Perspectives on the Norwegian-British Energy and Climate Partnership

• Your Royal Highness, excellencies, ladies and gentlemen,

• It is a pleasure to participate in today’s seminar here in London, the day before the opening of the Sheringham Shoal offshore wind farm.

• Sheringham Shoal wind farm marks another important step in an ever closer Norwegian-British energy relationship.

• Both Norway and the UK have high ambitions for increased renewable energy production. This is crucial to adopt society in an increasingly more renewable and more sustainable direction.

• The UK and Norway have enjoyed a very good cooperation in the energy field for decades.

• We share the North Sea and its large petroleum resources. Norwegian and British companies have cooperated for 40 years in this sector. UK has long been a major market for our gas export, through the Langeled pipeline, offloading gas at Easington.

• It is said that every fourth cup of tea made in Britain is boiled using Norwegian gas. This may be a slight simplification, but the claim is essentially correct.

The Challenge

• As the Norwegian Crown Prince pointed to, the world needs more energy to create growth, reduce poverty and to improve quality of life for hundreds of millions of people. Improved energy efficiency is crucial – but cannot solve the challenge alone.

• The International Energy Agency tells us that oil and gas will be an important part of the energy mix for decades to come. We know that significant new capacity must be brought on-stream every year, just to keep global production of oil and gas stable at the present level.

• The question is not wether to produce, but how. And to do it as clean and efficient as possible.

• At the same time, we need to curb global warming. Our ultimate goal is to contribute to curtailing the human-induced temperature increase to a maximum of two degrees, as compared with the pre-industrial level. This is a huge and complex task. This requires comprehensive change in the global energy system over time.

• Meeting the energy demand, and fighting poverty, while at the same time cutting emissions, is a question of morality. We cannot choose between the two. As global citizens we need to achieve both – and at the same time.

• What are the implications of this for Norway, for the UK and for our energy cooperation? The implication is that we must focus on developing and using low carbon energy while at the same time ensuring that energy is an affordable commodity for our citizens.  Furthermore, we must produce and use energy as efficiently as possible and seek common solutions where this is to the benefit for both countries.

The role of gas

• In this context, I believe that gas can play an important role. Let me explain why.

• The carbon footprint of natural gas is much smaller than for other fossil fuels. In power production, natural gas emits up to 70 % less CO2 than coal. In fact, Europe can achieve almost the 2020 target of 20 % reduction of CO2 emissions, by simply replacing all use of coal with gas in electricity production – without any subsidies! Gas power is low-cost and flexible; it’s also an excellent partner for intermittent renewable power production.

• This is what now happens in the UK; reducing emissions, increasing the ability to compete.

• A strong increase in intermittent renewable energy production demands sufficient balancing capacity. We need backup for solar power and wind power on days where the wind is not blowing or the sun not shining. For example, Denmark, with its large wind power capacity, uses Norwegian hydropower as backup. Even though Norway has a lot of hydropower, it is – unfortunately – way insufficient as backup for all of Europe. Gas, on the other hand, has this potential of being a regulating power.

• Some numbers to illustrate; Norways installed hydro power capacity is about 30 GW. And Germany alone will have an installed capacity of wind and solar of above 60 GW.

• Analyses also shows that gas fired power plants have the lowest life-cycle costs of production, when compared to coal, nuclear and wind power.

• Based on this, it is not surprising that the World Energy Outlook predicts an increase in the use of gas in all of their scenarios – also when achieving the 2-degree target.

• Consequently, natural gas is a fuel for generations to come! Europe must stop talking about gas as a transitional source. It is here to stay for the long term.

• I am glad that the UK government so clearly has stated that gas will continue to play an important part in the UK energy mix. The United Kingdom and Norway have a long history of collaboration in gas. It is important for Norway to continue to strengthen this relationship.

• Norwegian natural gas production has grown to a level of one hundred billion cubic meters a year. And yet, only 28 per cent of the total recoverable gas resources have been produced.

• Thus, Norway has both the resources and the infrastructure to be a significant gas exporter to the UK and the rest of the EU for a very long time.

Infrastructure/the NSN-cable

• Development of electrical interconnectors is vital for the further integration of European electricity markets. It is also important for security of supply in and between countries and regions. Furthermore, stronger connections between countries and regions if a prerequisite for increased utilisation of intermittent renewable electricity production.

• The Norwegian TSO – Statnett – has recently decided to develop interconnectors from Norway to both UK and Germany. These cables will be important for energy security and well functioning markets, and is then a good deal for all parties.

• I am happy to see that there is good progress in the North Sea Network project, and I look forward to its successful accomplishment within the target date of 2020. When built, this will be the longest interconnector in the world!

Renewables and CCS

• Both Norway and the UK are front-runners on carbon capture and storage in Europe and internationally. We also have high ambitions for increased renewable energy production.

• Norway’s renewable target of 67.5 percent reflects our ambitious policy in this area, and it entails a substantial increase from today’s 60 per cent.

• Both Norway and the UK are experiencing a number of renewable energy projects on the drawing board or being materialised as a result of measures implemented to reach our renewable targets.

• In the UK, offshore wind is an important part of the effort and Sheringham Shoal is a very good example of this.

• I have been told that our two major energy companies Statoil and Statkraft have been received with open arms by British authorities on all levels, in their endeavour to develop renewable energy off the coast of North Norfolk. I was very happy to hear this and I am impressed by the British Governments dedication and flexibility. The realisation of Sheringham Shoal is indeed an important and tangible milestone in the UK/Norwegian effort to develop new capacity from renewable energy sources.

• To add to this, the United Kingdom and Norway are also two of the front-runners on carbon capture and storage, or CCS. CCS being a vital element of a sustainable and low carbon energy future. We will need fossile energy, but we need to clean them up.

• We have cooperated closely on this issue for a number of years. We face many of the same opportunities and challenges and we benefit from knowledge-sharing and joint work, among others through the North Sea Basin Task Force.

• In Norway both the government, the industry and research institutions are using large resources to develop and qualify technology for CCS. In may this year, we opened TCM – Test Centre Mongstad – a flexible test facility for capture technology. We are also planning a full scale capture facility at Mongstad.

• There is not one solution to our challenges. I belive it is important to work on renewable energy, CCS, and energy efficiency to combat climate change.

Closing

• I am happy to note that Norway and the UK are cooperating on many levels to secure the necessary transition to a low carbon energy future. Through my speech today I have tried to highlight the areas where we collaborate most extensively and where the benefits of cooperation are tangible and concrete.

• Norway and the UK have a lot to gain from our cooperation in the energy field. I am ready to extend this cooperation whenever there are good and sound reasons to do so!

• Thank you for your attention!