Climate Change. Challenges and Commitments

Ladies and gentlemen,

This week is the week of Nobel Prizes.

This week last year in Oslo, we celebrated the Nobel Peace Prize awarded to the scientists of the IPCC and Al Gore, the political campaigner who has dedicated himself to spreading insight into the inconvenient truth about climate change.

No politician should need to spend much time arguing whether climate change is a threat. We know it is. The point of departure for any politician, any minister and any government is that climate change is happening, and that if we fail to act, the consequences will be disastrous.

In short, global warming is the greatest political and moral challenge facing our generation. Lord Stern has provided us with the same insight using an economist’s logic and reasoning. In addition he has made a crucial contribution to our understanding of what we need to do in order to both curb emissions and at the same time adapt to the climate change that is already happening as we speak.

Allow me to share with you a few approaches from a Norwegian standpoint – i.e. from my perspective – to this dual challenge of mitigation and adaptation. Being in Stockholm, I am tempted to quote the words of the great Swedish statesman and internationalist the late UN Secretary-General Dag Hammarskjöld: “Never look down to test the ground before taking your next step; only he who keeps his eye fixed on the far horizon will find the right road”.

We know the horizon of the IPCC. We also know that the way we choose to provide the energy needed by the world economy will determine our ability to find the right road.

We recently learned about the energy horizon presented by the IEA, the International Energy Agency. If we believe in the findings of the IPCC and the IEA’s scenarios for future energy consumption, we know we are heading for real trouble.

According to the IEA, global demand for energy will increase by 45% by 2030, because national economies, despite the current downturn, will continue to need energy to grow, to provide jobs, to create welfare, to combat poverty. Especially to combat poverty and put hundreds of millions of people onto the ladder of development. No government will decide against that.

The Brundtland Commission put it very clearly back in 1987: “There is no way the rich countries can turn to the developing world and say: Sorry, we filled up the waste baskets...”. The developing countries will – and have the right to – develop and to expand.

If no new policies are introduced and if the energy mix remains the same as today, global average temperature is predicted to increase by six degrees Celsius by the end of this century. The result will be a global disaster.

In order to prevent this, we must cut global greenhouse gas emissions by between 50 and 85% by 2050. Probably closer to 85% than 50%.

And here is my first point: cutting emissions is key. But cutting energy consumption, beyond what can be saved through improved energy efficiency, is extremely hard to envisage – and not necessarily desirable.

The key is to reduce emissions.
Here Sweden has a compelling story. For a long time, the link between economic growth and rising emissions was regarded as a law of nature.

In the world as a whole, economic growth is still becoming more, not less, carbon intensive. But for the last eight years, Sweden has reduced emissions significantly while maintaining economic growth.

Sweden started on the road towards the clean energy horizon many years before climate change was raised to the top of the international agenda. Over a period of more than 30 years, Sweden has pursued a policy of energy diversification.

The transition to renewable energy sources has spurred innovation and created new jobs and at the same time improved the environment. This successful approach is an inspiration to my own country and to the rest of the world.

Renewable energy has a great potential in efforts to reduce global greenhouse gas emissions. This sector has a two-digit growth rate, but let us not forget that it has started from a very low level. If current trends continue, renewables may be able to provide about 20% of the global cuts that we must achieve by 2050.
But renewables will only provide us with part of the solution. In the foreseeable future, fossil fuels will account for the largest share of the global energy mix. According to the IEA, 80% of global energy demand will be met by fossil fuels in 2030. About the same mix as today.

A consumption growth of 50% with an energy mix in which fossil fuels continue to account for 80% is clearly not sustainable.

So we need to focus serious attention on how we can cut emissions from fossil fuel consumption, how we can produce electricity from oil, gas and coal with significantly lower emissions.

In short, we need to develop technologies that can capture and safely store CO2.

If we are to stabilise the concentration of CO2 at a sustainable level, preferably one that limits global warming to two degrees Celsius, carbon capture and storage, CCS, is an imperative. Pure and simple.

