What is your opinion on Norway

The discussion about Norway's “green future” is only productive if it is conducted honestly

For fifty years the oil industry was Norway's dairy cow. Now climate change is putting them under pressure, and calls for an early exit are getting louder. An honest discussion is necessary, buzzwords and wishful thinking do not help.

The expectation was written on the faces of those present, even if the prospect of the hoped-for success was slim. A crowd had come before Norway's highest court to hear the verdict in one of the most sensational trials of recent times, brought on by the environmental organizations Greenpeace and Young Friends of the Earth Norway (Natur og Ungdom). It was about the question of whether the Norwegian state is violating the constitution by granting oil production licenses. Because the Basic Law contains a passage that obliges the state to leave an intact environment for future generations. The development of new sources of oil is in conflict with this, argued the plaintiffs, because it makes it impossible to achieve the climate goals to which Norway committed itself in the Paris Treaty of 2015.

Unsurprisingly, the highest court rejected this line of argument, in agreement with the two other judicial authorities that had already ruled on the issue. The judges did not identify a direct connection in the sense that the plaintiffs had postulated. They also pointed out that the energy sources that Norway exports are used elsewhere; this does not mean that Norway is responsible for the emissions. A clearly audible sigh of relief went through the government offices in Oslo. Because with this ruling, the most important industry in the country is off the hook for the time being.

The weight of the petroleum

The importance of the oil and gas sector for Norway is enormous. Today he single-handedly generates around ten percent of government revenue through license fees, taxes and dividends; fifteen years ago, at the best of times, it was a full third. With the discovery of oil on its continental shelf fifty years ago, Norway went from an economically peripheral state to one of the richest countries in the world. With this money, Oslo has built a comprehensive welfare state.

Money from the oil sector

Net income of the Norwegian state from the petroleum sector 1971–2021 (in billions of kroner; exchange rate: 10 kroner = 1 franc)

Nevertheless, the Norwegian oil sector today has a problem for the future from which even the highest court was unable to free it with its judgment. Because in the course of the four years during which the process “The People vs. Arctic Oil” was running, the tide turned in society; now he blows the fossil fuels sharply in the face. And not just in Norway, but also in large parts of the western world, which are the target market for Norway's most important export product. The call for a “green future” is polyphonic.

Not least from the mouth of the Norwegian government itself, which likes to portray itself as a pioneer in climate policy. In view of the country's role as Western Europe's largest exporter of crude oil and natural gas, this may come as a surprise. But it is a paradox that has accompanied Oslo's politics for years. The political leadership has not yet been able to resolve it. You shine with ambitious goals for climate protection. But apart from being a global leader in electromobility - also thanks to nature's advantage of practically all of the electricity generated from water and wind power - Norway tends to show deficits in terms of actual emissions reduction efforts compared to the goals to which the country has committed itself . Even if one does not take into account the moral question of "emissions exports" through oil and gas exports.

Of course, Norway is not alone among the highly developed industrialized countries with the dilemma of how to switch to a more climate-friendly economic structure without tearing down the pillars of the previous system and thus endangering social stability. But the pitfalls of transition in this Nordic country are particularly evident due to the sheer economic weight of the oil sector and its function as the money faucet for the welfare state.

Not everything is in government hands

It is undisputed - in theory - that the decoupling from crude oil must take place at some point. The "when", however, is an explosive political question. The fact that the government escaped forced shock therapy with the decision of the highest court leaves it some freedom to help determine the pace of change. But she doesn't have everything in her own hands.

Norway has noticed this several times over the past few years. When the oil price plummeted in 2014 after a prolonged boom, the general public suddenly and painfully realized how far beyond the raw materials sector the shock waves propagated into the Norwegian economy. Thousands of jobs were lost, not just in the petroleum industry and its extensive subcontracting industries, but also in more remote service sectors that had benefited from the increased circulation of the "good times". Finally, the state also felt the shocks due to reduced income. This raised the question of how long he could afford his extensive administrative apparatus in a future with fewer oil deals.

A second surprise followed when a recovery set in in the years that followed and the oil industry increased its investment again. The search for oil in Arctic waters was also increasing - the subject of dispute in the “The People vs. Arctic Oil” trial. But it turned out that where unimagined riches were suspected, far less was found than hoped for. That has not fundamentally changed to this day.

And if things change, donors will still be needed to finance such projects. These, however, are beginning to hesitate everywhere. For example, Deutsche Bank announced last summer that it would refrain from investing in arctic oil with immediate effect due to revised sustainability principles. This is a sign that others could follow, because the social pressure to decarbonise energy production is increasing.

In light of these influences, which are beyond the government's control, it must have become clear to Norwegian politicians that if they postpone the problem of decoupling from oil it can quickly slip away from them. But there is a reason for the hesitation. There are currently no branches of industry that could even come close to replacing the oil sector in Norway. In the medium term there are glimmers of hope. Floating wind power plants in the North Sea could become Norway's next golden donkey, using experience and even existing suppliers to the oil industry. But the way there is neither short nor cheap.

A hot potato for politics and the people

Politicians who are already scaling back the profitable business with oil and natural gas set in motion a spiral of consequences that threaten to affect the welfare state. The government knows that. That is why it keeps its hands off the topic as far as possible.

But the question of how much oil industry Norway can, can or should afford today is very relevant for society and requires clear communication. The same applies, however, to the predominantly younger part of the population, who are calling for the state to adopt a more brisk pace in changing climate policy. This would include an admission of the link between oil revenues and welfare. But such a thing has not yet come from this side. Not to mention scenarios of the extent to which one would be prepared to revise one's own claims to the state in return for an accelerated departure from the oil industry.

If in many places people like to ignore the fact that the state income from the oil industry and the organization of the welfare state are linked, this may also be due to the fact that, especially for the younger part of the population, welfare is more or less a natural state. Anyone under thirty has never experienced Norway otherwise than filthy rich. The younger generation cannot be blamed for this. But it should not obstruct her from seeing where an essential part of the foundation of the welfare state lies. The idea of ​​reducing oil production to help the climate is not just popular with young people. According to a survey in 2017, almost half of the Norwegian population leaned towards this view.

The debate on the “green future” can only be productive if it is conducted honestly. This means that everything has to be addressed: the opportunities, the risks, the constraints and the costs. All the more as it is a discussion that the country will not be spared. Your result should therefore reflect the broadest possible social consensus.