News story | Date: 08/01/2021
Norway is committed to achieving its emission reduction target under the Paris Agreement. Today, the Government is presenting a white paper describing its action plan for transformation of Norwegian society as a whole by 2030. The plan shows how Norway will achieve its climate target and at the same time create green growth.
‘Under this Government, Norway has reduced its greenhouse gas emissions, and this progress will continue. This climate action plan will give new momentum to Norwegian climate policy. For the first time, a government is putting forward a compelling, comprehensive plan for cutting emissions in every sector. We must make sure that it pays to cut greenhouse gas emissions,’ said Minister of Climate and Environment Sveinung Rotevatn.
The main emphasis of the climate action plan is on emissions that are not included in the Emissions Trading System, or non-ETS emissions. These include emissions from transport, waste, agriculture and buildings, and some emissions from industrial production and the oil and gas industry. It also deals with the EU Emissions Trading System, which applies to the bulk of emissions from industrial production and the oil and gas industry. In addition, the action plan discusses CO2 removals and emissions in the land-use, land-use change and forestry (LULUCF) sector.
‘This action plan will enable us to exceed Norway’s assigned target from the EU for non-ETS emissions, which is 40 %, and achieve the Government’s ambition of a 45 % reduction. And we will achieve this through domestic emission cuts,’ said Mr Rotevatn.
The main policy instruments in the climate action plan are taxation of greenhouse gas emissions, regulatory measures, climate-related requirements in public procurement processes, information on climate-friendly options, financial support for the development of new technology, and initiatives to promote research and innovation.
The Government intends to make greater use of climate-related requirements in public procurement processes. Requirements for zero-emission solutions will be introduced for passenger cars and small vans in 2022, and for local buses from 2025. Criteria relating to low- or zero-emission solutions will also be introduced for ferry services and high-speed passenger vessel services.
The sales volume of biofuels for road traffic will be maintained to ensure cuts in emissions from the fossil vehicles that are still in use. The Government will introduce biofuel quota obligations for offroad diesel and fuel for shipping from 2022. Vehicle taxes and other policy instruments will be designed so that they continue to provide incentives to choose zero-emission vehicles.
Enova has been given a clearer climate profile, so that it will contribute towards Norway’s emission reduction commitment for non-ETS emissions and Norway’s transition to a low-emission society.
The Government will use the letter of intent it has signed with the agricultural organisations as a basis for climate-related work in this sector in the years ahead.
The white paper also announces a gradual increase in the carbon tax rate from its current level of about NOK 590 to NOK 2000 per tonne CO2 equivalents in 2030. This will progressively increase the cost of emitting CO2 and give stronger incentives to reduce emissions. The Government’s policy is not to increase the overall level of taxation. Any tax increase will therefore be offset by reducing other taxes correspondingly.
‘Climate policy is the sum of all our efforts - how we transform Norway and equip the country for the future. We will cut emissions and enhance removals of CO2 in a way that transforms Norway and promotes green growth. To achieve this, we need an industrial sector that is greener, smarter and more innovative,’ said Prime Minister Erna Solberg.
‘The Government is presenting an action plan for achieving Norway’s climate target for 2030. We will continue to reduce Norway’s greenhouse gas emissions, and shape a society that will provide jobs for the future. This will offer freedom and opportunities for everyone,’ said Minister of Education and Integration Guri Melby.
‘We all have a responsibility for each other, for the poorest people in the world and for future generations. The climate action plan will contribute to an equitable transformation process, so that Norway takes its share of the responsibility,’ said Minister of Children and Families Kjell Ingolf Ropstad.
(Edited february 15. at 14.01: The complete white paper Norway's Climate Action Plan (Meld. St. 13 (2020-2021)) is in the process of being translated to English. Meanwhile, below are the key elements of the proposed tax shift explained and the chapter about important changes for non-ETS emissions translated to English.)
