Speech held at The Norwegian Academy of Science and Letters

Check against delivery

Your Majesty, president, ladies and gentlemen.

I am pleased to have the opportunity to participate here this evening. I would like to thank the Norwegian Academy of Science and Letters for this excellent initiative. The objective of these seminars is to create a forum for dialogue between scientists and politicians. I have great faith in such a dialogue, and we need more of that!

I appreciate the opportunity to discuss topics that are important for Norway, Europe and the world, and this is a very good forum for such a discussion. I wholeheartedly support the ideas and visions Hans Rasmus Astrup had for this Academy.

"In the more than ten years from when they moved into the house in 1887 until Astrup’s death in early 1898, he and his wife made the Academy’s house a lively venue for gatherings. He worked with determination to promote tolerance and mutual understanding rather than blind partisan hatred. He was appalled by the fact that many conservatives and liberals in Norway were profoundly unwilling to have any social contact at all, hardly even speaking with each other."

While there is usually less tension in today’s political arena, there is still a need for constructive and open-minded discourse on national political and social issues.

For my part, I have a keen interest in staying in touch with the academic community, and I would like to see the community get more involved in the public debate. Therefore, I held a series of lectures last year, visiting the Universities in Oslo, Stavanger, Bergen, Trondheim and Tromsø.

I also took advantage of the opportunity to challenge academia. As a society, we have in many cases become so practical and solution-oriented in our thinking that I wonder if we are under-estimating the importance of debate and arguments. The academic community has a special responsibility to contribute here, and my opinion is that the community is largely too silent on these issues. It is a paradox that participation in the social debate appears to be in reverse proportion to the number of academics. I hereby repeat the challenge. I hope that the academic community will become a stronger driving force and source of debate in the future discourse.

Tonight’s topic is “Norwegian energy policy in light of the global energy situation”, a burning issue that consumes most – if not all – of my working days.

Let’s start with the big picture. My opinion is that the world is facing two major challenges: the climate challenge and the poverty challenge.

The world is facing two major challenges today: the climate challenge and the poverty challenge. 

The world will have an enormous need for more energy in the years to come. Significant changes are required if we are to limit global warming to no more than two degrees by 2050. However, even in that scenario, energy consumption will have increased by more than 20% in 2035.

China is an example of the enormous growth in energy supply and consumption that is taking place today. Twenty years have passed since China became an importer of oil. Today, China is the world’s second largest importer of oil, consuming 10 million barrels per day in 2011, nearly 10% more than last year, and representing a growth that accounts for almost 40% of the increase in global oil consumption. 10 million barrels per day is about 5 times Norway’s production.

China’s installed capacity for generating electricity increased by 80 gigawatts from 2007 to 2008, compared with Norway’s installed capacity of 31 GW. In other words, it took China five months to build up what took us 120 years to achieve. Most of China’s power production comes from coal-fired power plants. China consumes more coal than any other nation, and is responsible for almost 50% of the world’s coal consumption. China became a net importer of coal three years ago, and is today the world’s second largest importer, dominating development in global coal prices.

A major reason for the increase in energy demand is the growing world population and a decline in poverty. There is a close link between energy consumption and increasing prosperity. Norway is a prime example of this. Ever since the Middle Ages, our prosperity has been dependent on learning how to control nature and develop energy. This has been a prerequisite for development. But energy consumption is also closely linked with greenhouse gas emissions. If we are to handle the problems of poverty and the climate challenge in parallel, we must achieve economic growth without a corresponding increase in energy consumption.

Last year, the world’s population passed the 7 billion mark. Never before have so many people, in relative or absolute terms, had such a good chance of achieving a good life. This is a positive and encouraging trend. Nevertheless. there are around 1.5 billion people without electricity and more than 1 billion who do not have enough to eat. This is one of the greatest challenges facing our world, not least in an ethical and moral perspective.

