Speech at Offshore Northern Seas 2008

Energy for one world

Ladies and gentlemen,

Over the last few years, energy has emerged as an increasingly prominent issue in international politics.

Energy is also a top issue on my agenda as prime minister of an energy producing country.

So I thank you for this opportunity to come to the ONS 2008 here in Stavanger, and discuss with you our common energy challenge.

The world has come to realise two central facts about energy. Two facts that also represent a dilemma:

On the one hand energy supply is necessary for economic growth and poverty reduction.

And on the other hand the use of fossil energy has a negative impact on the climate.

The demanding task that lies before us is the following: To combine an increase in the global supply of energy, with a decrease in the global emissions of greenhouse gases.

Solving this task will require substantial efforts. From the governments of the world. And from the energy industry. 

Over the last year, the price of crude oil has reached levels that not long ago few people thought possible.

The rise in global energy prices – and in prices of other commodities such as food – has caused hardship for people in many countries.

As always when prices increase, the poor are hit the hardest.

The impacts of high energy prices – and high food prices – should be a cause for great international concern.

However, we should also bear in mind that the increase in energy prices reflects some good news for the world. For it is also a reflection of the strong global economic growth of the last two decades.

It is difficult to fully grasp the welfare gains from this growth: It has brought hundreds of millions of people out of poverty. It has enabled them to live their lives with more dignity and with fewer worries and fears in their daily lives.

For this development to continue, the world needs to increase the supply of energy further.

Ladies and gentlemen,

Norway will remain a reliable supplier of energy. We still have large unproduced resources on the Norwegian Continental Shelf. Most of this is natural gas. 

The main political challenge in the years ahead will be to combine petroleum activity with safeguarding important ecological resources.

Lately, the attention of both governments and the petroleum industry has been drawn northwards. However, this new reality also creates new challenges.  These challenges will have to be met in cooperation with all the countries involved. And in accordance with international law.

Now, let me turn to the second aspect of the energy dilemma:  The use of fossil energy is the main source of CO2 emissions. And – according to the International Energy Agency –  fossil energy will remain the main source of energy supply right up to 2050.

But, during the same period, we need to reduce global CO2 emissions by at least 50%. So how do we resolve this dilemma?

The first point I will make is that we need to put a global price on carbon. My hope is that in December next year the following clear message will be sent from the climate conference in Copenhagen to the business world, consumers and entrepreneurs all over the world:

“The era of free polluting is over! In the years to come emitting greenhouse gases will be costly!  You will have to take this into account when you make your future investment decisions!”

I have no doubt that a clear signal on price will have a great impact.

Let me just give you two examples of how prices can contribute to reduced emissions:

My first example is the changes in economic behaviour we are already seeing as a result of the current high energy prices.

The sales of SUVs have fallen dramatically this year. Now even people in the US are switching to public transport.  In addition, high energy prices stimulate energy efficiency. And make investments in renewable energy more profitable.

My second example is the CO2 tax regime on the Norwegian continental shelf.  We have had a CO2 tax on the Norwegian shelf since 1991.

Currently, emissions of CO2 per unit of petroleum produced on the Norwegian shelf are less than half of international averages.This is due to the investments in research and development undertaken by companies operating on the Norwegian shelf.

However, these investments have also been motivated by the CO2 tax imposed on emissions. The Ministry of Finance has estimated that the total Norwegian emissions of CO2 would have been around 20 percent above their current level, had it not been for the CO2 tax.

Carbon pricing alone, however, will not solve our climate change problems. Additional action is needed.

I believe Norway can make important contributions in at least three areas related to energy.

The first is the substitution of coal by gas. Norway is the now the 3rd largest gas exporter in the world. And we have the resources to increase our export of gas.

As a long-term reliable supplier of gas, Norway can contribute to reduced consumption of coal in Europe. And thereby to reduced CO2 emissions.

The second area we could call “export of energy efficiency”.  I am proud to see that Norwegian companies are at the forefront in terms of technological and environmental developments. This technology is increasingly being used all over the world. Contributing to reduced emissions of CO2.

This fact highlights the important role that you – the energy industry – have to play in combating climate change.

The last area I would like to mention is carbon capture and storage. CCS. I would like to stress the potential of CCS in helping us to resolve the dilemma of emissions growth and economic growth. Let me give you some figures:

According to the International Energy Agency, CCS could account for about 20% of the global reduction that we must achieve by 2050.  

This is about the same as the reduction that can be expected from renewable energy. In other words, if developed and deployed worldwide, CCS may make a key contribution to combating climate change.

The Norwegian Government has embarked on an ambitious CCS programme.Within a few years, we aim to operate a full-scale CCS facility at the Mongstad power plant.

However, worldwide deployment of CCS can only be achieved through international cooperation. The industrialised world has a special responsibility for developing this technology. And for making it affordable.

At the political level we need to create a financial framework that makes it commercially attractive to develop and invest in CCS. But you – the energy industry – have an equally important role to play. We need your ideas and your initiatives.

Our common objective should be to make CCS a central element in the new climate regime.

Ladies and gentlemen,

Climate change is a very serious challenge for the global community. It is easy to become paralysed by these overwhelming threats to our way of life. But we should not lose faith in our ability to take joint action. To resolve the energy dilemma. And to combat climate change.

Let that be my message to you today!

Thank you.