an energy-rich nation, we must shoulder our fair share of the burden. We cannot expect countries like China, India or Nigeria to take part in the international efforts to reduce greenhouse gases if countries like Norway do not do our part.

While carbon markets are a necessary step in a transition period, they are not sufficient in themselves. Governments also have a crucial role to play in setting regulatory standards and in supporting low-carbon research, development and deployment.

The Norwegian Government has announced that it will significantly increase funding for climate research in the course of 2008. Here we have to look at the links between the fight against climate change and energy security: the theme of today’s conference.

As you said, Mr President, when you spoke at the World Energy Congress in Rome last autumn: “The most important issue for global security and development, the issue with the highest potential for solutions but also for serious problems if we do not act in the right way, (it) is energy and climate change” – i.e. the link between the two.

This is exactly the point that places Norway at the crossroads.

We are among the world’s largest exporters of oil and gas. We have an annual oil production of approximately 2.5 million barrels per day and an annual gas production of 85 billion cubic metres. Early in the next decade, our export of gas – almost all to Europe – will have increased by 50% to an estimated 130 billion cubic metres. Today, Russia currently exports approximately 150 billion cubic metres per year to Europe.

Exports from Norway will account for nearly a third of natural gas consumption – or enough to cook every third meal in kitchens in France, Germany and the United Kingdom.

As a reliable and sustainable supplier Norway is part of the answer to Europe’s need for energy security in the future. You could say that we are an “external provider from within”.

But, then at the same time you may ask – and you should ask – isn’t there a dilemma here? How can we – and why should we – increase our energy production, which involves greenhouse gas emissions, and at the same time contribute to global climate security?

My response to this legitimate question is this: yes it is a paradox, but it is not only Norway’s paradox, it is the world’s paradox.

Because this is the challenge – we need to change the world’s energy mix.

But regardless of the breakthroughs made in renewable energies, the world will continue to need fossil fuels for decades to come. Demand is even likely to increase.

The International Energy Agency (IEA) estimates that fossil fuels will remain the dominant source of energy up to 2030. Oil, natural gas and coal will continue to account for more than 80% of overall energy demand more than 20 years from now. During this same period, global energy demand is projected to expand by around 50%.

Again, Norway’s dilemma is therefore also Europe’s – as it is the world’s – dilemma. And we – Europeans – have to tailor our approach in such a way that it can form a constructive part of the world’s approach.

Norway will seek to ensure that the production and use of Norwegian oil and gas involves lower emissions compared with the production and use of energy from other suppliers. If we were to reduce our exports of natural gas today, it would not be wind power that would be the substitute – it would be coal.

So we need a combination of political, economic and technological measures. And, of course, within a framework of international cooperation.

The EU is making a big difference in the global process towards a new binding international agreement on addressing climate change. Norway is striving to do its part, but we will never be able to tip the balance in this global negotiating process.

Where Norway can make a difference both for Europe’s – and for the world’s – approach to climate change is in the areas where we have unique experience and expertise.

Let me first turn to the Norwegian petroleum sector.

I was a young boy at the time of the first UN conference on the environment in Stockholm 35 years ago, and since then generations of Norwegians have been well schooled in sustainable development.

Norway was the first country to introduce a CO2 tax on petroleum production in the early 1990s. This attracted a lot of attention and debate. What we have seen, however, is that environmental regulations and taxation have spurred technological innovation and made our industry more – not less – competitive in world markets.

Today, the Norwegian continental shelf is the most energy-efficient petroleum producing region in the world with CO2 emissions that are less than a third of the global average per unit produced.

Where we really could make a difference that would matter, is in the field of technological advances. The IPCC has found that 20% of the answer to the climate change challenge needs to be met through capture and storage of CO2. We introduced the first generation of this technology in the North Sea more than ten years ago. For years, we have successfully stored CO2 under the Sleipner gas field off the west coast of Norway.

Now we have set the course to take decisive steps forward in this direction. What is new is the ambition of applying the technology to new areas and on a wider scale.

Looking towards the future, we need to develop a technology for capturing CO2 from gas- and coal-fired power plants, from the raw nerve centre of the modern economy – the production of electricity.

According to the IEA, carbon capture and storage (CCS) could reduce CO2 emissions by 20–28% by 2050. UNDP has underlined that CCS holds out the promise of coal-fired power generation with near zero emissions. It is considered a “key break-through technology”.

But to make a viable technological breakthrough, the costs have to be brought down. Significantly.

Norway is in the process of establishing pilot projects – at Mongstad and Kårstø – with a view to capturing and storing CO2 from full-scale gas-fired power plants. These are very challenging projects, both technologically and financially.

We will continue to be a front runner in developing these technologies. And we will deliver.

I am very pleased that the Commission’s energy and climate package recognises the need for both public and private investments in new technologies. Your proposals on energy efficiency have the potential to deliver a double dividend: reducing CO2 emissions and cutting energy costs. We look forward to exploring the potential for further cooperation with the EU in this area.

Through the EEA Financial Mechanisms we already contribute to greenhouse gas reduction through energy efficiency measures and increased use of renewable and sustainable energy in the new member countries of the EU.

Secondly, let’s turn to shipping. And you mentioned the EU’s Maritime Strategy, Mr President. Norway has been a major player in the shipping industry for 150 years, and remains one of the top shipping nations of the world – now the 4th largest measured in tonnage.

The Norwegian Shipowners’ Association recently announced the goal of zero emissions for the industry. Their conviction is that this ambition can be combined with securing the competitive edge.

This supports what the EU and Norway keep stressing internationally: strong action to fight climate change and a low-carbon economy that is compatible with growth and prosperity.

Thirdly, you mentioned, Mr President, the link between development and climate change, and the need to lead the way. Norway had decided to contribute substantial funds to assisting developing countries in combating deforestation. At Bali, Prime Minister Stoltenberg announced that Norway would allocate some NOK 3 billion annually for this purpose – or EUR 300 million.

Efforts to reduce deforestation is a cost-effective way of reducing greenhouse gas emissions. Norway will seek to ensure that such measures are included in international agreements. Action is urgently needed. Natural forests in South East Asia are disappearing at a rate of the equivalent of 36 football pitches per minute. Deforestation accounts for some 20% of greenhouse gas emissions.

Norway will assist developing countries in other areas as well. There is broad agreement that the impact of climate change is likely to hit developing countries – and particularly the poorest in these countries – disproportionately hard. Later this week – here in Oslo – together with UNDP, Norway will hold a conference on how to prevent and respond to natural disasters and climate change with particular focus on developing countries.  

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Mr President, ladies and gentlemen,

Today’s topic is energy and the environment. The EU and Norway are working closely together here. The topic illustrates that well.

There are so many other fields where we are partners as well. Europe’s challenges are also our challenges. Now, our eyes are fixed on the Balkans. The EU and NATO will have key roles to play in maintaining stability. Kosovo needs development, security and stability. And Serbia needs to be welcomed on the fast track to European integration. 

In today’s Europe, burdens must be shared, commitments kept, and challenges faced – together. This is Europe’s way. And it is Norway’s way, too.

I believe that in the areas where Norway has unique expertise and experience, we can make a real difference for Europe’s – and for the world’s – approach to climate change. And in the areas where we have strong historical ties – such as with the peoples in the Balkans – we offer our experience to make a difference and to promote peace on our own continent.

And now, Mr President, as you leave Oslo for Svalbard – as far north in Norway as you can get – I hope you will bring with you our commitment to work together with the EU to find solutions to what can be called the ultimate moral and political challenge of our generation.

Because – as Nobel Laureate Al Gore reminded us here in Oslo in December – “political will is a renewable source”.