Norway to join EU 2030 package – what does it mean?

Publish date: February 16, 2015

Non-EU member Norway earlier this month announced its plans to bilaterally sign-up to the Union’s 40% emission reduction target of the 2030 Climate and Energy Framework. The reception has been mixed. Knee-jerk reactions from much of the environmental movement said that this is not ambitious enough. But considering that the EU has actually delivered emission reductions in the last ten years, while Norway’s go-it-alone efforts have so far increased emissions, it’s not all bad.

While Bellona calls for this bilateral agreement to include the 2030 Framework’s two other targets for energy efficiency and renewables, which are so far not to be encompassed, Bellona is pleased to see Norway binding itself to an international climate framework that has a track record of delivering real emission cuts.

The Norwegian government’s indicative commitment to Paris 2015 is a 40% reduction compared to 1990 emission levels. If a bilateral agreement with the EU can be found, the country will contribute jointly with the EU for similar emission reductions. Because of the EU ETS the discussion around national emission targets often distinguishes between emission reductions in the parts of the economy covered by the ETS, and those in the part of the economy not covered by the ETS.

In the former we find offshore petroleum and most of land-based industry, covering nearly half of Norwegian emissions (47 per cent in 2013). According to the EU’s targets, emissions in these sectors will be reduced by 43 per cent by 2030 (compared to 2005). The responsibility for lowering the cap on emissions is placed in the EU system, and then industry can allocate resources for emission reductions in a cost-efficient manner.

For the part of the economy not covered by the emission trading system (mainly agriculture, waste, heating and transport) the EU has a JOINT target of 30 per cent emission reductions. The responsibility for policy instruments that will ensure these reductions lay with the national governments. Total EU emissions in these sectors shall be reduced by almost a third. How much shall be done in each individual member state is still not known, but the responsibility for cuts will be determined according to a EU-internal ‘effort-sharing decision’, where rich countries will have to shoulder a larger part of the burden than poorer ones. Some countries may be allowed to not cut their emission, (but also not increase them), whereas other countries will have to cut theirs with 40 per cent. Norway, being a rich country, will reasonably be expected to contribute in the upper end of that scale.

It is worth keeping in mind that an EU framework does not prevent individual states from setting even higher ambitions, such as Germany has done with its Energiwende.

According to the pillar of Norwegian climate policy, ‘Klimaforliket’, emissions from the Norwegian territory shall not exceed 45 MtCO2e in 2020. So far the country is far away from reaching this target, and much effort will need to go into reducing national emissions over the next five years.

A bilateral agreement with the EU would open up for Norwegian money being used to finance emission reductions elsewhere in the EU. This may (or may not) be cost effective for Norway in the short term. However, in a longer time perspective, it may be smarter for Norway and Norwegian industry to start the transition to the low-carbon society of the future. The last months’ low oil price has sent shock waves through the Norwegian economy and revealed just how dependent it is on these revenues.

An alternative is therefore to use the occasion of joining the 2030-framework to ensure a restructuring of Norwegian industry that means it may eventually deliver the technologies and products a low-carbon world needs. Facilitating green innovation and growth in traditional and new power intensive industries remains key to ensure these sectors’ future global competitiveness – as well as a basis of Norwegian value creation beyond the petroleum era. Investments in carbon capture and storage (CCS) would not only be a valuable end-point to maintain carbon intensive industries like steel and cement, but could also ensure a socially responsible transition from a petroleum to low-carbon economy.

Norway can also contribute by building future sustainable markets, like those that have been started with electric vehicles, battery development and electrification in the maritime sector.

Bilateral negotiations between the EU and Norway on joining the 2030 Framework are likely to continue through 2015 into 2016. The EU is naturally going to expect that Norway pulls its weight in delivering at least 40% emission reductions across Europe. If Norway is to be an integrated part of an international framework that delivers results, it must be prepared to shoulder the necessary costs.