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Meld. St. 41 (2016–2017)

Norway’s Climate Strategy for 2030: a transformational approach within a European cooperation framework — Meld. St. 41 (2016–2017) Report to the Storting (white paper)

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1 Introduction

The Norwegian Government is working towards joint fulfilment of its Paris commitment together with the European Union (EU). Joint fulfilment will make it possible to achieve the 2030 reduction target for emissions that fall outside the scope of the EU Emissions Trading System (EU ETS) mainly through domestic emission reductions, and with the use of EU flexibility mechanisms as necessary. The main sources of non-ETS emissions are transport, agriculture, buildings and waste, but also manufacturing and the petroleum sector. The Government’s strategy for 2030 is intended to open the way for substantial domestic emission reductions.

Chapter 2 describes a changing world. Climate change is one of the greatest threats of our time. Global warming is resulting in new rainfall patterns and affecting life both in the sea and on land. At the same time, there is rapid technological development of climate-friendly solutions for example using solar and wind energy. There has been a phenomenal increase in the number of electric cars. The Paris Agreement and events since show that the attitudes of a clear majority of the world’s politicians are changing. However, unless the world succeeds in cutting emissions substantially in the next few years, there is a very high risk that climate change will have serious and far-reaching consequences. Global emissions must be reduced. A transformation process is needed to develop a greener global economy, and we must prepare to deal with unavoidable climate change.

The Government is working towards joint fulfilment of its 2030 commitment together with the EU. Chapter 3 presents the Government’s strategy for achieving this. Norway is already cooperating with the EU to reduce emissions from ETS sectors. Given an agreement on joint fulfilment of the 2030 target, Norway would also cooperate with the EU on reducing non-ETS emissions covered by the proposed Effort Sharing Regulation. Norway would be allocated a separate target for these emissions. These emissions are mainly from transport, agriculture, buildings and waste management, but also include non-ETS emissions from manufacturing and the petroleum sector.

The Commission's proposal estimates that Norway would be attributed a target for reduction of non-ETS emissions of 40 % below the 2005 level in 2030. The target for non-ETS emissions would be expressed as a budget for the whole period 2021–2030. The gap between projected emissions in Norway and Norway’s emission budget is estimated at 30 million tonnes CO2 equivalents (CO2-eq) over the period 2021–2030. This estimate is uncertain. Based on the proposed regulation, Norway is likely to be able to use between 5.5 and 11 million ETS emission allowances to cover part of the gap in the emission budget (this is further discussed in Chapter 4.5). The Government will make use of this flexibility. Further emission reductions totalling 20–25 million tonnes would be required during the period.

The Government intends to achieve its 2030 target mainly through domestic emission reductions, and with the use of EU flexibility mechanisms as necessary. The Government will promote the use of cost-effective mitigation measures to meet the 2030 commitment. The Government's strategy for 2030 is intended to facilitate substantial domestic emission reductions. Before the commitment period starts in 2021, the details of the legislation will be known and the consequences for Norway will be clearer. However, well into the commitment period 2021–2030 there will be considerable uncertainty related to emission trajectories, the effects of climate policy, technological developments and the costs of emission reductions. This is why the strategy needs to be both ambitious and flexible. The Government is allowing for uncertainty by strategic planning to ensure the necessary flexibility to achieve the emission budget. Use of the EU flexibility mechanisms will contribute to emission reductions elsewhere in Europe within the common overall emission ceiling, and thus contribute to real global reductions in the same way as emission reductions in Norway.

The Government has already implemented a range of mitigation measures and strengthened national climate policy together with the parties with which it is cooperating in the Storting (Norwegian parliament). In addition, decisions made by the Storting and ambitions and goals that have been formulated will play a part in bringing about emission reductions in the years ahead. This applies in particular to the targets for zero-emission vehicles as a share of the vehicle park set out in the white paper Norwegian National Transport Plan 2018–2029 (Meld. St. 33 (2016–2017)); the decision to increase the biofuel quota obligation (the required proportion of biofuels in annual sales of road traffic fuels) to 20 % in 2020; and a decision by the Storting to request the Government to introduce a standard carbon tax rate for non-ETS emissions.

In the strategy described in the present white paper, the Government shows that the estimated emissions gap of 20–25 million tonnes can be closed by means of domestic emission reductions. The white paper presents mitigation measures that the Norwegian Environment Agency estimates have the overall potential to reduce emissions by more than is needed to close the emissions gap. The Government considers it appropriate to consider a broad range of mitigation measures because estimates of the emission reduction potential and costs of measures are highly uncertain. This strategy takes into account the possibility that some of the emission reduction potential may not be realised. The strategy does not present a final list of mitigation measures or policy instruments to achieve emission reductions by 2030. It will be important to be able to adjust the use of policy instruments throughout the period, for example to take into account technological developments and the costs of deploying zero- and low-emission technology. The strategy therefore charts a course for the use of policy instruments in the years ahead and indicates mitigation opportunities within each sector.