In Norway and the western world, sustainable economic and social growth came as a consequence of eliminating these factors. I believe that this is also necessary in the rest of the world. It is also a precondition for controlling climate change created by human activity. If you do not have access to food, light, heat and shelter, the global climate is probably not your primary concern. Therefore, it is positive that global energy consumption is increasing. Now it is up to us to work together to make sure that this progress becomes sustainable.

Historically, there is a clear parallel between economic growth and energy consumption. However, the IEA reports a reduction of slightly more than 1% in energy consumption per unit of growth in the period from 1985 to 2009. All scenarios in the World Energy Outlook indicate better global progress in the years to come, and that we have to accomplish twice as much if we are to achieve the two-degree goal. This should be possible.

Events in Norway are a good example. From 1990 to 2010, Norway’s energy consumption grew by about 20%, while our economic growth in the same period was 67%. Figures from Statistics Norway show that emission intensity for greenhouse gases relative to production have been cut almost by half during this period. This is significant progress, and the development continues.

The task facing the world is formidable, but we have a moral obligation to succeed. I choose to be optimistic. Our grandparents and parents managed to send people to the moon and to bring about a peaceful conclusion to the cold war and imminent nuclear threat. In such a perspective, I don’t think these challenges are insurmountable.

A binding, international climate agreement would be an important step, as well as a global CO2 price. A global price tag on greenhouse gas emissions would be the most effective policy instrument we can introduce. It can facilitate making an offensive climate policy good business policy as well, and it can contribute to realising global emission cuts. Not least, the development of carbon capture and storage will take on a whole new drive if we can put a global price tag on CO2. The development that we see now is largely a result of the lack of consensus from the world society as regards a global price tag on CO2.

Along with setting the “right price” on both energy and emissions, we must remove fossil energy subsidies. According to the IEA, more than 400 billion dollars were spent on subsidising fossil energy consumption in 2010. This is more than seven times the amount spent on subsidies for renewable energy production in the same year.

At the same time, we must be realistic when it comes to the challenges countries face when adjustments are made. When diesel subsidies in Nigeria are cut, it means more expensive transport and more expensive goods for the people. One example of a country that has succeeded in implementing a program to redistribute funds from fossil energy subsidies to the poorest segment of the population, is Indonesia. Nigeria, for example, lacks a social structure and institutions that can ensure efficient redistribution of these funds to the poorest citizens.

We must acknowledge that we still have a long way to go before the world can put a global price tag on CO2. Therefore, it is important that individual countries and regions take the lead and introduce policy instruments and measures that lead to global emission reductions. Durban was not enough. We must hope for, and work hard to ensure, that future processes will lead us to take bigger steps in the right direction.

With regard to the energy sector, it is quite clear that we have to do something about the way we produce and use energy – both in Norway and around the world. We must:

• Use energy more efficiently – and smarter.
• Use more renewable energy resources.
• Also produce fossil energy in the most environment-friendly way possible, and with maximum energy efficiency.

For Norway, this means several things: We will continue to produce oil and gas for an energy-hungry world. As the world’s second largest gas exporter and the world’s sixth largest oil exporter, we have a large responsibility in the international energy markets. We will strive to make our production as clean as possible. We must develop new and more energy-efficient technologies for recovering petroleum. And we must continue our commitment to carbon capture and storage.

Many have predicted the demise of the Norwegian continental shelf; a prediction that has proven to be premature. My opinion is that we must manage the oil and gas resources in a perspective that spans generations. I am optimistic on the industry's behalf.

The world’s energy markets are essential for economic development. The changes we have experienced in recent years have been demanding, both for producers and consumers. Major price fluctuations create uncertainty, which erodes the preconditions for necessary investments in all parts of the value chain. We also note the current tense market situation. Norway plays an important role as a large, reliable and transparent supplier. It is important to remember that substantial price fluctuations have the greatest consequences for those who have the least.

