German – Norwegian relations within European Climate and Energy Policies

Oslo, 10. november 2015

Statsråd Vidar Helgesen holdt dette innlegget på en norsk-tysk energikonferanse i regi av Norsk-tysk handelskammer i Oslo 10. november.

Ladies and Gentlemen, dear friends,

Thank you for the invitation - it's a pleasure for me to take part in this year's German-Norwegian energy conference.

Today's conference is held against a backdrop of testing times for Europe.

Our vision of a politically stable, secure Europe is being challenged, externally as well as internally. Europe must tackle the geopolitical and humanitarian crises currently dominating at a time when many European countries are still struggling in the aftermath of the financial crisis.

I bring this up because our bilateral relations do not exist, and cannot develop, in a vacuum. I see it as imperative that we use our close bilateral relations and common ground in support of Europe and the values we share.

My topic today specifically places our bilateral relations within the context of European climate and energy policy. And while climate change constitutes one of the major challenge of our generation, it is also an area in which Europe is a policy leader and where our bilateral relations can make a difference. Gas from the Norwegian Continental Shelf, where – by the way - a number of German industry partners are active, can support your Energiewende in the years ahead, along with hydropower. This gives cause for optimism.

We share high climate ambitions, and view climate measures in the context of long term transition to low-emission societies and economic growth. By linking our efforts, we achieve better results for our nations and for Europe as a whole. And I, for one, strongly believe that future growth means "green" growth.

The climate and energy framework sets three key targets for the year 2030: a binding target to cut greenhouse gas emissions by at least 40 percent (compared with 1990 levels): a minimum share of renewable energy of 27 per cent, and at least 27 per cent improvement in energy efficiency.

Most important factor: A well-functioning, integrated energy market

A Norway has committed to the same target of at least 40 per cent reduction of greenhouse gas emissions by 2030. Our aim is to meet this emission reduction target together with the European Union and its member states and we have entered into a dialogue with the Union to this end. We are grateful that the EU environment ministers welcomed our intentions at their September Council meeting. This will allow for a more efficient climate policy and will further strengthen our cooperation for a global agreement.

Through the EEA agreement, Norway is already part of the Emission Trading System (ETS), which covers about half of our emissions. We will now also be cooperating in the non-ETS sectors. National reduction targets for these sectors will be set for the EU Member States and for Norway (and Iceland).

A well-functioning, integrated energy market is, in our view, the single most important factor for security of energy supply in Europe and at the heart of an effective climate policy. We are pleased to work alongside Germany and other EU countries in order to complete market integration. In that regard, we aim for a rapid inclusion of the Third Energy Package in the EEA Agreement.

The way we produce and use energy globally is still responsible for two-thirds of the world's greenhouse gas emissions. Actions in the energy sector can make or break efforts to achieve agreed climate targets. So the energy sector must be a key contributor to action to mitigate climate change.

In Germany, you have taken the role of energy to heart in designing, and now further developing, your "Energiewende". We appreciate that Germany is cooperating with energy partners, among them Norway, as you take this energy transition forward.

We see regional cooperation as a cornerstone of European energy transition and commend German State Secretary Baake for his actions in this regard.

I have observed that the Energiewende has not been without challenges. Even so, I find it remarkable what Germany has achieved in the course of fifteen years. I am impressed by the way German policies have helped bring down costs and create a market for solar PV in many parts of the world.

In Norway, we have seen a massive growth in the market for electric cars in the past years, thanks to government incentives. This has made Norway an important testing ground for the car industry. And this, in turn, may have prompted for instance German car manufacturers to introduce electric vehicles into their product lines earlier than would otherwise have been the case. Cooperation and synergies take many shapes and forms. Our respective policies have not only lowered emissions in our own countries; they also contribute to necessary change in other parts of the world.

Norway introduced a carbon tax in 1991. As of today, more than 80 per cent of our emissions are either covered by the ETS or are subject to the carbon tax. Putting a price on carbon encourages the development of climate-friendly technology without the government picking winners. We want to enourage innovation and enterprise through predictable regulation and framework conditions. Recommendations from the Green Tax Commission later this fall will likely result in a further shift towards increased taxes on environmentally harmful activities. To some extent, our climate measures in Norway have thus differed from those of Germany. But then, our point of departure has been very different.