The Norwegian Government proposes to gradually raise taxes on greenhouse gas emissions to about 2000 NOK (ca. € 190) per tonne CO2 equivalent by 2030. The aim is to provide stronger financial incentives for climate-friendly solutions. At present the carbon tax is at about NOK 590 per tonne CO2-equivalents (ca. € 55). This raise will assist Norway in reaching its Paris commitment of emissions reductions of 50-55 per cent by 2030. The Government considers the measure to be sufficient to ensure that Norway meets its current commitment under its agreement with the EU to reduce non-ETS emissions by 40 % by 2030. Non-ETS emissions are not covered by the EU Emissions Trading System, i.e. emissions from transport, agriculture and certain other sources. The raise in CO2 tax is also proposed to apply to emissions from petroleum activity and aviation that are part of the EU ETS. For emissions covered by the EU ETS, the total carbon price level will not exceed NOK 2000, meaning the price of EU ETS allowances will be taken into account. The Government does not intend to increase the total level of taxes and will offset the raise in carbon tax by reducing other taxes for groups affected by carbon taxation.
The proposal to raise the carbon tax is part of a plan presented in a new white paper to the Norwegian Parliament on how to reach Norway's 2030 climate targets. In the white paper the Norwegian Government proposes several strengthened policies in important areas to accelerate cuts in greenhouse gas emissions.
The Government considers the totality of the policy instruments proposed in the new white paper to be sufficient to reduce non-ETS emissions by 45 % by 2030 and thus achieve the Government's own target. However, the level of uncertainty is high, and the actual emission reductions may be either lower or higher than estimated.
1.3.4 The most important changes for non-ETS emissions
In this white paper, the Government is announcing new policy proposals in several important areas to accelerate cuts in non-ETS greenhouse gas emissions, in other words emissions that are not covered by the EU Emissions Trading System. These proposals apply to emissions from transport, agriculture and certain other sources. The most important changes are outlined below.
In the Government’s view, the policy instruments proposed in this white paper will be sufficient to reduce non-ETS emissions by 45 % by 2030 and thus achieve the Government's target. This will also meet the emission reduction commitment for non-ETS emissions that Norway has agreed with the EU, which entails a cut of 40 %. However, the level of uncertainty is high, and the actual emission reductions may be either lower or higher than estimated.
Green tax shift
The Government intends to raise taxes on greenhouse gas emissions and offset this by reducing other taxes for groups that are affected by greenhouse gas taxation. This will give stronger financial incentives to choose climate-friendly solutions. The carbon tax, which at present is about NOK 590 per tonne CO2 equivalents, will be increased to about NOK 2 000 per tonne CO2 equivalents up to 2030. The Government considers that this will be sufficient to ensure that Norway meets the commitment in its agreement with the EU to reduce emissions by 40 % by 2030.
CO2 emissions from road traffic must be further reduced, and the Government is therefore maintaining the targets for the introduction of zero-emission vehicles, expressed as shares of new vehicles sold, as set out in the National Transport Plan for 2018–2029. It is therefore important to ensure that vehicle taxes and other policy instruments continue to provide incentives to reduce CO2 emissions and to phase in zero-emission vehicles.
Phasing in low- and zero-emission technology
Where technological developments make it possible, the Government will introduce requirements to use low- and zero-emission technology. From 2020, the Government intends to introduce requirements to ensure the use of zero-emission solutions in public procurement processes for passenger cars and small vans. From 2022, similar requirements will be introduced for procurement processes for local buses. The design of requirements for local buses will be considered to find ways of including buses running on biogas. These requirements will be important for achieving the targets for zero-emission vehicles, expressed as shares of new vehicles sold, as set out in the National Transport Plan for 2018–2029. This white paper also announces the Government’s intention to introduce criteria concerning zero- and low-emission solutions, where feasible, for new procurement processes for ferry services and later for all procurement processes for high-speed passenger vessel services. Requirements for zero- and low-emission solutions for aquaculture service vessels will according to plan be brought in gradually from 2024 onwards.
The Government expects to see the use of fossil fuels for energy purposes in industrial installations that are outside the scope of the EU ETS gradually phased out by 2030, and the use of fossil gas for heating and drying buildings during construction phased out by 2025. An important means of achieving this will be the gradual increase in the carbon tax rate. If necessary, the Government will consider introducing further policy instruments, including a prohibition on the use of fossil fuels for these purposes.
Greater use of climate-related requirements in public procurement
The Government will include climate-related requirements in more public procurement processes, for example for construction projects in the transport sector. The Government also intends to facilitate a transition to fossil-free construction sites in the transport sector by 2025. Furthermore, the Government will promote the inclusion of environmental and climate-related requirements in public procurement processes for food and meal services.
