Ms. Guro Fjellanger, Minister of Environment

Energy and Climate in an Environmental Context - "Norwegian Climate Change Policy Post Kyoto"

Speech at Expo '98, Lisbon, Portugal, 22 July 1998

Ladies and gentlemen,

I am happy to be here in Lisbon contributing to this energy and environment seminar, as a part of the World Exposition 1998 - Expo'98. The exposition has a focus on the ocean, the environmental condition and the future. Energy use, emissions of greenhouse gases, the risk of human induced climate change and the possible effects on the sea level and ecological life are closely linked to the future of the ocean. Research, technological developments and other policy measures are parts of the solutions and will be presented here today. Climate change is a global challenge deserving a common and concerted action. In my speech, I will focus on the Norwegian follow-up of the quantitative commitments under the Kyoto Protocol, the challenges ahead and the role of climate change research in the next decades.

The Kyoto Protocol

For the first time in history quantitative commitments limiting and reducing emissions of greenhouse gases from the industrialised countries have been established. The Kyoto Protocol is therefor an important step in the right direction with regard to achieving the long-term objective of the Climate Change Convention, ".. to avoid dangerous human-induced climate change". It is essential that the industrialised world is taking their responsibility for emission reductions in order to comply with the Kyoto Protocol. The countries with the largest emissions have a special responsibility for emission reductions and technology transfer to less developed countries.With such a transfer of technology these countries could make a technological jump from their present state to a "green" industrialised economy based on efficient use of resources, instead of developing industrialised economies with heavy pollution as has happened in the industrialised countries.

After Kyoto industrialised countries face new challenges. All industrialised countries will face costs related to limitation or reduction of greenhouse gases. This process will however stimulate technology developments in all sectors and investment in climate friendly products and services. The governments must speed up the transformation process by a set of policies and measures.

We must use our creativity to find new resource efficient solutions. In the last 150 years the labour productivity has increased about 20 times. Now, we need the same development with regard to resource productivity. Such an improvement is needed to sustain the welfare at a less resource-intensive level and to allow developing countries to grow and increase their standard of living.

The follow up

Since the Protocol was agreed in Kyoto last December, the Norwegian Government has submitted a White Paper (no.29 (1997-98)) on "Norwegian implementation of the Kyoto Protocol" and a bill (no.54 (1997-98)) on "Green Taxes" to the Norwegian Parliament. These two documents were discussed in the Parliament in June and provide the basis for an early follow-up on these issues.

Since the Norwegian government regards national measures as most important it was essential with an early response in order fulfil our obligations under the Kyoto Protocol. Early implementation of these measures could improve the competitiveness for the Norwegian industries in the long run.

According to the Kyoto Protocol, Norway's emissions of greenhouse gases should not be more than one per cent higher in the commitment period, 2008-2012, than in 1990. In practice, this means that Norway must reduce the emissions by about six per cent from the 1996 level to meet its commitment. Without the introduction of new measures, emissions are expected to increase by 23 per cent in the commitment period, from 1990 to 2008-2012.

It will be a major challenge to develop a less CO2-intensive economy and patterns of production and consumption that can reduce emissions of greenhouse gases. It seems clear that we can only succeed in this task if all sectors play their part. A close co-operation between the Government and business and industries will be necessary.

The Norwegian Parliament reviewed the White Paper on Norway's follow-up of the Kyoto Protocol on 17 June and decided that:

• The CO2-tax system will be extended to some other application (air flights, domestic transport by sea etc). This is an extension of the current system which covers about 60% of the CO2 emissions in Norway.
• The Parliament has asked the Government to come up with a proposal for a national emissions trading system for greenhouse gases. This system should at a minimum compromise the process industries, but inclusion of other sectors should also be considered. A committee of experts will be established to outline the principles of such a system.
• A tax on waste to increase recovery and reduce emissions of methane from landfills will be introduced. The tax rate will be reduced if methane is extracted and used for energy purposes.
• There will be increased efforts on the demand side to use energy more efficiently and introduce water based heating systems by revision of laws, economic incentives and information. Regional authorities and municipalities will be encouraged to develop local plans for abatement of greenhouse gases, including energy saving and use of local energy sources and renewables, as well as land use and forest management.
• The economic incentives for use of wind energy, heating pumps, bioenergy, solar energy and district heating systems will be strengthened.
• Increased efforts to strengthen the climate change research in both Natural Sciences, technological research and Social Sciences will be considered.

These first measures will contribute to limit emissions at the national level, but they are probably not be sufficient to ensure our fulfilment of our Kyoto commitment. These first steps must be seen as part of a process. As we come closer to the commitment period 2008-2012 the policy measures will have to be strengthened. They will therefore have to be supplemented by new and additional steps at a national as well as an international level.