Think about this: the global reserves of coal are estimated to last for more than 250 years. In the years ahead, demand for coal is expected to rise more in absolute terms than demand for any other fuel. There is little doubt about that.

Recent studies suggest that carbon capture and storage technology could reduce CO2 emissions from coal- and gas-fired power plants by between 85% and 95%. According to the IPCC, carbon capture and storage could contribute 15–55% to the overall mitigation effort this century. It could also reduce the costs of stabilising CO2 concentrations by up to 30%.

CCS technology will have to be installed in thousands of coal- and gas-fired power plants worldwide. We need to develop this CCS technology further, bring it up to scale and make it available – across the globe.

We are not starting from scratch. Norway, the world’s second largest exporter of gas, has gained experience that brings hope.

Let me share some aspects with you:

We have long experience of storing CO2 in natural geological structures under the seabed. At the Sleipner Field, off the west coast of Norway, a total of 10 million tonnes of CO2 has been stored 1000 metres under the seabed during the past 12 years.

This came about because we put a tax on CO2 in 1993. We created real incentives for the petroleum industry to limit emissions. Industry turned around and came up with an answer: capture of CO2 and re-injection into the reservoirs.

The data from the Sleipner project show no unexpected movement in the storage reservoir and no sign of leakage. Multinational research projects, financed by the EU, have confirmed that the CO2 is confined securely within the storage reservoir. This reservoir is huge.

The Norwegian Government has taken this one significant step further. At the Mongstad refinery close to Bergen, we are testing the viability of our plans for a full-scale plant producing electricity with gas without emissions - with capture and storage of CO2 to the geological reservoirs under the seabed in the North Sea.

Vattenfall is one of our main partners at the Mongstad test centre. We are building on our experience from Sleipner and we aim to take it further and have an industrial-scale carbon capture facility operational by 2014. The goal is to capture 1.3 million tonnes of CO2 per year from a combined heat and power plant, and an additional 1.1 million tonnes from a refinery. These numbers may seem small, but they are significant.

In 2008, Norway started the world’s first CO2 injection project. CO2 is separated from natural gas at an onshore liquefied natural gas plant and then piped back 160 km to the Snøhvit field in the Barents Sea, off Hammerfest, where it is injected and stored in a geological formation 2600 metres under the seabed. When full production is reached, 700 000 tonnes of CO2 will be captured and stored annually. Statoil and BP are doing the same off the coast of Angola.

This is, of course, an expensive undertaking. It will not happen if left to the markets alone. It took a lot of explaining to open the eyes of EU regulatory bodies to the need for state aid. Without state aid the necessary research will not be carried out. But now we have been given the green light. If we succeed, this project will be a major achievement.

What will provide real hope will be if we are able to take the next major step. The Norwegian CCS projects will only be really meaningful if they help to make the technology commercially viable and financially and technologically accessible to emerging economies, especially those primarily coal-based.

Earlier this year, the G8 countries stated that 20 large-scale CCS demonstration projects need to be launched by 2010, with a view to broad commercial deployment by 2020. That is a clear and timely political signal.
 
EU leadership will also be crucial. The EU’s objective of launching up to 12 pilot projects is also a clear message. We hope to see Mongstad among these 12 projects.

Financial mechanisms and incentives are needed to commercialise this key technology. The Kyoto Protocol encourages CCS projects, and hopefully the ongoing UN Climate Conference in Poland will finally approve the criteria for CCS projects in the Clean Development Mechanism.

Both in Norway and Sweden, projects are under way to improve the technology and reduce the costs of carbon capture. At Värtaverket here in Stockholm, Swedish and Norwegian companies have been working together on a pilot project to test techniques for CO2 capture. Another important project is running at the power plant in Karlshamn. I believe that Norway and Sweden can both gain a lot by pooling our resources and technological skills to make progress on CCS.

Capturing the CO2 is one thing. Transporting and storing it is another.