A clearer climate profile for Enova
The Government has given Enova a clearer climate profile for the next four-year period, so that its goals are to contribute towards Norway’s emission reduction commitment for non-ETS emissions and Norway’s transition to a low-emission society. Enova is a state-owned enterprise that funds the development and introduction of climate technologies. Enova will contribute to the technological advances needed to meet the 2030 climate target and to complete the transformation to a low-emission society in 2050.
More use of sustainable biofuels
The Government is seeking to replace fossil fuels with sustainable biofuels in road transport, offroad diesel, aviation and shipping. The biofuel quota obligation for road traffic is to be increased in the period up to 2030, so that the current volume of biofuel is maintained as further electrification and other changes result in declining sales of liquid biofuels. In addition, the Government plans to introduce biofuel quota obligations for offroad diesel and fuel for shipping from 2022. The proportion of biofuel required in offroad diesel will gradually be increased so that the biofuel quota obligation is the same as for road traffic. In the Government’s view, the same biofuel quota obligation should apply to road traffic and offroad diesel, and it will consider whether this can apply to shipping as well. The Government will consider the proportion of biofuels required by the biofuel quota obligation every two years, and make adjustments if appropriate. This will be done for the first time in 2022. The Government will gain experience of application of the new advanced biofuel quota obligation for aviation before considering whether to increase the proportion of advanced biofuel required.
Cutting emissions from agriculture
The Government will use the letter of intent it has signed with the agricultural organisations as a basis for climate-related work in this sector in the years ahead. In the letter of intent, the parties have undertaken to reduce emissions and enhance carbon uptake by a total of 5 million tonnes CO2 equivalents in the ten-year period 2021–2030.
The specific measures and policy instruments that will be used to achieve this will be considered in the negotiations on the annual Agricultural Agreements. Climate-related measures in agriculture must not result in a rise in the level of subsidies. Moreover, the letter of intent signed by the Government and the agricultural organisations must not put constraints on the policy instruments the Government can use. The mitigation effect of the annual Agricultural Agreement will be set out in the budget proposals for each year’s agreement. The Government’s efforts to promote a healthy, sustainable and climate-friendly diet will be strengthened and further developed, as will efforts to reduce food waste.
Cutting other emissions
The Government will take steps to reduce emissions from the use of fluorinated gases in products.
The Government is launching the Longship project for the capture, transport and storage of CO2. This will facilitate future projects that can reduce non-ETS emissions, for example from waste incineration. One example is the planned carbon capture project at Fortum Oslo Varme’s waste incineration plant. The Government intends to co-fund this project provided that the company provides sufficient funding of its own and obtains funding from the EU or other sources.
1.3.5 The most important changes for the land-use, land-use change and forestry sector
The land-use, land-use change and forestry (LULUCF) sector accounts for a large volume of CO2 removals and provides raw materials and renewable energy that can replace products that result in higher emissions in other sectors. The Government is therefore proposing a number of measures to enhance CO2 removals in forest and to maintain the carbon stock in soils in forest, agricultural areas and other green spaces. These measures will play an important part in achieving Norway’s 2030 climate target, and will be even more important for achieving the long-term climate target.
Enhancing CO2 removals in forests
The aim is to enhance CO2 removals in Norway’s forests. The Government will therefore consider ways of strengthening existing mitigation measures for forest, introduce statutory requirements relating to a minimum age for tree felling and facilitate afforestation of new areas on the basis of clear environmental criteria. This white paper also gives an account of new mitigation measures in managed forest land that offer a high potential for enhancing CO2 removals and are easy to implement. Measures to which this applies specifically include improving practices for tending young-growth stands, treatment of stumps to control conifer root rot, and choosing appropriate tree species for restocking after felling.
Cutting emissions from the development of green (carbon-rich) areas
The Government will seek to reduce the development of forests, peatlands and agricultural areas for other purposes. Municipalities, counties and central government agencies will receive sound guidance and good tools so that they can take carbon-rich areas into consideration in spatial planning. The Government will emphasise that spatial planning processes should be used to promote the development of compact towns and urban areas, and that the potential for densification and transformation should be used before new areas are developed.