Flexible mechanisms

In addition to the national measures, we also have to take measures at the international level, in co-operation with other countries, to reduce emissions. As a supplement to national policy measures, we will through use of the flexible mechanisms under the Kyoto Protocol develop climate change co-operation with other countries including Eastern Europe, Russia as well as developing countries. The aim is to reduce greenhouse gas emissions in a cost-effective way. Such co-operation will also contribute to improvements in local air pollution and should be in accordance with national development priorities in the host countries. Through such co-operation we can also achieve larger environmental gains than if all our funds were spent domestically.

Norway has along with some other countries been active in developing project co-operation in the pilot phase under the Climate Change Convention up to year 2000. No credits are provided in the AIJ pilot phase. Late 1995, Norway made an agreement with the World Bank to co-operate on methodological issues as well as projectsIn March this year, the Norwegian Government finalised an agreement with the Peoples Republic of China. In May, I signed an AIJ-agreement with the Slovak Republic. By the end of June, an agreement with India was completed. We have also started up a project with South Africa with regard to capacity building in this field and aiming at a project co-operation in the longer term.

When the Kyoto Protocol is ratified and comes into operation, crediting will be allowed. Our agreements with in particular Costa Rica and the Slovak Republic with projects covering the period after 2000 also allows crediting. We believe that both Joint Implementation, the Clean Development Mechanism and trading in emission quotas will be of great importance to combat climate change in a cost-effective and long-term perspective.

The role of research

The role of research will be essential in the next decades both to understand relationships in the nature, but also to develop technologies to reduce emissions of greenhouse gases and to make our energy systems and overall economies less carbon intensive.

Natural Sciences

The challenges ahead are huge and complex. In the Natural Sciences there is for instance a need for a better understanding of the complex processes between the ocean and the atmosphere and the human influences on these processes. This is of great importance for a country like Norway, given our climatic dependence on the Gulf Stream. A weakening of the Gulf stream might change the climate in this Northern region in an undesirable way.

It is necessary to understand the interaction between the ocean and atmosphere, and the effects of human greenhouse gas emissions. In this respect it will be an important issue to increase our understanding of the relationship between global warming and regional effects. This may include effects on biodiversity, precipitation patterns, storm frequencies as well as the ocean's ability to absorb CO2. Such knowledge will improve our ability to forecast possible effects and risks of global warming on a regional level and make it easier to prepare for these effects through preventive measures. A national research programme to enhance our understanding of these regional effects for the Northern Atlantic and Scandinavian area has now been established.

Technological research

Furthermore, in Norway technological research has been speeded up in the last years. Norway has developed technology for separation and storage of CO2 in geological formations. The technology is, however, not available yet on a commercial basis for emissions of CO2 from combustion, but might be so in the future. In addition, more efficient production of electricity on the petroleum platforms will be important to reduce emissions from this sector. The research is partly financed by the government and partly by the private sector. I assume that business representatives will in greater detail describe successful projects within this field later today.

Social Sciences

The Social Science research in this field has also contributed to development of measures in our national climate change policy. Prior to the introduction of a CO2 tax in Norway, analysis with regard to economic and environmental effects of the tax system was carried out and laid the foundation for the policy recommendations. Norway has also been in the forefront with regard to development of macroeconomic instruments that include environmental effects. This has made it possible to analyse the relationship between economic activity and the environment, and the effects of a possible CO2-tax system.

New market opportunities

Introducing new technology may reduce the cost of abatement measures in the long run. Adjusting at an early stage to stricter environmental requirements with regard to greenhouse gases may in some cases imply a loss in competitiveness. However, it does not necessarily have to be so. Those countries that introduce measures and stimulate less greenhouse gas intensive developments in their countries at an early stage, may be most able to adjust to future developments. Also business and industries in these countries are likely to gain in competition with other countries that adjust at a slower pace.

We notice that the awareness of consumers is increasing due to better environmental information. Consumers often have a preference for good health and a sound environment, and will increase their demand for environmentally friendly products and services. In addition programs for "Green Public Services", like those introduced in Norway, can increase the demand and create new markets for climate friendly products and services. In many industries environmentally sound production processes etc. have become a positive asset in the marketing of goods and services and led to increases in market shares. So again: adjusting early to new environmental requirements may improve the competitiveness of business and industries and increase their market shares in "energy-efficient and climate-friendly" goods and services.

Conclusion

A transformation to a more energy-efficient and less carbon-intensive society is a challenging task. We, as industrialised countries, have a responsibility to do so. On behalf of our children and grandchildren, the overall condition of the environment should at least be in the same condition when it is passed on to the next generation. This is an important principle for ensuring sustainable development, which also is easy to understand for most people. We therefore need to take responsibility with regard to saving the commons as the oceans and the atmosphere and to speed up the technology diffusion to ease the transformation process. I believe that enhanced co-operation between governments and business and industries will be one key to success as well as a long-term based research efforts. Strengthened activities at the regional and local level to contribute to national commitments will be another importnat element. Finally, consumer awareness will be the forth and important aspect to give speed to this vehicle for greening of our economies.

Thank you for your attention.