Excerpt: Internally, the country is a model for the rest of the world in terms of progress. It is the continuous exportation of crude oil that hinders the nation’s ability to seriously reduce its overall impact. This is the Norwegian energy paradox: the nation has transitioned to an almost entirely renewable energy system; yet, it is one of Europe’s most substantial suppliers of oil. Norway’s footprint remains significant, despite having made enormous strides domestically.
Climate change continues to be a significant issue across the globe, with numerous countries having begun efforts to address it. The energy sector is notable here, because it represents both the primary problems and solutions at the forefront of the issue; fossil fuels being the problem and renewable energy, a solution. Amongst countries making large efforts towards climate progress is Norway. The nation has made enormous strides in terms of policy changes, and its dedication to renewable energy is widely-known through its global leadership in the hydroelectricity realm. However, it is also one of the world’s largest exporters of crude oil. Domestically, the country is almost entirely independent from fossil fuels; yet, on an international scale, Norway continues to contribute to climate change as a supplier of fossil fuels. The nation thereby presents a paradoxical case that is worth investigating.
Norway’s substantive role in oil exportation dates back to the Industrial Revolution; it was during this time that the technologies needed for mining and refinement emerged, leading to a significant increase in the use of crude oil. The most apparent reason why oil production boomed by the 1860s was the inefficiency of coal power when faced with increasing market demands. Coal-powered machines could not keep up anymore, so industries turned to crude oil. Oil also played a key part in World War I and World War II, acting as an important point of leverage during both wars, and a crucial energy source. The 1969 discovery of the Ekofisk reserve in the North Sea, just off the southern coast of Norway, marked the true beginning of substantial Norwegian influence in Europe’s oil sector. A number of additional oil reserve discoveries were made in the following years, further enabling Norway’s self-sufficient oil production.
In the decades since, Norway has made a name for itself through oil exportation. The oil industry accounts for 24% of the nation’s gross domestic product (GDP), as well as 32% of state revenue and 52% of exports. Oil supplies the Norwegian citizenry with approximately 200,000 jobs across the country. By the end of 2015, Norway was one of the largest suppliers of oil for all of Europe, containing about 8 billion barrels in reserves. As of 2023, Norway ranked 11th in oil production worldwide.
Oil plays a chief role, not just in the Norwegian economy, but also in the welfare of the state. The Norwegian government keeps the majority of its oil revenue in a sovereign wealth fund meant for both the current population and future generations. The fund is sizeable, having accumulated over $1 trillion since it was first created in 1990. It acts as a sort of safety net for the country. For example, a portion was used during the COVID-19 pandemic to help soften the blow of closing businesses. Evidently, Norway relies on fossil fuel extraction and exportation in order to support its population.
According to Bård Lahn, a researcher at Norway’s Center for International Climate Research (CICERO), the Norwegian government made it a point to ensure oil revenue stayed within the nation’s borders from the initial reserve discoveries in the 1960s. Politicians wanted to see the money given back to society; thus, the sovereign wealth fund became a sort of savings account. However, Lahn expressed his concerns: “we are still one of the largest fossil fuel exporters in the world — we’re exacerbating the problem we want to solve.” There is a noticeable trend of politicians keeping discussions of oil and climate policy separate for the sake of maintaining this fund. But the two stand intrinsically linked; climate change cannot be effectively dealt with without addressing oil. This situation in Norway is quite unique. The country continues to extract and export crude oil — which is negatively impacting climate change — but is doing so for the betterment of its population.
The damaging aspects of Norwegian climate policy have not been focused on much because the country is simultaneously setting an impressive example in the renewable energy sector. Almost all of Norway’s energy is produced by hydropower. Due to the convenient elevation of at least 1,650 Norwegian lakes, and the large portion of the country that is above sea level, Norway has massive hydroelectric potential; and the country has certainly taken advantage of it. Today, hydropower accounts for about 96% of the nation’s electricity. Furthermore, Norway has invested a large sum into onshore and offshore wind farms, as well as carbon capture and storage. Altogether the country has been praised for its smooth and relatively rapid shift away from fossil fuels.
Still, the nation continues to push for crude oil exploration. In 2023, the government offered up 92 new areas of exploration in the Arctic to an array of Norwegian companies — a substantial increase from its 28 offers in the year prior. Internally, Norway is impressively independent from fossil fuels, a model for the rest of the world in terms of progress towards renewable energy. It is the continuous exportation of crude oil that hinders the nation’s ability to seriously reduce its overall impact. This is the Norwegian energy paradox: the nation has transitioned to an almost entirely renewable energy system; yet, it is one of Europe’s most substantial suppliers of oil. Norway’s carbon footprint remains, despite having made enormous strides domestically.
The nation’s dependence on oil represents a vulnerability in its ability to completely commit itself to renewable energy. Future global demand for crude oil has decreased over the last couple of decades, and this trend is predicted to persist as the worldwide shift towards renewables continues. This phenomenon has already impacted Norway’s energy sector. In 2014, the price of oil saw a massive drop, leading to the loss of over 70,000 jobs. The nation does, however, have a plan of action to move forward. To begin addressing this, Norway submitted a new 2030 emissions reduction target in 2022, changing its goal to reduce emissions 50% below 1990 levels to at least 55%. By 2050, the country hopes to achieve a 90-95% reduction from 1990 level emissions. Because oil is one of Norway’s primary sources of greenhouse gases, achieving these goals would have to involve cutting back on oil extraction and exportation. A shift to renewables in Norway has the potential to address the issue of employment as well. With enough investment, a large Norwegian offshore wind industry could provide upwards of 50,000 new jobs. However, the petroleum industry still makes up a sizeable proportion of the labour market; the people will still feel the effects of an energy transition.
Generally speaking, crude oil consumption in Europe is actually at an all time low. Still, there is value in evaluating where oil is coming from, as we can gain a better understanding of where climate efforts may need to be directed. Norway has made significant strides when it comes to its own domestic energy transition. However, the paradoxical case of its relationship to oil may soon be placed under a microscope by the international community as the world continues to deal with climate change and its effects.
Edited by Justine Delangle
