3 Norway’s level of ambition and submission of its INDC to the UN
3.1 Norway’s intended nationally determined contribution for 2030
During the first quarter of 2015, the Government will submit an independent intended nationally determined contribution (INDC) for Norway to the UN Framework Convention on Climate Change, including the following elements:
Norway will conditionally undertake a commitment to reduce its emissions by at least 40 % by 2030 compared with the 1990 level.
Norway will enter into a dialogue on joint fulfilment of its climate commitment together with the EU, with an emission reduction target of at least 40 % in 2030 compared with the 1990 level. In the period up to the Paris conference, Norway will work towards a letter of intent with the EU on joint fulfilment of this commitment.
An agreement on joint fulfilment with the EU would involve the following:
In sectors covered by the EU emissions trading system (EU ETS), Norway would contribute to emission reductions of 43 % compared with 2005 through its participation in the EU ETS.
Norway would also contribute to emission reductions in non-ETS sectors by setting a national emission target for these sectors in line with comparable EU countries.
For non-ETS sectors, flexibility within the EU system will make it possible to achieve some of the cuts through the purchase of EU emission allowances or the implementation of measures in other EU countries. Norway would make use of this flexibility on the same lines as EU member states.
3.2 Towards joint fulfilment with the EU
3.2.1 The substance of joint fulfilment with the EU
In the Government’s view, Norway’s emission reduction commitment in the new climate agreement should reflect its close association with the EU on climate issues. The EU has adopted a target of reducing domestic greenhouse gas emissions by at least 40 % below the 1990 level by 2030. This will give an emissions trajectory in line with the two-degree target. Norway’s target must be at least as ambitious as the EU’s. By adopting a target of a reduction of at least 40 %, which will facilitate joint fulfilment of the commitment, Norway can play a part in strengthening the group of countries that are taking the most ambitious and constructive approach to the climate negotiations.
If joint fulfilment is agreed, Norway will take part in joint efforts with the EU to achieve the target of reducing greenhouse gas emissions by at least 40 %. These efforts will be based on the allocation of reductions between the ETS and non-ETS sectors adopted by the EU, in other words emission reductions in the ETS sector of 43 %, and emission reductions of 30 % in the non-ETS sectors, both relative to 2005.
The EU intends to achieve these targets entirely through emission reductions within the EU. If joint fulfilment is agreed, Norway will also be restricted to implementing emission reductions within the EU and Norway, but will be able to make use of the same flexibility as EU member states through participation in the EU ETS and the flexibility the EU intends to provide for cuts in the non-ETS sectors.
About half of all Norway’s emissions are included in the EU ETS. With an agreement on joint fulfilment, the harmonisation with the EU ETS that has already taken place would continue for the ETS sectors in Norway. The EU ETS produces real and verifiable emission reductions. Norway incurs costs by participating in emissions trading, but is at the same time contributing to emission cuts within the system. If Norway fulfils its emission reduction commitment jointly with the EU, Norwegian companies will deliver overall emission reductions of 43 % together with companies in EU member states. The cuts will be made in the sectors and countries where the costs of reducing emissions are lowest. The crucial requirement is to ensure compliance with the emission ceiling at European level.
Norwegian emissions in non-ETS sectors would also be included in an agreement with the EU on joint fulfilment. Norway will set a target for 2030 for its domestic emissions in non-ETS sectors. This is expected to be set on the same basis as the targets for EU member states, and after negotiations with the EU. For Norway, a target for the non-ETS sectors will be conditional on opportunities for flexible implementation in line with those available to EU member states (see the description of the EU commitment for 2030 in Chapter 2.3). The EU is expected to reach a decision on how emission reductions in non-ETS sectors are to be shared between member states (effort sharing) in 2016.
3.2.2 Background for a joint solution with the EU
Both Norway and the EU are giving high priority to climate policy, and consider the implementation of climate policy measures to be part of a long-term transition to a low-emission society. Norway’s objective is to be a low-emission society in 2050. The present Government has followed this up by strengthening the national cross-party agreement on climate policy. In its roadmap for 2050, the EU has set out its ambition for the transition to a competitive and cost-effective low-carbon economy in 2050. The EU views investment in green technologies and green employment as a cost-effective strategy for strengthening the economy, creating new jobs and making Europe more competitive. The EU also points out that although taking steps to curb climate change has economic costs, the long-term costs of not acting will be far higher.
