VIEWS FROM THE CAPITALS

Summer 2010

by Paal Frisvold

The EU energy and climate package adopted a year and a half ago is now coming into effect in Norway, even though Norway tops the European class in renewable energy. Opinion on the EU’s proposals that Norway should further increase its renewable energy production are divided, with some saying it's unfair and others that it should be welcomed. Norway’s long coastline and its offshore expertise mean that it can go on leading the way in renewable energy production and has an enviable potential to deliver offshore wind, wave and osmotic energy to the rest of Europe.

Norway isn’t part of the EU, but it certainly is a key player in the European energy market. The European Economic Area (EEA) agreement means it must implement all EU internal market legislation, so in January of last year the Oslo government had to accept the EU’s proposals for increasing the production and consumption of renewable energy.

Some 60% of Norway's overall energy consumption is already renewable, so the EU's goals look rather modest in comparison. The EU aims to bring renewable energy from its present 8.5% of overall energy consumption to 20% by 2020. This has led some Norwegians to complain that the EU renewable energy proposals are unfair.

The EU is asking member states to increase consumption by 5%, or more, depending on their per capita GDP. Norway’s population is less than 5m but its GDP – €331bn in 2008 – makes its per capita wealth greater than other EU or EFTA members. The upshot is that Norway must try to reach a target of 74% by 2020, about 14% higher than its 2005 level.

The real increase in the use of renewable energy will be subject to negotiation. The EU has already given special treatment to Sweden, where the future rate of renewable energy use has been capped at 50%, meaning the Swedes will only have to increase their renewable energy use by 9.2%.

It would be hard for Norway to increase consumption of renewable energy by 14%, but far from impossible. The country has enormous offshore wind and osmosis power reserves, and its hydropower can be regulated to complement less predictable sources of renewable electricity like wind or solar. With these reserves, Norway could even help neighbouring countries wean themselves off fossil fuels. Åslaug Haga, a former minister of petroleum and energy, commented back in 2008 that “Norwegian hydropower is well suited to be ’Europe's battery’ because we are sitting on nearly half the reservoir capacity of Europe.”

Some Norwegian power providers are less optimistic. They suggest that improved energy efficiency in Norway means the country doesn’t need to expand its renewable sector. They fear that prices and then incomes will fall if there is a radical increase in renewable energy production without a corresponding jump in demand. They also claim the cost of expanding the grid to bring electricity from where it is produced to where it is consumed, will be almost impossible to manage in a country as large as Norway.

Some Norwegians are uncomfortably aware that the idea of oil-rich Norway going after a better deal from the EU may seem greedy. They argue that Norway already boasts all the conditions for a truly world-beating renewable energy sector, and with EU help could start a drive to become Europe’s largest clean energy exporter.