Speech at Point Carbon Conference 2008

Excellencies, ladies and gentlemen,

This year, I have visited all three poles – the Arctic, the Antarctic and the Himalayas. I have been struck by the magnificence and the strong forces of nature in these remote parts of the world. But I have also been alarmed by the potential consequences of climate change.

In the Arctic, climate change is taking place twice as fast as elsewhere in the world. Over the past few years, the average temperature in Svalbard, in the Norwegian part of the Arctic, has been more than 5 degrees higher than normal.

In the not too distant future, the North Pole may be ice free during summer.

In the Antarctic, even a slight reduction of the ice cap will have massive consequences for sea levels.

In the Himalayas, the melting of ice and snow poses a serious threat to the supply of fresh water to hundreds of millions of people in Asia, and could cause serious floods and droughts.

Our common future is at stake. This calls for joint action.

Last week, the OECD presented its Environmental Outlook for 2030, which outlines strategies for how governments can address climate change.

It confirmed that economic incentives are key.

I fully agree with the OECD. In my view, the establishment of a truly global carbon market will create the most powerful incentives to reduce greenhouse gas emissions.

To make this a reality, three factors are vital.

Firstly, we must agree upon a common target – a cap. Only then will carbon prices reach a level where they can be effective.

Secondly, the carbon market must include all major emitting countries.

Thirdly, all sectors need to be included. Shipping and aviation; and not least deforestation.

To succeed, we therefore need a global climate agreement that is broad, ambitious, fair, and cost effective. It should be based on the principle of common but differentiated responsibilities.

One of the major challenges is to get the developing countries aboard.

Some developing countries are playing an increasingly important role in the world economy. But their economic development is causing greater pressure on the environment. Their participation is crucial to achieve the necessary emission cuts.

The future climate agreement must therefore include substantial financial transfers from developed to developing countries. 

Industrial countries must lead the way: both by cutting emissions in our own countries, and by financing mitigation and adaptation in the developing world.

Norway is committed to exceed our Kyoto commitment by 10 per centage points.

In addition, we will reduce or off-set 30 per cent of our emissions by 2020.

And by 2030 we will reduce or off-set 100 per cent and become carbon neutral, as part of an ambitious agreement where other industrialised countries undertake substantial commitments.

The concept of carbon neutrality may be a key to establishing a global carbon market. The need of industrialised countries to buy quotas will result in financial and technological transfers to developing countries.

These transfers could be substantial. They will provide incentives needed for developing countries to take on obligations.

By setting a price on carbon - and establishing a carbon market - we stimulate the transfer of funds from developed to to developing countries. Thus, through carbon trading we can address the two most important challenges the world is facing today: climate change and poverty.

For many poor countries, deforestation is the main source of greenhouse gas emissions. Including deforestation in the global carbon market could provide another incentive for developing countries to take on commitments.

The release of CO2 from deforestation alone accounts for almost 20 per cent of total global emissions. Through addressing deforestation, we can achieve large cuts in greenhouse gas emissions – quickly and at low cost.

Internationally we must agree on binding targets, establish mechanisms for trading in emissions from deforestation and include deforestation in the future climate regime.

As I announced at Bali, the Norwegian Government is prepared to increase its support for preventing deforestation in developing countries to more than 500 million US dollars a year.

Ladies and gentlemen,

It will take time to develop a truly global carbon market. And this market alone will not be sufficient to reduce emissions on the scale and at the pace required.

Even with massive investments in renewable energies, the world will rely on fossil fuels for the production of energy for a long time.

Through carbon capture and storage, however, necessary cuts could be achieved. This technology has the potential to reduce CO2 emissions by more than 80 per cent of all emissions from fossil energy production.

We have already applied carbon storage in some of our petroleum fields. Our experience is that it is safe. The CO2 stays in the reservoirs.

We are now developing the technology to capture and store CO2 from gas-fired power plants. CCS technology may also be used in coal-fired power plants in other parts of the world. 

We hope that these Norwegian projects will help to make this technology commercially viable.

Furthermore, carbon capture and storage projects are perfectly suited for the Clean Development Mechanism.

CDM has provided greater understanding of clean technologies, emissions trading and the importance of mitigating climate change in developing countries.

Pending a global carbon market, the EU Emission Trading Scheme is the leading emission trading system. Others are emerging.

Norway joined the ETS in January. We believe it should expand into new sectors. However, the most important step is to determine the overall cap – the total number of quotas to be allowed in the system.

Norway has contributed to a tighter cap. I also believe that the free allowance allocation should be gradually reduced.

Cooperation between national and regional systems should be encouraged. Integrating American and European emissions trading markets would be a step in the right direction.

Expectations of higher costs of emissions would immediately speed up technological innovation and diffusion. Establishing a high carbon price should therefore be a common goal.

Ladies and gentlemen,

We are facing serious challenges.

It is a top priority for my Government to contribute to the successful conclusion of a new global climate agreement here in Copenhagen, one year and nine months from now. This issue is on the agenda of all my international meetings, including my meeting with the Danish Prime Minister this morning.

I also strongly believe that a comprehensive emission trading scheme will be vital for the implementation of a future climate agreement.

I would like to take the opportunity to thank Point Carbon for convening this conference on the important topic of carbon markets.

I am delighted to have this occasion to speak to this distinguished audience.

You are part of the solution. We need your experience, your ideas and your initiatives to address our common challenge – together.