Norway thus shares many of the EU’s views on the climate-related challenges we are facing. Dealing with global climate and environmental problems will require a process of social transformation so that growth and development take place within safe ecological limits. There must be a transition to products and services that have considerably less negative environmental and climate impact than those in use today. A ‘green shift’ will be demanding but possible – but it must be a global shift. Today’s globalised economy sets the overall framework for social and industrial development, policy development and the use of public policy instruments. By delivering its commitment jointly with the EU, Norway would be able to draw on a wider range of experience and cooperate more closely on the transition to a low-emission society. Joint solutions and joint markets would make the transition easier. This solution would also link Norway more closely to the EU, which is our most important trade partner.
To reduce global emissions in line with the two-degree target, it is necessary to put a price on emissions. Norway has for a number of years been cooperating closely with the EU on good, effective solutions, including the establishment and development of international markets for emissions trading. This approach has been supported by changing governments, with broad-based support in the Storting. The establishment of the EU ETS made the EU a pioneer in putting market solutions into practice and thus creating long-term economic incentives for a transition to low-emission solutions. With its strict monitoring, reporting and verification requirements, the EU ETS provides an international standard for best practices in emissions trading, combining cost-effectiveness with verifiable cuts in emissions. This is important in the transitional phase we are entering at international level, before all countries have undertaken commitments in a new climate agreement.
By forging closer ties with the EU, Norway will contribute to the wider international cooperation on global climate solutions. The EU ETS is the key tool for achieving the EU’s climate target. An emissions trading system is both cost-effective and efficient, since it ensures emission cuts at the lowest possible price. The EU ETS maintains high standards and has strict requirements to ensure that emission allowances represent real emission reductions. Although emissions trading schemes are becoming more widespread, and there are moves to link a number of them together, there is a long way to go before there is a single global carbon price. Given the current uncertainty about developments in international carbon markets, developing closer ties to the EU in international climate policy could help to set a standard for effective ways of cooperating to reduce emissions. This would provide a firmer basis for wider climate cooperation and an example of how regional cooperation can be used to make progress towards global climate targets. Cooperation could subsequently be expanded to the global level. A joint solution for the EU and Norway would be a positive step in international climate cooperation, making it easier for countries to take part in international emission trading systems and facilitating cost-effective implementation of mitigation commitments between countries.
Norway is a small open economy, which benefits from equal framework conditions internationally. An agreement on joint fulfilment with the EU could open up more opportunities for Norwegian companies that are able to provide innovative solutions for the green shift in the economy that has begun both in the EU and in Norway. The EU’s provision for the use of flexible mechanisms internally (see Chapter 2.3) may be instrumental in making carbon prices more uniform within the geographical area to which the joint commitment applies.
3.2.3 Developing an agreement with the EU
The Government wishes Norway to enter into a dialogue with the EU, with a view to concluding an agreement on joint fulfilment of a climate commitment with an emission reduction target of at least 40 % in 2030 compared with the 1990 level. It is essential for Norway that any such agreement is not incorporated into the EEA Agreement, but is negotiated as a bilateral agreement between Norway and the EU. Moreover, Norway must not automatically be bound by other targets and legislation in the climate and energy field beyond what follows from the EEA Agreement and the agreement on joint fulfilment with the EU. Since Norway already participates fully in the EU ETS through the EEA Agreement, it is particularly questions relating to emission reductions in non-ETS sectors and to access to flexible implementation that must be resolved. The Government will emphasise the importance of ensuring equitable conditions for Norwegian and EU companies.
In the period up to the Paris conference, Norway will work towards a letter of intent with the EU on joint fulfilment of an emission reduction commitment in accordance with the provisions of the Climate Change Convention. The Convention encourages cooperative efforts to address climate change.
Although it should be possible to sign a letter of intent with the EU on joint fulfilment relatively quickly, it may take some time before an agreement can be finalised. The EU’s own time frame for following up the 2030 policy framework for climate and energy must be taken into account, and a number of decisions will not be made until 2016. Because of this, and to take into account the possibility that negotiations with the EU may not be successful, it is necessary for Norway to submit an independent INDC to the UN Framework Convention on Climate Change by the first quarter of 2015. The Government will keep the Storting informed in an appropriate way about progress in the negotiations with the EU.
3.3 Norway’s commitment without an agreement with the EU
In the Government’s view, an agreement on joint fulfilment with the EU would be the best solution. If an agreement with the EU is not reached, the Government will maintain the ambition of reducing emissions by at least 40 % by 2030 compared with 1990. This target will be conditional on the availability of flexible mechanisms under the new climate agreement and on Norway being credited for participation in the EU ETS, so that this counts towards fulfilment of the commitment. In order to retain the same ambition level, Norway will need to be able to make use of flexible mechanisms at international level, in line with the flexibility EU member states will enjoy in achieving their targets within the EU system. The EU’s allocation of emission targets for the non-ETS sectors in member states and how flexible mechanisms can be used will be clarified as the EU continues its work on the climate and energy policy framework. Decisions are expected in the course of 2016. If Norway does not conclude an agreement with the EU, the Government will consult the Storting at a later date on the determination of a national target for the non-ETS sector.