Cutting emissions from other forms of land use
The Government will promote a shift from peat-based to peat-free products, review the introduction of a tax on greenhouse gas emissions from peat extraction, and consider the introduction of a ban on opening new sites for peat extraction. The Government will continue the restoration of peatlands and other wetlands.
1.3.6 The most important changes for ETS emissions and Norway’s transition to a more climate-friendly society
The price of emission allowances is the main instrument for reducing ETS emissions. To speed up emission reductions in petroleum, industrial production and aviation, the Government will intensify work on the green transition, developing new technology and ensuring that Norway’s industrial sector is competitive in the future.
Higher, more predictable carbon price for the petroleum industry
The Government intends to raise the carbon tax in line with the rise for non-ETS emissions and consider the tax rate in conjunction with the price of emission allowances in the EU ETS, so that the total carbon price reaches NOK 2 000 per tonne CO2 equivalents in 2030, measured in fixed 2020 NOK. This will give stronger financial incentives to cut emissions, and make it easier for industries to plan emission reductions.
A clearer profile for Enova
The Government has given Enova a clearer climate profile for the next four-year period, so that its goals are to contribute towards Norway’s transformation to a low-emission society and to innovation that can play a part in this process. Enova’s role is particularly important in the case of ETS emissions, since public funding for research and development is an important supplement to the emissions trading system.
Promoting carbon capture and storage (CCS)
The Government will implement the Longship project for the capture, transport and storage of CO2. The aim of the project is to develop CCS as an effective mitigation tool and to contribute to technology development internationally.
Developing the Green Platform initiative
The Government intends to build further on the Green Platform initiative, which involves cooperation between the Research Council of Norway, Innovation Norway, SIVA (the Industrial Development Corporation of Norway) and Enova. The initiative was established as part of a green restructuring package to promote innovation and development despite the economic impacts of the COVID-19 pandemic.
Stepping up green research and innovation
The Government will maintain its focus on research and innovation, both in Norway and through Norway’s participation in the EU framework programme for research and development, Horizon 2020.
Improving reporting of climate-related and environmental information
The Government will follow legislative developments in the EU closely as it seeks to improve reporting of climate-related and environmental information, and consider whether amendments to the Accounting Act are needed so that investors and other stakeholders can receive relevant, comparable climate-related and environmental information. The Government will engage in dialogue with the business sector on how to facilitate better and more relevant corporate reporting of climate-related and environmental information.
The Government will appoint an expert committee to review the overall framework for promoting climate-friendly investment in Norway. The Government will tailor the committee’s mandate to fit with other related processes and committees and avoid unnecessary overlap with other work in the same field.
Climate and environmental aims for public buildings
The Government has formulated aims for public buildings and property in the civilian sector. These will apply to the central government administration in its roles as developer, manager and tenant of property. The central government will seek to make full use of existing buildings, ensure re-use of buildings, re-use materials and choose environmentally friendly materials. The central government will also establish a common methodology for measuring the overall climate and environmental impact of public buildings, and highlight the environmental benefits of re-using already developed areas and existing buildings, and of siting developments in line with central government planning guidelines.
EU climate legislation
Norway has entered into an agreement with the EU to take part in EU climate legislation in the period 2012–2030. This consists of three pieces of legislation:
- The Effort Sharing Regulation for non-ETS emissions: this assigns each country a binding target for reducing emissions from transport, buildings, agriculture, waste, and some emissions from the oil and gas industry and industrial production. Under the current regulation, overall emissions in the non-ETS sector in the EU are to be reduced by 30 % by 2030. Norway’s national target is an emissions cut of 40 %, either in Norway or in other European countries.
- The land-use, land-use change and forestry (LULUCF) regulation: the regulation sets out accounting rules for removals and emissions of CO2 in the LULUCF sector. The legislation sets out an obligation to ensure that overall greenhouse gas emissions from land use and forestry do not exceed removals (this is known as the ‘no-debit’ rule).
- The EU Emissions Trading System (EU ETS) applies to installations in manufacturing, the petroleum industry, power and heat generation and domestic aviation. There is a cap on the total volume of greenhouse gas emissions that may be emitted. Installations can trade emission allowances with each other within the system. The cap, or number of allowances, is being reduced gradually so that total emissions fall over time. Under the current legislation, emissions are to be reduced by 43 % by 2030.