Successful deployment of CCS worldwide will depend on environmentally sound technologies for transport and storage of CO2. We see this demonstrated in the ongoing discussions regarding pipelines in the Barents Sea.

We have worked actively to improve the international legal framework for CCS. The two main legal instruments are the London Protocol and the OSPAR Convention. The latest amendments to these were adopted in 2006 and 2007, and will be important in making it possible to implement CCS.

Furthermore, the EU Commission’s draft directive on geological storage of CO2 is another important development. However, additional changes in the London Protocol are required to legalise cross-border transport of CO2 for offshore storage in another country.

Such changes could provide a great opportunity for closer cooperation between Sweden and Norway. Imagine, perhaps one day CO2 from Sweden will be transported to Norway for storage in Norwegian offshore reservoirs. And perhaps similar storage will used throughout Europe.

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Let me sum up a few points:

We must grasp the opportunities and make rapid and cost-effective cuts in emissions.

We need to refine and expand the allowance trading schemes. Europe has come far. Norway will continue to be a member of the EU trading scheme. Perhaps we can now dare to hope that the Obama administration will establish an American scheme. Perhaps we will also see an Asian scheme emerge. And perhaps we will one day see a global allowance trading scheme.

In short, we need to put a price on CO2. And I envisage the day when each individual on Earth has an individual quota of climate gas emissions. That would unleash a much needed transfer of resources from the rich to the poor, from those – like us – whose consumption is far above any imaginable individual quota.

At the same time, we must make determined and systematic efforts to move towards the long-term goal of a carbon-neutral economy. Climate technology must be made commercially viable as soon as possible. We must encourage investments in renewable energy and CCS technology, mainly by putting an international price on carbon. Global warming must be seen as market failure.

Once CO2 emissions have a price, investments in renewable energy and carbon capture and storage will become more profitable. And so will investments in energy efficiency and in innovative research and development of new technologies.
This will, however, not be enough. We will need new regulations to guide both investments and consumption. But they will be of little use unless we get the economy to work sustainably.

A clear and long-term international price signal will have a strong impact on global investments. This is why it is so important to build momentum in this direction ahead of the UN climate summit in Copenhagen next year. The outcome must include significant progress on international carbon pricing. If this is achieved, the future for investments in renewable energy will be promising.

In many ways, Sweden and Norway are special cases when it comes to energy mix. It is difficult to make deep cuts in our emissions because energy consumption in both countries is already based largely on renewable sources. In Norway, hydropower accounts for about 99% of electricity production, and around 60% of our total energy use comes from renewable sources.

Nevertheless, most of our political parties have agreed on a set of ambitious climate targets for Norway, including national emission cuts:

Norway has undertaken to reduce global greenhouse gas emissions by the equivalent of 30% of its own 1990 emissions by 2020. About two-thirds of these cuts will be made in Norway.

During the first Kyoto commitment period, which ends in 2012, we have undertaken to strengthen our Kyoto commitment by 10 percentage points, which means reducing our emissions to 9% below the 1990 level.

Our firm long-term ambition is to make Norway carbon neutral by 2030.

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Then you may argue, and quite a few here in Sweden do, that Norway faces a dilemma. On the one hand we have a public opinion strongly focused on the need to combat global warming. And on the other hand we are speaking of a country that is the world’s second largest exporter of gas and fifth largest exporter of oil.

I agree. It is a dilemma. But I would add: this is not only Norway’s dilemma. Ask the English and the French who cook their meals using Norwegian gas. It is the whole world’s dilemma. As I said, the world will continue to depend on fossil fuels for decades. Therefore we must spare no efforts to curb emissions from these sources.

By comparison, the Norwegian petroleum sector abides by high environmental standards. CO2 emissions per unit of oil and gas produced on our shelf are one third of the global average.

Even so, the petroleum sector is responsible for one fourth of Norway’s total CO2 emissions. We will leave no stone unturned in our efforts to reduce emissions further in order to make our production more sustainable.

