The Changing Face of Energy and Geopolitics

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Four reflections on energy and geopolitics:

1. Norway as an energy producer. Norwegian footprints.

• As a large oil and gas producer and exporter, Norwegian energy and foreign policy are closely linked. We are the world’s fifth largest oil exporter and second largest gas exporter, the sixth largest producer of hydrocarbons globally.
• We supply about 18% of the gas consumed in the 27 EU countries. Stable Norwegian deliveries of oil and gas to Europe and the world market remain our most important contribution to energy security.
• We are a significant player in global financial markets through the Norwegian Pension Fund – Global which invests the revenues from the petroleum sector. Second largest sovereign wealth fund (SWF) in the world.
• Our economy is highly dependent on petroleum revenues; account for roughly half of Norwegian export earnings and a quarter of Norway’s gross national income.
• We are a major global energy nation and play an important role for security of supply in the EU. We want to remain a long-term, reliable and stable supplier of much needed oil and natural gas. This is a responsibility Norway takes seriously, not least at a time when energy security is at the top of the political agenda world-wide.
• Norway – as a small country rich in resources – has nothing to win by politicising oil power. Will remain a reliable supplier of oil and gas to competitive markets. We want to continue to play a constructive and active role in the dialogue between energy consumers and producers.
• Energy is the area where Norway leaves its clearest and most important footprint, regionally here in Europe, but also globally. Energy brings me to countries and actors we traditionally have had little contact with (Azerbaijan, Algeria, Angola, Venezuela, Saudi Arabia  and Kazakhstan). We leave the footprint of a reliable and stable energy supplier, of a highly experienced and high-tech oil industry, and of high health, environment and safety standards.
• We have the opportunity to use active diplomacy to persuade other oil exporters to follow the same climate policy track as Norway.
• But many petroleum-rich countries, particularly those in politically unstable areas, have a quite different record when it comes to democracy and respect for human rights and fundamental freedoms. Petroleum resources can be more of a curse than a blessing to such countries. How can we work together to ensure long-term positive effects of this valuable resource?

2. Need for better global governance

• Norway is dependent on a robust international order. Today’s global governance system is inadequately equipped to meet current and future global problems. It suffers from the gap between rich and poor countries and the antagonisms this causes. Multilateral approaches to global challenges are needed. 
• Transparency, cooperation and dialogue should be key elements not only in energy policy and the energy market, but also in all aspects of global governance.
• Economic downturn should inspire political upturn. This is a time to review and improve global governance. Economic and political developments will impact energy security, just as energy developments will impact global economics and politics.
• We are seeing the emergence of strong new players on the global scene – geopolitical implications:  Brazil, China, India, South Africa and a more assertive Russia. Implications for global governance. The game has changed. New alliances. New opportunities, but also challenges. WTO.
• The financial crisis is global. But the economic downturn should not distract us from the urgency of dealing with the twin challenge of energy security and climate change. 
• Also need to consider how energy security issues can best be dealt with within existing institutions such as the OECD,IEA, IEF (International Energy Forum), the EU and NATO.
• The interfaces between Norwegian energy policy and Norwegian foreign policy and geopolitics are growing rapidly.  Have to balance our energy interests with other political considerations:  climate issues and our relations with Russia.
• Climate change, Russia and the High North/Arctic are all foreign policy areas with long-term implications. They all involve challenges and opportunities for Norway as a global, climate-conscious energy nation. 

