Good morning!
First of all; I would like to thank you for the invitation to this conference. This gives me an excellent opportunity to present some important aspects of the energy policy for the Nordic countries and more importantly the potential I believe exists within the Nordic energy sector to remain highly competitive in a European perspective.

Nordic – Baltic co-operation
We have had a strong co-operation with our Nordic neighbours on energy policy over the last decades. In the previous decade this co-operation has been broadened to include the Baltic countries. The breakdown of the Soviet Union allowed for the creation of new cooperative links in the Baltic Sea Region. The energy cooperation in the Baltic Sea Region has been a part of the new opportunities which then emerged. It is obvious to me that we share similar challenges in energy policy with our Baltic neighbours.

The enlargement of the EU has the immediate effect that we are part of the same integrated market in the European Economic Area (EEA), concerning both trade and our legal obligations . Main issues on the European level, such as the establishment of effective markets, security of supply, responses to climate change and promotion of renewables are issues dominating our common agenda.

We have strengthened our ties with the Baltic countries within the framework of the Baltic Sea Region Energy Co-operation (BASREC). An important challenge now is to develop this co-operation as the Baltic countries and Poland have acceded to the EU. Another result of this enlargement is the creation of EEA and Norwegian financing mechanisms that provide for energy and environment related projects, amongst others. I believe we could expect that these recently established mechanisms would further enhance our energy relations.

A Well-functioning Nordic Energy Market
The security of supply is a common concern within the interlinked Nordic power market. Apart from more available production capacity, an efficient use of the Nordic transmission capacity and the capacity to neighbouring countries is vital to secure a more reliable energy supply situation. I would therefore like to underline the importance of a well-functioning Nordic energy market.

A well-functioning Nordic power market leads to an efficient use of the resources available and gives signals to obtain the investment needed. We have to make sure that the transmission grid within Norway and to our neighbouring countries is sufficient and well-functioning. In this context, I will point out the responsibility of the Transmission System Operators within the Nordic power exchange system, and the importance of a good Nordic collaboration.

The Norwegian Government prioritises the co-operation with other Nordic countries, and issues like security of supply and vulnerability in the Nordic energy market are of most recent concern. These were among several topics I discussed with my Nordic colleagues at the annual meeting of the Nordic Energy Ministers in Akureyri last September.

Need for More Energy in The Nordic Market
The power balance in Norway has developed from a surplus situation to a shortage situation in the last few years, as the illustration shows. This makes Norway increasingly dependent on imports of electricity to serve the domestic demand. The situation is, I would say, comparable to the Nordic system as a whole. This is an unsatisfactory situation, and in my opinion, we are in a need of increased production capacity.

I believe Norway has the right qualifications and conditions to produce enough energy to serve our domestic use, and even contribute to a better power balance on a Nordic level via exports. I believe there is a number of ways to achieve this, and I will proceed by talking about some of the possibilities in a few moments.

Large Potential within Known Energy Sources
Generally, there is a large potential within well known energy sources. We still have many unused hydro power resources, many of them in connection with already existing hydro power plants. We also have a large potential of wind power in Norway. In this context I would like to mention the support scheme administrated by Enova, that is an important contribution to the strategy of increased new renewable energy production and energy savings in Norway.

A more secure energy supply in the Nordic countries requires an energy system that is less dependent on hydropower as an energy source and electricity as an energy carrier. This necessitates a long term change of energy use from electricity to for example natural gas. Shortly, I would like to say more about the advantages of natural gas as fuel in production of electricity and for use in industries and households.

Further, I believe that it is important to promote the consumers as partakers in the electricity market to obtain a functional electricity market and develop the flexibility of consumption. The Government has a continuous focus on the consumer's situation and needs in the power market. Several actions to improve the consumer's situation are presented in the white paper on security of supply.

A Mandatory Certificate Market
A mandatory certificate market is a new support scheme for electricity from renewable energy sources. This support scheme may have considerable influence on energy policy in our countries in many years to come. I believe a broad international certificate market has several advantages.

A draft law on a mandatory certificate market was late November put out for public inquiry. I aim to put forward a proposal to the Storting for a common certificate market with Sweden during spring 2005, so that a market can be established 1. January 2006.

A common market with Sweden can be established if Norway creates a certificate system similar to the Swedish one. In a common market both countries would then accept certificates from the other country. The Ministry of Petroleum and Energy is having continuous discussions with the Swedish Ministry of Industry, Employment and Communications to find the right solutions for such market.

The scope of the scheme and the possibilities for value creation in Norway is strongly influenced by the kind of energy sources included in the market. Additionally, the financial target for new renewable electricity production set for the market will be one of the deciding factors for the size of the scheme. I expect the Storting to make a decision on this and other issues when discussing the proposal for a mandatory certificate market.

Gas-fired Power Plants
I rejoice at Naturkraft’s decision to go on with their plans to build a gas-fired power plant at Kårstø in western Norway. Both the gas-fired combined heat and power plant under construction in Gothenburg and the planned plant at Kårstø will contribute to a strengthened Nordic energy supply in an appropriate way.

The increased use of natural gas in Norwegian power production can contribute to a larger domestic market of natural gas. Further, gas fired power plants can give important contributions to a better security of supply of energy and to the generation of national earnings. But, not to forget, the emissions from gas-fired power plants represent a challenge with regards to the level of CO ₂ and NO _X.

New applications for licences for construction and emission permits will be processed according to prevailing regulations. Yesterday the Storting approved the Government's proposal for a greenhouse gas emissions trading scheme. Energy production based on natural gas is by 2005 obliged to supply a sufficient amount of emission allowances in order to operate with emissions of CO ₂.

Gradual Development of Domestic Use of Natural Gas
Natural gas in interaction with other energy sources can contribute to a more flexible and sound energy supply. The Nordic market for natural gas is still small. Figures from Statistics Norway show that natural gas only represented 1.1 percent of the total end use of energy in Norway last year. However, the use of natural gas is increasing.

The Norwegian Government will support a gradual development of a domestic market for natural gas. The total use of natural gas is widely dispersed and it will take time to build up a market. It is necessary to find transport solutions that can support this form of utilisation of natural gas. The best way is to find solutions that can grow together with the growth of the market.

The available analysis supports a strategy of a gradual development of a market for natural gas. The natural gas should be utilised first where the conditions are best prepared.

Summing Up
To conclude, I would like to sum up my presentation with the following statements:

• To improve the security of energy supply in the Nordic countries:
• There is a need for more power production and a more diversified use of energy
• The Nordic electricity market must be well-functioning

The energy policy should:

• Promote and create value and be based on a sustainable development
• Provide profitable and competitive conditions for production of energy in a long time perspective

I thank you for your attention.