All countries of the world have a responsibility in the fight against climate change. But if we are to get the emerging economies onboard, we – the rich countries – need to accept the principle of different obligations. Industrialised countries, such as Norway and Sweden, must take responsibility for the damage we have caused to the environment, and we must continue to take the lead in reducing emissions.

We must live up to our national obligations under the Kyoto Protocol, and push for a more ambitious post-Kyoto regime. Nothing less.

In addition we should focus on making further contributions where our experience and resources can make a global difference.

My country is providing the world with oil and gas, which will be required for decades to come. We are able to make a difference by investing heavily in the development of necessary CCS technology. We have the experience and the financial strength to do it, and we are doing it.

We are also increasing our development assistance and directing considerable funds towards climate measures in the developing world. Norway and Sweden are now members of an exclusive club of two: we will both give 1% of GNI as official development assistance.

We spent some time searching for an initiative that could really lift our ambitions. We studied the recommendations of the IPCC and searched for initiatives that could lead to radical reductions in emissions.

We concluded that we would make the fight against deforestation a main priority in Norwegian development assistance.

The evidence is pretty compelling: forests play a vital role in regulating the Earth’s climate. Trees store carbon, thus helping to offset human carbon emissions. Therefore deforestation and forest degradation increase carbon emissions. The IPCC findings are clear: emissions from deforestation and forest degradation account for around 20% of global carbon emissions.

Emissions from forests are, in fact, even more crucial than this figure indicates. If global deforestation continues at the present rate, this alone will prevent us from achieving the goal of limiting global warming to two degrees Celsius.

Emissions from deforestation are not included in the Kyoto Protocol and are therefore not regulated at present. But several scientific reports, including the latest IPCC report and the Stern Review, point out that reducing deforestation is a very cost-effective way of reducing carbon emissions.

They also argue that it will bring about emission reductions more quickly than any other measure. This is key because we have no time to loose.

Norway has therefore pledged substantial funds to programmes to reduce deforestation and forest degradation in developing countries.

In 2009, we will allocate NOK 1.5 billion to these efforts, which will be scaled up to about NOK 3 billion annually – or about USD 400 million – as soon as possible. The entire growth in our international development budget for next year will be used to reduce deforestation.

The goal is not only to reduce carbon emissions. Reducing deforestation is also promoting sustainable development for people who are dependent on forests.

Most of the funding we are providing for the International Climate and Forest Initiative will be channelled through multilateral organisations. Thus, this is not an exclusively Norwegian initiative. The relevant UN bodies are now cooperating closely in the UN Collaborative Programme on Reduced Emissions from Deforestation and Forest Degradation (“UN-REDD”). In addition, the World Bank and the African Development Bank are looking into arrangements for mutual participation in relevant funds.

We are providing full funding for the first phase of UN-REDD, which involves “quick start” actions for developing national strategies. This work will start in selected pilot countries: Bolivia, Panama, Paraguay, the Democratic Republic of Congo, Tanzania, Zambia, Indonesia, Papua New Guinea and Vietnam. This gives you some idea of the extent of the problem.

We have also committed substantial funds to the Congo Basin Forest Fund, to Brazil’s Amazon Fund, and to a forest programme in Tanzania.

We consider this to be a good start. And we hope that these efforts lead to the inclusion of forest-related emissions in the climate change regime to follow the Kyoto Protocol. This is needed in order to provide new and necessary incentives. I believe Norway and Sweden can do a lot together. We have little choice: deforestation must be stopped to avoid global warming.

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Let me return to home. Close to us we can see the most dramatic consequence of climate change: the melting ice. The melting ice in Greenland and the melting Arctic ice cover is the 21st century version of the canary in the coal mine. You can observe it in Svalbard right now. The fjords are free of ice, and the temperature can be plus 10 where it used to be minus 20.

The High North is Norway’s number one foreign policy priority.

The reasons are many. Norway and Russia are neighbours in the north. We are managing the world’s largest remaining stock of cod together with Russia.

