Speech by Prime Minister Erna Solberg at Statoil's autumn conference in Oslo, 23 November 2015.
Today, we will discuss the new edition of the IEA´s flagship publication – World Energy Outlook. Once again the Agency has done an impressive job in analysing future energy scenarios.
The IEA points out that the energy scene is changing, and that the signs of change are more visible today than they were only a year ago.
In such times of uncertainty, it is vital to understand the relationship between a shifting energy landscape, economic and environmental goals, and energy security.
World Energy Outlook offers insights and analysis that will be crucial for policy makers, not least those of us who will be taking part in the climate summit in Paris next week.
COP 21 – Climate and energy
One of the biggest questions facing us today is the challenge of meeting the world’s growing demand for energy, while at the same time addressing climate change.
The world expects us to deliver an ambitious and fair agreement in Paris. Most countries are stepping up to the challenge, and have submitted their climate goals.
According to the IEA, these goals will limit the temperature rise to 2.7 degrees, instead of the 3,6 degrees indicated in last year´s New Policies Scenario.
We are making progress, but we must do more. The Paris agreement should provide a framework to enable all countries to achieve a low-emission society.
With this in view, we need:
- a collective, time-bound goal on emission reductions,
- clear provisions for increasing national commitments, and
- common rules for reporting progress and sharing information.
An ambitious global effort will create trust and strengthen efforts at the national level.
Norway is striving to be at the forefront of this global transformation. We have committed ourselves to an ambitious target – a 40 % reduction in emissions by 2030.
I also hope that we will see more use of cost-effective instruments –nationally, regionally and globally. Not least a global price on carbon emissions.
In a world where emissions need to be reduced, access to clean, renewable energy will be a competitive advantage.
The growth in renewable energy in many markets and countries is encouraging. Electricity is being used in new ways, and in new areas. The introduction of electric cars is just one example.
Norway has benefited from abundant hydropower resources. In an average year, Norway generates a power surplus, making us a net exporter of clean energy to Europe.
Even so, we are continuing to develop more renewable energy – from Finnmark in the north, to Agder in the south.
We also need well-functioning markets.
The IEA report presents the Nordic region as an example for the rest of Europe. And it highlights the fact that we have decoupled emissions and economic growth.
At the heart of this achievement is a joint market and an interconnected power system in the Nordic area.
The increasing role of renewables is positive. However, the global energy system is huge and complex, and major changes won’t happen overnight.
Fossil fuels still account for more than 80 % of the world’s energy demand – and will continue to be the dominant part of the energy mix for decades to come.
Against this backdrop, I believe natural gas will – and should be – an important energy source in the transition to a low-carbon world.
Replacing coal with gas is one of the most efficient ways to reduce emissions, and thus move closer to achieving our climate objectives.
Using gas instead of coal for power generation in Europe, would reduce all emissions in Europe by 10 %. It would also significantly reduce local air pollution.
Natural gas can also play an important role in providing flexibility and back-up capacity for intermittent renewable energy like wind and solar power.
Norway is a major supplier of gas to Europe. We will continue to be a reliable and stable source for European gas imports for many years to come.
Clean production and reliable supply of Norwegian oil and gas
The activity on the Norwegian continental shelf is subject to strict climate regulations. Oil production in Norway is among the best in the world in terms of CO2 emissions per barrel.
Our production is also at the forefront when it comes to technological solutions that minimise the environmental impact.
We know that our policies and measures – with carbon pricing as the most important – deliver results.
For example, the introduction of our CO2 tax gave oil companies a clear incentive to take action. Over the past 20 years, this has resulted in an emission reduction of five million tonnes CO2 a year from the Norwegian shelf.
The oil companies operating on the Norwegian shelf have ambitions to further reduce emissions.
I would especially like to commend Statoil for increasing its target to a reduction of 1.2 million tonnes by 2020.
It is now 50 years since the first exploration licences for the Norwegian shelf were awarded. This is certainly something worth celebrating. At the same time, less than half our resources have been produced.
We can still maintain a high level of activity in Norway's most important industry for decades to come.
We will continue to be a major producer of oil and gas, and we will do so with the lowest possible carbon footprint.
Low oil prices
From the World Energy Outlook, we know that the total global demand for energy will continue to rise, and that oil and gas will remain a crucial part of the energy mix.
However, with the current low oil prices, companies are not investing enough to meet future demand.
It is difficult to predict future developments in the oil market, but it is evident that the current price level is too low to generate the investments needed.
This means that the industry must continue – and even intensify – its efforts to bring down costs.
Key words here are efficiency, standardisation, new technologies, smarter solutions and eliminating unnecessary bureaucracy.
A very positive development these days is the progress being made in the first stage of the giant Johan Sverdrup field.
This project will bring about significant value creation and employment opportunities all over the country.
The part played by the Government
We should not underestimate the current challenges, but we must also remember that downturns and upturns are normal in this industry.
The Government cannot micromanage the level of activity. It is up to the industry to adapt to market realities.
However, the Government will continue to contribute where it can. First and foremost by providing a stable and predictable framework and access to attractive acreage.
This in turn will promote:
- sound management of existing fields by stimulating increased production,
- development of profitable new fields using existing infrastructure, and
- the discovery of more resources, and thus the establishment of infrastructure in new areas.
Although the industry is going through a challenging period, I am confident that there will be significant interest for the new acreage that is being made available.
We are now approaching the deadline for applications in the 23rd licensing round on the Norwegian continental shelf. Licences will be awarded before the summer.
Several blocks have been announced in the Barents Sea, including blocks in the south-eastern area – the first new area to be opened on the Norwegian continental shelf for more than 20 years.
The Government has also presented measures to stimulate activity and employment in the petroleum sector in next year’s budget proposal.
These include increased support for technology development – especially technology for use in the northern areas.
In challenging times, it is important to keep the long-term perspective in mind.
We must retain and develop skills and expertise, continue our research and development efforts, further reduce emissions, and at the same time reduce costs and increase efficiency.
Ladies and gentlemen,
The world needs more energy. it needs cleaner energy. And it needs reliable energy supplies.
Norway will continue to be a reliable long-term provider of energy. Both oil and gas and renewable energy.
And Norway will continue to take action to address climate change.
I wish you all a successful conference, and fruitful and interesting discussions.