3. Russia and the High North

• The challenges in the relations between Russia and the West have not so far had any spill-over effect on the bilateral relations between Norway and Russia. Norway has been at peace with Russia for a thousand years, and we have managed our neighbourly relations in a responsible way during very different times.
• In recent years, we have seen increasing Russian military activity in the north. However, the modernisation and strengthening of the Russian armed forces in this region is not perceived as a threat to Norway. It is rather a return to normal levels of activity for a major power with legitimate interests in the north. But at the same time, we are observing developments closely.
• Relations between Russia and West are likely to continue to be challenging in the future. Isolating Russia is no solution. It is important to maintain dialogue, which is the only real opportunity we have to influence Russia. A breakdown in our channels of communication could also strengthen the inward-looking forces in Russia that want the country to turn its back on the West.
• We are therefore glad that the EU has resumed negotiations on a partnership agreement with Russia. And that NATO has decided to fully re-open the NATO–Russia dialogue within the framework of the NATO–Russia Council (NRC).
• Energy and climate change are also the drivers of increasing international attention to the High North. The High North offers front row seats to the climate change now taking place.
• The High North is a strategically important area for Norway. Number one foreign policy priority. Russia is clearly one reason why the High North is at the top of our policy agenda. Other important reasons are energy and climate change.
• The Arctic climate is warming rapidly. The impacts will affect the rest of the world through further global warming and rising sea levels. Long-term preservation of the Arctic as we know it today will only be possible if we follow a clear strategy for reducing global emissions of greenhouse gases to a sustainable level.
• Want to send a strong message to Copenhagen about what is happening to the ice in the north and in other parts of the world. A new climate agreement that ensures significant reductions in greenhouse gas emissions is vital for preserving the Arctic.
• Regardless of the agreement we reach, we will – for a long time – have to deal with a changed and gradually more accessible Arctic. For example, areas previously covered by thick ice are already beginning to open up for shipping and resource exploration.
• For Norway, it is important to underline that an extensive international legal framework already applies to the Arctic Ocean. The Arctic Ocean is not a lawless territory. Within this legal framework, the Arctic states are examining how increased activity in the Arctic areas should be managed.
• Increased international interest in the region: in resource development, potential for increased maritime transport (attractive alternative transport routes – ref. pirates). Opportunities and challenges for Norway as a coastal state. Cooperation with Russia vital.

4. Climate change

• Climate change is the greatest long-term challenge facing humanity. The international financial crisis will pass, but the damage to the environment will remain for generations. And climate change is inextricably linked to energy.
• Last year, there were two very promising developments regarding climate change: the EU’s adoption of the climate and energy package, and the election of Barack Obama as US President.
• Norway highly commends EU in securing the adoption of the climate and energy package.
• The US elections have laid the ground for a change of pace in the international climate negotiations. President Obama wants the US to play a leading role in the international fight against climate change, based on clear national obligations to reduce emissions and extensive cooperation with other countries.
• The US has a key part to play in the development of a new climate regime. So does China. And India. We have to stop playing an international blame game if we are to reach agreement on a comprehensive and effective climate framework.
• The increase of global energy use has helped hundreds of millions to rise out of poverty. We want this development to continue. But it has also led to a massive increase of global CO2 emissions. We cannot and will not allow that development to continue.
• In the decades to come we will have to resolve our energy dilemma. We will have to decrease global emissions of greenhouse gases by more than 50%, and increase the global supply of energy by more than 50%. How will we fulfil this huge common task? 
• As a major exporter of fossil fuels, the threat of climate change and the increasing demand for energy represents a dilemma for Norway. But this dilemma is also a global dilemma, and not just for producers, but also for consumers.  
• As we all know, we need to decarbonise world energy production. Carbon capture and storage is a key technology in this regard. Norway has more than 10 years’ experience of offshore CO2 storage from our gas field Sleipner.  In May, the Norwegian Government will host a high-level conference on carbon capture and storage.
• 2009 is a critical year. We need to reach a new, more comprehensive and effective climate framework agreement in Copenhagen. This will not be easy. It will require flexibility and political leadership from all parties. Nevertheless, we must be ambitious. The financial crisis must not be allowed to weaken climate policies or the outcome in Copenhagen. Crucial that political pressure is maintained.

To sum up:

• Given the changing face of energy and geopolitics, it is important for Norway to remain a reliable, long-term and climate-conscious exporter of oil and gas. Will continue to further dialogue between energy producers and energy consumers. Interdependence and relations based on trust.
• Securing energy supply and speeding up the transition to a low-carbon energy system call for radical action by governments and active participation in coordinated international mechanisms. It is only through extensive international cooperation that we will be able to address the huge challenges of climate change.
• The Arctic – a vulnerable environment with petroleum potential. Here our energy and political relations with Russia are key along with relations with other countries with which we share Arctic interests. Need to further dialogue.