Analyses from the IEA and The Intergovernmental Panel on Climate Change also illustrate the importance of a commitment to renewable energy. We must significantly increase production of renewable energy in the years to come.

There is a tendency to create antagonism between fossil and renewable energy sources in the Norwegian public debate. I believe this is a contrived conflict. We have to pursue both avenues at the same time. We will produce and deliver our petroleum resources to the world efficiently, and in the most environment-friendly way possible. At the same time, we will adapt our own society in an increasingly green and renewable direction.

Therefore, we have ambitious goals for restructuring of energy consumption, energy efficiency and renewables, as well as greener and more climate-friendly petroleum production. We also have a huge commitment to development of technology, both in fossil and renewable sources, as well as in technology that can promote energy-efficient consumption.

Let me expand on this, starting with renewable energy. Anyone who claims that we do not have high ambitions for renewable energy hasn’t been paying attention.  I have claimed – and continue to claim – that we are facing a paradigm shift when it comes to renewable energy in Norway. The reason for this is the electricity certificate arrangement with Sweden.

The Renewables Directive sets a renewables target for Norway of 67.5 per cent by 2020. This entails an increase of around 9.5 percentage points from 2005. Norway’s share of renewables will thus amount to 2/3 of our energy consumption in 2020, which is much higher than any EU country.

The most important policy instrument for achieving such an ambitious goal is the joint electricity certificate market with Sweden. This took effect 1 January this year and in practice represents an efficient support scheme for renewable electricity. The target is set: Norway and Sweden will have 26.4 Terra Watt hours of new production by 2020.

And let me say this: the targets are extremely ambitious. 26.4 Terra Watt hours is equivalent to about 1/5 of Norway’s current annual production. As regulatory authorities, we have put the framework in place. Now it is up to the industry to get these projects started.

In parallel, we are working to reinforce the electricity grid. We know that many of the new developments are coming in remote areas, far from the consumers. There is no point in developing more renewable electricity if we can’t transport it to where it is needed.

Obviously, such a strong commitment to renewable energy will be felt all over our country. We will have more wind turbines, more small-scale power plants and more power lines. It would be naïve to think this will not be an important part of the public debate in the years to come.

I believe that the focus of our debate will change in the period ahead of us, and that we will see the focus shift from framework conditions to licensing policy. For generations, the balance between preserving and using nature has been one of the strongest conflicts in Norwegian politics. I believe this will continue – and it is certainly legitimate.

Just before Christmas, we passed the final resolution giving the go-ahead for the new power line between Ørskog and Sogndal. This power line was crucial for realising a number of small-scale power projects in Western Norway. The same is true of a number of other power line projects, which Statnett is currently working on.

All in all, this shows that there is quite a lot going on in the renewables area, much of which will be essential in the work to make the Norwegian society even greener.

Another important element is the work to use energy in ways that are smarter and more efficient. Considerable activity is also underway in this area, and the role of the research and academic communities is key in developing new technology.

We don’t have to travel far to find good examples. The City of Oslo is currently building a bio-gas plant at Nes in Romerike. The plant will use source-separated food waste, in part to produce bio-gas.

The Haraldsrud heating plant in Oslo is another example. I visited the plant myself before Christmas last year. Hafslund district heating is in full swing to expand its production capacity with more climate-friendly energy. Anyone who is interested in the potential of pellets should come see the new pellet boiler. 56 megawatts (MW) of installed capacity is a lot. The consumption in this pellet boiler alone is estimated at more than one-third of total pellet consumption in Norway, equivalent to 100,000 cubic metres of timber!

We have many examples like this, and Enova is an important resource in this work. I am pleased to see that the interest and enthusiasm in the market has been and – and continues to be – substantial. Enova currently has a project portfolio of more than 4 000 large and small projects in the fields of renewable energy and energy efficiency. Overall, these projects contribute to ensuring that Norway’s energy supplies become greener, and more flexible.

