... In spite of the climate crisis, Norway’s love affair with petroleum seems to be continuing.
Never before has the country enjoyed such high revenue from its oil and gas industry.
The Norwegian Petroleum Directorate said 2021 had been a “great year” for oil and gas in Norway.
Oil and gas production has remained high as both demand and prices have increased.
The news was announced by the Norwegian Petroleum Directorate’s Ingrid Sølvberg at the presentation of their annual resorts.
As pointed out by our friends at the Barents Observer, “she did not mention the word ‘climate’ even once.”
It’s the latest chapter in Norway’s very visible conflict between its desire to be a leader in the green shift while remaining one of the world’s biggest producers of oil and gas.
In the final quarter of 2021, Norway’s oil and gas exports reached more than NOK 100 billion (USD $11.5 billion) per month.
That’s almost three times more than in the same period the previous year.
Production of oil in 2021 increased to 102 million standard cubic meters and natural gas to 113 billion cubic meters.
Norway has now extracted approximately half of all oil and gas resources available on the Norwegian continental shelf.
Despite racking up $11.5 billion/month in oil & gas export revenue, Norwegians pay more for gasoline than almost every other nation on Earth
Sales of electric cars in Norway rose by 48 percent last year, ensuring that almost two out of every three new vehicles were battery powered and making Tesla the top selling brand.
Seeking to become the first nation to end the sale of gasoline and diesel cars by 2025, oil-producing Norway exempts full-electric vehicles from taxes imposed on models using internal combustion engines.
Tesla took an 11.5 percent share of the overall car market, making it the number one brand for the first time on a full-year basis ahead of Volkswagen with 9.4 percent.
The U.S. automaker on Sunday reported record quarterly deliveries that far exceeded Wall Street estimates, riding out global chip shortages as it ramped up China production.
Norway compensates for the exorbitant gasoline prices by massively subsidizing EV purchases.
The Norwegian EV incentives:
* No purchase/import taxes (1990-)
* Exemption from 25% VAT on purchase (2001-)
* No annual road tax (1996-2021).
Reduced tax from 2021. Full tax from 2022..
* No charges on toll roads or ferries (1997- 2017).
* Maximum 50% of the total amount on ferry fares
for electric vehicles (2018-)
* Maximum 50% of the total amount on toll roads (2019)
* Free municipal parking (1999- 2017)
* Parking fee for EVs was introduced locally
with an upper limit of a maximum 50%
of the full price (2018-)
* Access to bus lanes (2005-).
* New rules allow local authorities
to limit the access to only include EVs
that carry one or more passengers (2016)
* 50 % reduced company car tax (2000-2018).
Company car tax reduction reduced to 40% (2018-)
and 20 percent from 2022.
* Exemption from 25% VAT on leasing (2015)
* Fiscal compensation for the scrapping
of fossil vans when converting to
a zero-emission van (2018)
The progressive tax system makes most EV models cheaper to buy compared to a similar petrol model, even if the import price for EVs are much higher.
This is the main reason why the Norwegian EV market is so successful compared to any other country.
Norway’s EV subsidies are funded by oil & gas export revenue and are not even close to “carbon neutral.”
Norway an EV role model?
Their pathway is expensive and paid for with oil & gas exports
Norway is an EV leader thanks to a generous pot of tax incentives.
Today, battery-electric cars make up more than half of all new car sales in Norway.
Schalk Cloete takes a detailed look at what those incentives cost, and how many tonnes of CO2 they avoid.
In short, Norway – a major oil and gas exporter – needs to sell over 100 barrels of oil (which emits 40 tonnes of CO2) to pay for the tax breaks it gives EVs to avoid one tonne of CO2.
And Norway’s electricity is almost completely clean thanks to hydro power, so the CO2 avoidance costs will be higher in other countries.
In other words, most countries cannot take this pathway to achieve EV dominance.
It’s very expensive, and paying for it – certainly in Norway’s case – emits large amounts of carbon.
Cloete is therefore very critical of some of the hype around EV targets.
He wants to see the emphasis shift to behaviour change that reduces car use. And instead of being an EV leader,
Norway should consider being a leader in turning oil and gas into low-carbon fuels.
I love living in Norway.
It’s a beautiful country with nothing other than the weather to complain about.
But this Nordic dream comes with a sizable oil stain; a foundation built on 50 years of lucrative hydrocarbon exports.
From official data, I estimate that Norway has sold fossil fuels amounting to roughly 44 billion barrels of oil equivalent – a CO2 legacy in the vicinity of 15 gigatons.
Norwegian production costs are attractively low, so we can reasonably assume a profit of $23/barrel to reach a cool $1 trillion in historical cumulative hydrocarbon profit (resource rent, to be more precise).
The best thing about BEVs in Norway is that electricity comes almost completely from clean hydropower.
This means that BEV emissions relative to conventional cars come only from battery manufacturing.
…paid for by selling barrels of oil
Relative to a PHEV, the saving is about 6 tons of CO2.
Hence, in total, the CO2 avoidance cost of incentivising people to buy the ID4 in Norway is $36,500/15 = $2,400/ton relative to the RAV4 and $23,300/6 = $3,900/ton relative to the RAV4 Prime.
For perspective, each barrel of oil that Norway sells to help finance these large tax breaks emits about 0.43 tons of CO2 upon use.
Making the $2,400 required to avoid one ton of CO2 with the ID4 at the previously assumed resource rent of $23/barrel requires the sale of 104 barrels (45 tons of CO2).
Relative to the RAV4 Prime,
it comes to 73 tons of oil CO2 per ton of CO2 avoided.
These numbers reveal the Norwegian BEV revolution to be little more than a band-aid on a 50-year oil legacy.
I haven’t checked his numbers (nor do I have time to do so); but they don’t seem unreasonable.
If he is correct, Norway’s EV subsidies result in the export of 45 to 73 tons of CO2 emissions for every 1 ton of avoided domestic emissions.
This works for Norway.
They have abundant cheap ($0.14/kWh) electricity due to their world class hydroelectric resources and infrastructure.
They have world class oil oil & gas resources; which they efficiently exploit. They have a relatively small population. They can probably afford to do this for many more years to come.
Is natural gas petroleum?
Generally no, although it is usually associated with petroleum.
Petroleum is defined as:
A broadly defined class of liquid hydrocarbon mixtures. Included are crude oil, lease condensate, unfinished oils, refined products obtained from the processing of crude oil, and natural gas plant liquids.
Note: Volumes of finished petroleum products include non hydrocarbon compounds, such as additives and detergents, after they have been blended into the products.
I would have captioned the graph as “Actual and projected sale of oil & gas 1971‐2022.”
Is it hypocritical for Norway to export 45 to 73 tons of CO2 emissions for every 1 ton of avoided domestic emissions?
No. It’s just good business – for Norway.
This model won’t work very well for the rest of the European EV bandwagon.
... Is it hilarious that climate alarmists and social justice warriors are stupid enough to think that Norway is saving the planet?"