Norway's continued investment in the oil industry could mean economic suicide.
Klassekampen, 21 May 2021
Last Tuesday, the International Energy Agency (IEA) released a bombshell of a report. It advocated an immediate stop on the exploration of new oil and gas fields to limit global warming to 1.5 degrees. In addition, the IEA projected an explosive growth in solar and wind energy, which means that in rich countries emissions from electricity could go down to zero by 2035. The result of this energy transition, in addition to a better climate? Economic growth, millions of new jobs and the prevention of about two million deaths from air pollution.
If you don't understand how big this breakthrough is, the IEA is not a fanatic club of climate activists. On the contrary: the agency came forth from the first oil crisis back in 1974, to ensure a stable supply of oil. The head of this organization, Fatih Birol, was a permanent fixture at Equinor's fall conferences, where he said as recently as 2019 that oil demand would remain high for the next 20 years. In addition, the IEA has for decades denied that renewable energy was growing exponentially. Last Tuesday's turnaround is nothing short of historic.
The IEA was thus far a main driving force behind the myth that we will remain dependent on oil and gas for decades to come. This thinking is so ingrained in most Norwegian political parties that they desperately defended their oil policies right after the, for them, unfortunate report was released. For example, Espen Barth Eide of Arbeiderpartiet (the Norwegian Labour party) immediately said that there will be no stop on oil exploration. Nor does it appear that the government is going to suddenly cancel the upcoming bidding round for new oil fields. But how are they going to tackle climate change then?
The Norwegian plan is built on the notion that CO2 emissions will not have to go to zero by 2050, but to net zero. This may sound like the same, but it is not. Net zero means that instead of turning off the tap and cutting our emissions down to zero, we just carry on as usual and clean up the mess later. To do so, we need to deploy carbon capture and storage (CCS) on a massive scale. With this technique, CO2 is captured at an emission source or from the air, and injected underground.
CCS can be done in several ways. In principle, it is possible to capture CO2 directly from the atmosphere with filters, but this is still very expensive. It is cheaper to grow large quantities of plants, then burn them in a power plant and to capture the emissions. Since plants absorb CO2 from the air through photosynthesis, this translates into negative emissions. At the same time, electricity is generated which can be sold. This combination of bioenergy and CCS, also known as BECCS, appears to be a win-win situation.
What if this new technology is not ready on time?
Unfortunately, it is not that simple. We are not only in the middle of a climate crisis, but also a biodiversity crisis. BECCS requires immense tracts of land, and the more CO2 we emit now, the more land will be needed in the future. Estimates of this extend up to an area equal in size to India. This way, we may save the climate, but the hunger for land can only go at the expense of nature, and may come in conflict with our food production. There are sustainable forms of BECCS, for example by using residual waste from agriculture and forestry, but that will not be enough to continue to burn oil and gas for decades to come.
Incidentally, CCS does not yet exist on a commercial scale. That’s why the Norwegian government set a good example in December by investing 16.8 billion Norwegian kroner (2 billion dollars) in the capturing of CO2 from a cement plant in Brevik and a waste incineration plant in Oslo. That's a smart way of CCS, by capturing CO2 at the source, but these are just two pilot projects to demonstrate their feasibility in the long-term. That’s not enough to halve our emissions by 2030.
Norwegian politicians with their unbridled technological optimism are falling into a fallacy trap: they think that net zero, through CCS, can sustain the global thirst for oil and gas, and save the climate as well. But what if that new technology does not arrive on time, or turns out not to be deployable on a vast scale? The remarkable thing about the IEA report is that it shows that we don’t need to be fixated on CCS. Rather, existing technologies are sufficient to halve global emissions in the next ten years. But this means that oil consumption will drop straight away, and demand for Norway's main export product will collapse. Otherwise, the Norwegian statistics bureau has calculated that the economic consequences of a stop on oil exploration will be small (see yesterday's Klassekampen).
The inevitable conclusion to all of this is that Norway's refusal to wind down the oil and gas industry is not only incompatible with halting climate change – it may be economic suicide. If even the group, whose reason for existence is based on the free flow of oil, can understand this, then it must be possible for politicians in the Norwegian parliament as well. Or is it?
This text originally appeared in Klassekampen on 21 May 2021