About half of all Norway’s emissions will still be included in the EU ETS. By participating in the system, Norway is taking responsibility for managing emissions from ETS sectors. The Government is seeking to ensure that Norway is credited for a reasonable proportion of the emission reductions resulting from its participation in the EU ETS. The European Commission has expressed its understanding of the matter and is prepared to find a solution. The way Norway is meeting its commitment under the Kyoto Protocol provides a model for how this could be done. For the period 2008–12, a solution was found that provided a link between the EU ETS operating at company level and the EU’s and Norway’s Kyoto commitments at country level. Norway is discussing a solution for the current period (2013–20) with the EU. We do not expect a common international emission allowance to be established in the new climate agreement, and Norway and the EU must therefore find independent solutions. A system for crediting Norway’s participation in the EU ETS must ensure that an emission allowance is credited either to the EU or to Norway and is not counted twice. In addition, we must ensure that all emissions are accounted for; in other words, that the emission allowances in the system cover all emissions in ETS sectors.
If no agreement on joint fulfilment is reached with the EU, Norway will not be able to make use of the flexibility the EU system provides for emission reductions in non-ETS sectors. It is therefore important for Norway that a new climate agreement makes good provision for the use of flexible mechanisms, because the costs of emission reduction measures are currently higher in Norway than in many other countries. See Box 2.3 for a description of flexible implementation mechanisms.
3.4 Inclusion of forest and other land categories in Norway’s INDC
The Government will use the following as a basis for a predictable, long-term approach to the inclusion of emissions and removals from the land sector (forest and other land categories) in a new emission reduction commitment for 2030.
The accounting approach chosen for removals and emissions from the land sector will not affect the level of ambition for 2030 when forest is not included.
The approach taken will ensure that there are incentives for new mitigation action in the land sector.
When Norway submits its INDC during the first quarter of 2015, the treatment of the land sector will be described on the basis of a model where net removals by the sector can be accounted for, using 1990 as the base year. The INDC will make it clear that Norway has not yet taken a definitive position on the accounting rules for the land sector.
In the negotiations on the new climate agreement, Norway will work towards a land-based approach to treatment of the land sector and a common framework for all countries.
Norway will clearly indicate to the UNFCCC its position that it should not be credited or penalised for changes resulting from improvements in the methodology for calculating emissions and removals.
Norway will keep open the option of using the Kyoto accounting rules for natural disturbances and carbon storage in harvested wood products.
The accounting approach for emissions and removals in the land sector in Norway’s commitment under the new climate agreement will need to be clarified. It is not yet clear how the EU will include the land sector in its 2030 target. In its negotiations on an agreement with the EU, Norway will work on the principle that the choice of accounting approach for emissions and removals from the land sector should not affect the level of ambition, and that the accounting rules must ensure that there are incentives for new climate action in the land sector, in line with the two-degree target, see Chapter 2.2.2. At the same time, information must be provided on what this entails for Norway's INDC.
In its submission to the UNFCCC and in communications with the EU, Norway will describe the treatment of the land sector using a model that corrects for the difference between net removals in 1990 and the projected figure for the target year. 1990 is also the base year for other sectors. In 1990, net removals in the land sector totalled 10.4 million tonnes CO2-eq, while the projected figure for the target year 2030 is 21.2 million CO2-eq. The difference to be accounted for is 11.1 million tonnes CO2-eq. To ensure that this approach does not affect the level of ambition, Norway’s overall emission reduction commitment must be adjusted by the same amount (i.e. 11.1 million tonnes). New action that could be taken in the land sector in order to achieve Norway’s commitment could include reducing deforestation, afforestation, fertilisation, increasing plant density and plant breeding.
An approach of this kind when Norway submits its INDC in the first quarter will provide the necessary clarity about what the INDC includes and demonstrate the principles Norway will follow in working towards a common framework for all countries. Norway has not yet taken a definitive position on how the accounting rules should be formulated.