Last year marked Enova’s 10th anniversary. I believe that an important reason for Enova’s success is the management model it employs. Enova is responsible for selecting these projects, not the politicians.

As I mentioned in the beginning, it is a fact that the world needs more energy in the years to come – and all scenarios indicate that fossil energy carriers will continue to play an important role. How this fossil energy is produced is thus of great significance.

We must combine Norway’s role as a major petroleum producer and exporter with our ambition to lead the world in environmental and climate policy. Norway has been a pioneer in fields such as CO2 pricing. The fact that the Norwegian petroleum industry must deal with a price tag on CO2 as a consequence of quota obligations and the CO2 tax, gives the industry incentives to continuously improve. This is good. We produce our petroleum resources in a way that is energy-efficient. The Norwegian petroleum sector is world-class in environment-friendly offshore petroleum production.

We will continue to set strict requirements for the industry, and further develop the Norwegian petroleum industry as described in the White Paper on Norway´s petroleum activities, adopted by the Norwegian parliament before Christmas. In contrast to what we often see in the media, the parliamentary debate revealed fairly comprehensive political agreement on petroleum policy.

I believe it is important to look at the Norwegian oil and gas activities in a larger perspective. Gas production is particularly important for Europe, both due to good supply security – but potentially also in connection with the substantial renewables ambitions.

The EU has pledged to increase its share of renewables to 20% by 2020. These targets are legally binding, and entail a massive commitment to renewable energy in the years ahead. One of the challenges we face is the increased need for balancing power. If we are to exploit the sun and the wind, we need backup for days when the sun and wind are in short supply.

It is in this context that we talk about Norwegian hydropower functioning as a “green battery” for the rest of Europe. Norway already has this function, to some extent, and I believe this can be further developed. Denmark’s commitment to wind turbines is largely the result of Norwegian hydropower functioning as balancing power.

However, this is also a question of proportions. While Norway does have a lot of hydropower, it is far from enough to function as balancing power for all of Europe. Gas, on the other hand, does have this potential. Another relevant point to remember in a climate context is that gas is the cleanest of all fossil energy sources. If the rest of Europe replaced coal with gas, it would achieve the target of a 20% cut in greenhouse gas emissions – by implementing this measure alone.

One of the most important things we can do is to promote technology. I would go so far as to say that Norway has a special responsibility in this field. At the same time, it is important that we don’t just do things because we can afford it. We must consider how the solutions we develop can be used in other countries and other parts of the world. We must not end up with a situation where Norway implements measures simply because we can – this could actually be counter-productive.

Comprehensive work is underway in technological development, both as regards making renewable and fossil energy production less expensive and more efficient. Work is also being devoted to more environment-friendly use of fossil energy. Here I would particularly mention the work being done on carbon capture and storage, CCS.

CCS will have to deliver up to 20 per cent of the necessary emission reductions in 2050. Norway is one of the pioneers in this area, with experience based on 15 years of carbon storage on Sleipner and the storage project on Snøhvit.

At Technology Centre Mongstad (TCM) the goal is to create an arena for developing, testing and qualifying technology for carbon capture. The work at Mongstad is complex, and has proven to be even more complicated than we thought initially. Now, however, we will soon see the results of a long-term, offensive commitment. The technology centre will soon be commissioned, and I am looking forward to the opening in May of this year.

My primary message is that we must be able to pursue not just one or two, but many avenues at the same time. We will continue to produce oil and gas for a world that needs ever more energy. But we will strive to make our production as clean as possible. We must develop and apply new and more environment-friendly technologies for petroleum recovery and energy consumption. And we must continue our commitment to carbon capture and storage. At the same time, we will guide Norway in a greener direction through determined efforts to promote energy efficiency and renewable energy.

An impressive array of expertise is gathered here in the house of Hans Rasmus Astrup and the Norwegian Academy for Science and Letters. I am certain that we can shoulder the challenge of pursuing many avenues simultaneously, and I look forward to an interesting debate.

Thank you for your attention!