The Norwegian Environment Agency has estimated that action to achieve political goals and ambitions can result in emission reductions of the order of 16 million tonnes over the period 2021–2030. In its analyses, the Environment Agency has divided mitigation measures into several cost categories. Mitigation measures related to policy objectives and ambitions for the transport sector vary greatly in cost. Cost levels will depend to a large extent on further developments in low- and zero-emission technology for the transport sector. This technology is mainly being developed outside Norway.

The Environment Agency has estimated that there is an additional potential for reducing non-ETS emissions by about 18 million tonnes at an economic cost of less than NOK 500 per tonne CO2-eq in sectors including transport, agriculture, industry and petroleum. The estimated emission reduction potential and costs are uncertain and sensitive to the underlying assumptions. Developments in costs and in the feasibility of implementation will determine which mitigation measures are actually implemented. The Environment Agency has not assessed the policy instruments that would be needed or how they should be applied, and this is another source of uncertainty.

The Government considers it important to strengthen knowledge about possible mitigation measures, their costs and the effects of policy instruments that are designed to ensure that Norway meets its 2030 commitment and continues the transition to a low-emission society in 2050.

Chapter 4 of this white paper describes EU climate policy and its implications for Norway. If joint fulfilment of the 2030 climate target is agreed, the proposed EU regulations on effort sharing1 and on land use, land-use change and forestry will become relevant for Norway. The Government is allowing for uncertainty, including cost uncertainty, by strategic planning to ensure the necessary flexibility to achieve the emission budget. Norway expects to achieve sufficient flexibility through bilateral agreements with EU countries. The Government will seek cooperation with EU countries on joint implementation of mitigation measures through bilateral agreements. Cooperation on emission reductions between EU countries is an important part of the EU legislation for achieving the 2030 target.

Chapter 5 describes efforts and plans for reducing non-ETS emissions in Norway. It gives an account of emission trends and the use of policy instruments at national level. Chapter 5.2 describes key principles for Norway’s use of policy instruments. The main instruments of Norwegian climate policy are taxes and emissions trading, which are cross-sectoral economic instruments. The Government will promote the use of cost-effective mitigation measures to meet the 2030 commitment. If the carbon tax is not considered to be an adequate or appropriate instrument, other instruments that provide equally strong incentives to reduce emissions will be considered, including direct regulation under the Pollution Control Act and voluntary agreements. The Government will also take steps to ensure that the policy instruments used continue to be effective and well-coordinated. A number of publicly-funded grant schemes have been established to promote zero- and low-emission solutions, for example through Enova, the ‘Klimasats’ arrangement for counties and municipalities, and Innovation Norway. In addition, the Government will continue to focus on research and development and the deployment and dissemination of low-emission technology, and will ensure that the public sector as a customer supports the adoption and development of new environmentally friendly technologies and solutions.

Chapter 5.3–5.10 presents emission reduction potentials and possible mitigation measures and policy instruments to reduce emissions in various sectors. Estimates provided by the Norwegian Environment Agency indicate that emissions in the period 2021–2030 can be reduced by approximately 35 million tonnes CO2-eq by following up political decisions and ambitions, and through measures with an economic cost of less than NOK 500 per tonne CO2-eq.

The transport sector is an important element in the transition to a greener economy. The sector accounts for about 60 % of non-ETS emissions in Norway, and a large proportion of domestic non-ETS emission reductions must therefore be achieved in this sector. Meanwhile, the development of low- and zero-emission technology in the transport sector is proceeding rapidly. To support efforts to reduce emissions in the transport sector, the Government has set a working target of a cut of 35–40 % in emissions from the transport sector by 2030 compared with 2005. This target is based on the assumption that the technological maturity of zero-emission solutions in different transport segments will improve so that they become competitive with fossil-based transport solutions.

Chapter 6 assesses the economic and administrative consequences of the 2030 target. Achieving the 2030 and 2050 climate targets is bound to entail costs. The costs of reaching the 2030 target have previously been discussed in the white paper New emission commitment for Norway for 2030 – towards joint fulfilment with the EU (Meld. St. 13 (2014–2015)) and in a recent bill proposing a new Act relating to Norway’s climate targets (Prop. 77 L (2016–2017)). Norway will have to go through the impending transformation process in the face of great uncertainty, both as regards its costs and social impacts, and as regards the speed of technological developments in different areas.

Footnotes

1.

The proposed Effort Sharing Regulation includes binding emission reduction targets for non-ETS emissions for each country.

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