In order to provide incentives for new action in the land sector and at the same time maintain incentives for action in other sectors, the largest possible proportion of sources of emissions and removals and changes in carbon stocks should be included in the target. Norway will work towards a land-based approach including all emissions and removals from the different land categories – forest land, cropland, grassland, wetlands, settlements and other lands. This expands coverage beyond what has been included until now under the Kyoto Protocol. A system that includes all land categories would also prevent carbon ‘leakage’ through increased emissions or reduced removals from other land categories, and avoid a situation where countries make strategic choices about which emission sources or carbon sinks to include in their commitments. A land-based approach also gives a good basis for assessing impacts on biodiversity, because these are often related to land-use changes. Moreover, a land-based approach would provide a useful signal in the climate negotiations, as it would harmonise with possible common approaches under the new climate agreement. This is the generally required approach under the Convention and is used in international efforts to reduce emissions from deforestation and forest degradation (REDD+).
One of the factors that makes it complicated to account for emissions and removals from forest is that there are annual variations in net removals. These arise because of seasonal variations, and even more because of variations in timber harvesting. Part of the resulting uncertainty is dealt with by expressing Norway’s emission reduction commitment in the form of an emission budget covering several years, to smooth out annual variations. Uncertainty in the estimates of emissions and removals from forest has been reduced considerably in recent years and is now no higher than for certain other sources. It is important to ensure that countries are not penalised for introducing improved methodology, and that recalculations are made for whole time series for emissions and removals from forest and other land categories. Natural disturbances (fire, storms, etc.) have so far been of little significance for removals in forest in Norway. However, a changing climate will entail a higher risk that extreme weather events and forest fires will have greater consequences. To deal with unforeseen events that may make it difficult to achieve its commitment, Norway should indicate that it will keep open the option of using the Kyoto accounting rules for natural disturbances that were negotiated for the second commitment period under the protocol.
3.5 A fair and ambitious contribution
Norway’s climate policy is based on the agreements on climate policy adopted by most of the parties in the Storting in 2008 and 2012. These cross-party agreements include targets for emission reductions by 2020, including targets for national emission reductions and a long-term goal for Norway’s transition to a low-emission society.
One of Norway’s targets is to achieve carbon neutrality in 2050. This means that Norway would have to reduce emissions by the equivalent of 100 % of its own emissions by 2050. If an ambitious global climate agreement is achieved under which other developed countries also take on extensive obligations, Norway will undertake to achieve carbon neutrality by 2030 at the latest. These targets have been communicated to the Climate Change Convention and continue to apply.
At the Lima climate conference in 2014, it was decided that each country’s intended nationally determined contribution was to represent a progression beyond its current undertaking. Countries were also encouraged to provide information on how they consider their contributions to be fair and ambitious, and how they contribute towards achieving the overall objective of the Convention, to prevent dangerous anthropogenic interference with the climate system.
In the second commitment period under the Kyoto Protocol (2013–20), Norway has undertaken to achieve emission reductions corresponding to a reduction of its domestic emissions to 84 % of the 1990 level. This is in line with Norway’s target of reducing global greenhouse gas emissions by the equivalent of 30 % of its own 1990 emissions by 2020. Norway has also undertaken to increase its emission reductions to 40 % by 2020 compared with the 1990 level if this can contribute to agreement on an ambitious global climate regime that includes emission commitments on the part of the major emitters. Norway’s new emission reduction commitment represents a progression beyond these undertakings.
The Government considers Norway’s contribution to be both fair and ambitious. The starting point was that Norway’s contribution must be in line with an emission trajectory consistent with the two-degree target, both up to 2030 and up to 2050. The target of cutting emissions by at least 40 % by 2030 is in line with this. Norway will not be alone in taking this approach. The EU target of reducing emissions by at least 40 % in 2030 compared with 1990 also gives an emission trajectory in line with the two-degree target.
Cutting emissions by 40 % will be a more demanding task for Norway than for the EU. There are several reasons for this.
Norway has been experiencing much stronger population growth than the EU, and population growth is expected to be higher in Norway in the years ahead as well. Seen in isolation, a growing population will tend to lead to higher emissions in Norway, and make it more difficult to reduce emissions, particularly from the transport sector.
Norway has been applying climate policy instruments effectively for many years. The carbon tax was proposed by the Syse Government as early as 1990 and was introduced the following year. More than 80 % of Norway’s emissions are either in the ETS sector or subject to the carbon tax or both. The tax rates are also relatively high.
Norway has made use of stronger policy instruments than the EU average in non-ETS sectors. Vehicle taxes have been actively used for many years with the aim of ensuring that Norway’s vehicle stock is as environmentally sound and energy efficient as possible. Norway introduced taxes on waste with an effect on greenhouse gas emissions at a fairly early date. These taxes have now been phased out, but Norway has prohibited landfilling of biologically degradable waste since 2009.