The High North is an emerging energy province. The energy resources in the Barents Sea may be vital for future security of energy supply in Europe. And I will say this to the many environmentalists in Norway: if we close down gas and oil production, the alternative will be coal, not wind or hydropower.

And last – but not least – in the High North we are faced with climate change at close range. The ice is melting, and it is melting fast. In twenty years time we may be able to sail across the North Pole in summer.

As the sea ice shrinks, new opportunities for maritime transport and access to resources arise. Increased activity is encouraged, but steps must be taken to ensure that the Barents Sea remains a clean, rich and productive marine environment. We are seeking to strike a balance between petroleum activities, fisheries and maritime transport – adapting to climate change. We must learn to understand the logic of the oceans.

Norway is responsible for managing vast areas in the Arctic. We take this responsibility very seriously. Protecting ecosystems and ensuring the sustainable use of resources are core principles of all Norwegian legislation and policy.

We want to see increased activity in the High North. This involves both opportunities and challenges. Close cooperation with other key stakeholders is necessary, in particular with our Nordic neighbours and Russia. The regional framework for cooperation between Russia, Finland, Sweden and Norway in the High North is the Barents Sea Cooperation.

And there is also the Arctic Council, the circumpolar forum that also includes Canada and the United States. In the mid 1990s the Arctic Council emerged as a forum primarily focused on initiating and promoting scientific research in fields related to the Arctic, with a growing emphasis on environmental and climate change issues. The Arctic Climate Impact Assessment provided significant input to the IPCC’s final conclusions.

We need to build further on the Arctic Council. Norway is chairing the Council until next April when Denmark takes the helm for two years. It will in turn be succeeded by Sweden. Together, we three Nordic countries will be able to firmly establish the Arctic Council as the leading body on Arctic affairs, not least by drawing on experiences from our Arctic climate research and sharing them with the world community. We should make use of the Council to discuss some important issues ahead of the climate summit in Copenhagen. In April an Arctic Council ministerial meeting will be held in Tromsø, as well as a high-level international seminar on the issue of ice melting.

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In the late 1870s, Adolf Erik Nordenskiöld was the first person to successfully navigate through the North-East Passage. Climate change is today about to open this passage to less heroic travellers who, unlike the Nordenskiöld expedition, will pose a greater threat to nature than nature does to them. We must therefore ensure that the commercial successors of the Vega expedition behave in a way that does not threaten the vulnerable Arctic environment.

Right now, climate negotiators from all over world are at the UN Climate Conference in Poznan in Poland. I hope, although recent reports give little cause for optimism, that this meeting will bring us one step closer to a more comprehensive and effective climate framework in the future.

One thing is certain: the world community will have to go a lot further than the Kyoto commitments to stand any chance of halting climate change.

Norway views the Climate Convention and the Kyoto Protocol as the key framework for ensuring the commitments and incentives needed to reduce global greenhouse gas emissions. Achieving an agreement in Copenhagen in 2009 will require flexibility and political leadership from all parties. And we must significantly speed up our efforts. Both Norway and Sweden are working hard to meet their commitments under the Kyoto Protocol.

The Kyoto mechanisms are flexible to reflect differences between the parties. Emissions trading will continue to be one of the mechanisms that Norway needs to use to meet its commitments. This is not just a policy choice, it is a policy imperative. For the global climate, it makes little difference where emissions are cut.

To conclude, in order to combat climate change we must devise many different approaches, mechanisms and technologies.

We will – both Norway and Sweden – have to find innovative solutions, particularly when it comes to financing mitigation and adaptation efforts. These must include mechanisms that generate large amounts of funding more or less automatically. If the current economic turmoil continues, such mechanisms will be even more important.

We are today mobilising new, smart forms of public-private partnership that are generating the new technologies needed to move towards a low-carbon future.

Norway’s most important contribution is the development of CCS technology. We are determined to reach our goal of operating an industrial-scale carbon capture facility by 2014. Our vision is to make this technology commercially viable and thus to make a real difference in the global fight against climate change. 

In order to succeed, the world has to decarbonise economic growth.

Thank you.