Hydropower was the basis of our industrialization in Norway. We have more than one hundred years' experience in the development of abundant hydropower resources - long before anyone spoke of a "green shift". With a target of raising the renewable share in our energy mix to 67.5 per cent, we will continue to develop hydropower and other renewable energy sources.

Norway, one of Europe's green batteries

Increasing shares of intermittent renewable energy in Germany and Europe increases the need for flexible capacity. The interconnector that will be built between Norway and Germany will therefore contribute to the implementation of the Energiewende and will benefit both countries. As you may know, another interconnector will be built between Norway and the UK in the course of the coming few years.

In an average year, Norway generates a power surplus, making us a net exporter of clean energy to Europe. In dry years, we benefit from importing energy from neighbouring countries. Our average annual production now amounts to 135 Terrawatt hours a year. While we can never be Europe's only green battery, we can certainly be one of them.

Norway has supplied Germany with natural gas since the late 1970s, when the pipeline from the Ekofisk field to Emden was put into operation. Today, there are three pipelines from Norway to Germany, and Germany continues to be the most important market for Norwegian gas.

This is not news to this audience, but let me nevertheless take this opportunity to stress yet again that Norway will remain a long-term, commercially based supplier of natural gas to Europe. Large remaining gas resources, efficient infrastructure and close proximity to the market make gas from Norway competitive in the European market. Our gas production is expected to remain stable in the years ahead, and can assist Germany and Europe in meeting climate and energy goals.

As you are well aware, gas has far lower CO2 emissions than coal, and can, along with hydropower, play an important role in providing flexibility and back-up capacity for renewable energy. I have noted the German decision to take 2.7 gigawatts of power output from lignite coal plants off the market a year from now. We understand that this is no easy decision, as many jobs are involved.

At the same time its sends a strong and welcome signal that Germany is prepared to do what needs to be done. In terms of maintaining energy security, Norwegian energy can contribute to making the energy transition a little easier.

European climate and energy efforts can be put in an even bigger perspective. Turning to global climate negotiations, we must continue to push hard for a successful outcome of COP21. Europe has taken on a leading role, and must stay the course.

We are very concerned about the state of play only a few weeks before Paris. The result of the last negotiating round in Bonn was, unfortunately, disappointing. On the other hand, we note an expressed political will among leading countries to reach an agreement. We must ensure that this political will is translated into results at the negotiating table.

Norway's primary goal is a climate agreement that safeguards development in line with the two-degree target. An agreement in Paris should apply to all and include emission commitments for all countries with large and increasing emissions.

It is very encouraging that some 150 countries have submitted their "Intended Nationally Determined Contributions" or INDCs, for short. The most recent analysis of the INDCs, undertaken by the International Energy Agency, shows that growth in energy sector emissions will slow down dramatically if the INDCs are fully implemented. Fossil fuel demand growth will slow down considerably. Low carbon fuels will increase their share in the global energy mix to around 25 per cent in 2030. Natural gas will also increase its share in the energy mix, while that of coal and oil will decline.

Climate pledges help to strengthen the necessary decoupling between economic growth and energy-related emissions. Emissions per unit of economic output will be 40 per cent lower than today, with INDCs implemented. So even if there is still a long way to go, there are also positive signs.

Ladies and gentlemen,

I think we all can agree, that no long-term challenge we face today looms larger than climate change. This is something that all countries must deal with and requires a sustained effort from all stakeholders and at all levels of society, from the political to the individual. Energy is part of the problem, but clearly also a key part of the solution. We need to find smart ways of tackling the problem, and we cannot postpone action. And above all, we need to work together.

In conclusion, I would like to recall the greatness of Germany's Konrad Adenauer and the other European Union founding fathers. These men had the vision to promote and ensure European cooperation at a critical time in history – through industry and energy cooperation, but with the ultimate aim of lasting peace.

We are living at a time that requires the same sense of purpose, and the same boldness and concerted effort.

Thank you!