Canada Should Follow In Norway’s Energy Footsteps

Equinor's Oseberg field centre. Image: Harald Petersen

Isn’t it ironic? Norway is viewed as a paragon of environmental virtue and Canada an energy pariah, despite both being major producers and exporters of oil and gas.

The two countries also are major emitters of greenhouse gases on a per capita basis, with Canada ranked 12th and Norway 36th on a global basis — trailing primarily petro-states and island-states with large oil refineries, with Norway behind some highly-industrialized countries as well — to a large degree because of their substantial oil and gas industries.

And this is despite the vast majority of electric power in both countries being produced from non-carbon sources. Hydropower provides 99 per cent of Norway’s electricity and 60 per cent of Canada’s, with nuclear and other renewables adding another 20 percentage points to the latter.

The major difference between the two countries, the Norwegian government has supported its oil and gas industry since commercial quantities of oil were first discovered in the North Sea in 1969, and with the proceeds is leading international, and now domestic efforts to combat global climate change.

In contrast, the Canadian government has thrown a wrench into its oil and gas industry in recent years, primarily in the name of environmental stewardship, while chasing its tail as it attempts to decarbonize the country’s economy.

But, as of 2017, neither Norway nor Canada had achieved a domestic reduction in greenhouse gas (GHG) emissions from 1990 levels, the base year for the 1997 Kyoto Protocol. In fact, Canadian carbon dioxide (CO2) emissions are up 135 per cent over this period to 617 million tonnes (MT) and Norwegian emissions are 129 per cent higher at 46.9 MT — Canada’s population is roughly seven times greater than Norway’s.

Despite Norway’s poor record at reducing domestic CO2 emissions as of 2017, it ranks number one in the world for making a positive contribution to the planet and combatting climate change based on the environmental sub-component of the Good Country Index — Canada comes in 17th place.

The reason being the Norwegian government’s strong commitment to environmental sustainability in general, and climate change mitigation in particular, as these enjoy broad and deep political support in the country. Domestic CO2 emissions may have increased since 1990, but Norway remains committed to targeted reductions of 40 per cent from 1990 levels by 2030.

To date, Norway has placed substantially greater emphasis on reducing GHG emissions in developing countries, where it obtains far greater bang for the buck — international carbon credits to meet its climate targets — due to the relatively decarbonized nature of its domestic economy. The widespread use of electricity, especially for space heating, given the historical predominance of hydropower, means its residential and commercial sectors already have been largely decarbonized.

At the same time, Norway is at the forefront of decarbonizing transportation, oil and gas production, and manufacturing, the major sources of its energy-related GHG emissions. For example, the country has easily the highest electric car adoption rate in the world. Almost half of new automobiles sold in the first half of this year were powered by fully electric engines — compared to a quarter in the same period last year — placing Norway third in global sales behind behemoths China and the U.S.

A wide range of government measures support electric car sales in Norway. These include heavy taxes on gasoline and diesel-powered vehicles, exemptions or discounts on road tolls, free access to public parking, and funding for required infrastructure such as charging stations. In June 2016, the Norwegian government announced that all new cars sold in the country would have to be emission-free by 2025.

Norway has also been a global leader in carbon capture and storage (CCS) since the commercial-scale Sleipner gas field project came online in 1996, incentivized by Norway introducing a carbon tax way back in 1991, followed by a CCS project at the Snøhvit Liquefied Natural Gas plant in 2008.

CCS may be expensive, and the least attractive option for combating climate change at the present time, but its widespread adoption is considered necessary for avoiding environmental cataclysm by all reputable energy forecasting organizations.

And Norway is now at the forefront of the next wave of CCS, capturing CO2 from industrial emitters instead of oil and gas producers, having already funded its share of the Norwegian CCS Demonstration project. The project is to capture CO2 emissions from a cluster of industrial plants — including a cement manufacturer and a chemical company — and could be operational by 2022.

Since agreeing to its present CO2 emissions targets in 2008, the Norwegian government has substantially increased funding for energy research, development and demonstration (RD&D) to “exceptionally high levels” to support efforts to reduce GHG emissions in its economy. As a result, Norway may be the country best placed to overcome barriers to large-scale CCS deployment, supporting the adoption of CCS globally, and other obstacles to combating climate change.

As the International Energy Agency (IEA) wrote in a 2017 country report, “Norway is determined and, with its large oil and gas revenue, well placed to invest in developing new solutions for a low-carbon future.”

On the other hand, the Trudeau government has strangled Canada’s golden oil and gas goose through a number of misguided policies in a vain attempt to improve Canada’s environmental image tarnished by the global campaign against Alberta’s oilsands.

Since gaining power in November 2015, Prime Minister Justin Trudeau has either directly or indirectly killed all oil pipeline projects to tidewater, with the exception of Trans Mountain expansion (TMX). The federal government was forced to purchase this pipeline and expansion project from Houston-based Kinder Morgan in August 2018 to keep it afloat given widespread opposition, especially in the Greater Vancouver region, the terminus of the pipeline and one of the most heavily-populated metropolitan regions in Canada.

The Trudeau government’s anti-pipeline policies — including the recently passed ban on oil exports from Northern B.C. and Bill C-69, the onerous new regulatory regime for natural resource projects in Canada — have contributed to a shortage of egress from the region, Alberta to implement its crude curtailment program at the beginning of this year to restore prices to economic levels, and capital spending and drilling activity in Western Canada to collapse to their lowest levels since the region’s economic depression began in the second half of 2014.

In the process, the Trudeau government has alienated many provincial and territorial governments whose co-operation is key to getting Canada’s GHG emissions under control given the decentralized nature of power under the country’s federal system. For example, six provinces and territories are rebelling against a federally mandated carbon tax, a policy tool widely viewed as pivotal for reducing CO2 emissions.

To conclude, Canada could follow in Norway’s energy footsteps and become a leader in combating global climate change with the financial wherewithal of a vibrant oil and gas export industry. Domestically, we also have massive hydropower potential to support greater non-carbon electrification of our economy, especially in the space heating and transportation sectors — assuming we can dismantle interprovincial barriers to electricity trade and cut a fair deal with the Indigenous peoples that hydropower projects tend to negatively impact.

Or Canada could continue with the failed energy and climate change policies of the Trudeau government.