Within the EU, heating of buildings is a substantial source of emissions outside the ETS sector. In Norway, on the other hand, buildings are generally heated using renewable energy. Energy efficiency measures and phasing out the use of fossil energy carriers in buildings are often fairly low-cost measures, but will not result in large emission cuts in Norway. This means that the potential for emission reductions in non-ETS sectors is more limited than in the EU.
Despite the effective application of climate policy instruments, Norway’s greenhouse gas emissions have risen by 3.7 % in the period 1990–2013. In the same period, the EU’s emissions have been reduced by about 19 %. Norway will therefore have to make considerably greater reductions than the EU relative to current emission levels in order to achieve the target of a 40 % reduction in emissions by 2030 compared with the 1990 level. There are also important differences between Norway and the EU in non-ETS sectors. It is estimated that if the use of policy instruments remains unchanged in the EU, emissions from non-ETS sectors will be reduced by 20 % from 2005 to 2030. For Norway, the corresponding reduction is estimated at only 2 %. Costs are also higher in Norway than in the EU, making it more expensive to carry out emission abatement measures.
Differences between Norway and the EU in industrial structure were one reason why Norway’s commitment for the first Kyoto period was a 1 % rise in emissions from 1990, while the EU’s commitment was a reduction of 8 %. A study by Statistics Norway estimates that given a carbon price path in line with the two-degree target, the percentage reduction in emissions in 2030 would be about twice as large in the EU as in Norway.
3.6 Submission of Norway’s INDC to the UN
The Government’s dialogue with the EU on joint fulfilment of a climate commitment will not be concluded before the time limit for submitting INDCs to the UN, which is 31 March 2015. The Government therefore proposes that Norway should submit a conditional intended nationally determined contribution with a target of reducing emissions by at least 40 % by 2030 relative to the 1990 level. The submission should also include the information that Norway is negotiating an agreement on joint fulfilment with the EU. It should emphasise that in seeking an agreement on joint fulfilment, Norway intends to maintain its overall level of ambition, and that the information provided may be adjusted in accordance with the final agreement with the EU.
According to the 2014 Revised National Budget, Norway’s main methodological approach when developing Norway’s commitment will be to use an emission budget expressing Norway’s commitment as emissions in millions of tonnes of CO2 equivalents for the whole period. Commitments under the Kyoto Protocol have been expressed in this way. Converting Norway’s level of ambition expressed as a percentage of its emissions to an emission budget in tonnes will facilitate implementation in the most flexible and effective way possible. The EU also intends to draw up an emission budget for the period 2021–30. If an agreement on joint fulfilment with the EU is concluded, Norway’s final emission budget must be drawn up in conjunction with this agreement.
In order to evaluate the effect of the new climate agreement, it will be necessary to have sufficient and comparable information on the various countries’ INDCs. Decisions adopted under the Climate Change Convention provide some guidance on what information should be provided. INDCs should contribute towards the Convention’s overall objective of stabilising greenhouse gas concentrations in the atmosphere. Countries have also been asked to provide sufficient information to facilitate clarity, transparency and understanding of their contributions. At the Lima climate conference in December 2014, it was decided that this may include information that makes it possible to quantify the effect on emissions. Types of information that are mentioned include the reference point or base year, time frames and/or periods for implementation, scope and coverage, and the assumptions and methodological approaches on which the INDC is based.
Norway will follow this guidance when it submits its INDC in the first quarter of 2015, and will include both technical information to ensure that the emission target itself is quantifiable and comparable, and information explaining the emission target.
Norway’s submission will include the points below. In areas where further clarification will need to be arrived at through the negotiations with the EU on joint fulfilment, the necessary provisos must be included.
Information on the greenhouse gases and sources covered, including a statement that all emission sources and removals on Norwegian territory including Svalbard are covered.
A preliminary description of how emissions and removals and changes in the carbon stocks in forest and other land categories are included in Norway’s INDC (see Chapter 3.4). This will need to be conditional on the outcome of the negotiations with the EU.
The time frame for the commitment, the base year that is used for the emission reduction level and the period to which the emission target applies.
Information on the use of IPCC methodology for the emission inventory and for conversion factors for different greenhouse gases so that figures can be compared.
Other clarifications or conditions, such as conditions relating to emissions trading and the use of flexible mechanisms.
The submission to the Climate Change Convention will include a general proviso that if future developments of the rules make it impossible for Norway to fulfil its commitment as intended, it may be necessary to review the commitment. The submission will also explain the grounds for Norway’s INDC, with an account of existing policy instruments, emission trends and the potential for emission reductions, and will contain a general description of current political initiatives for reducing emissions.