Norway

Despite a new centre-left government being elected in 2021, Norway continues to support an expansion of oil and gas exploration in its already large fossil fuel sector. Norway’s exported fossil fuels are a large source of global emissions when their eventual combustion is taken into account. The government is seeking to throw out a case currently before the European Court of Human Rights (ECHR) that charges that approval of new permits to drill for oil and gas would constitute a breach of fundamental human rights.

It has slightly strengthened its domestic 2030 target to a reduction of at least 55% below 1990 levels, which we rate as 1.5°C compatible, but considerably stronger policies will be needed to meet this target. This target still needs to be formally submitted to the UNFCCC as an updated NDC. A significant boost to committed climate finance for developing nations is a welcome outcome, but it still falls short of a 1.5°C compatible level. There is also much still to do domestically to ensure Norway is aligned with the Paris Agreement’s 1.5°C temperature goal. The exported emissions from Norwegian oil and gas are not considered in the CAT’s overall “Almost sufficient” rating.

Norway leads the world on electric vehicle (EV) adoption thanks to a long track record of government support and regulation. It is on track to achieve its 2025 phase out of fossil fuel vehicles well ahead of schedule, with the market share of zero emission vehicles and plug-in hybrid vehicles combined reaching 86% in February 2022, and on track to reach 100% by the end of the year. Reducing Norwegian transport sector emissions is a top priority given the power sector is already mostly decarbonised. This also means the electrification of transport in Norway leads to a disproportionately large reduction in emissions relative to other countries that burn fossil fuel to generate electricity.

The CAT rates Norway’s climate targets, policies and finance as “Almost Sufficient”. The “Almost Sufficient” rating indicates that some elements of Norway’s efforts are world leading, like its updated 2030 emissions reduction target, but its climate policies and commitments need substantial improvements to be consistent with the Paris Agreement’s 1.5°C temperature limit. Norway’s updated 55% domestic reduction target is “1.5°C Compatible” when compared to modelled domestic emissions pathways. To achieve its updated 2030 target, Norway will need to enhance its current policies which are currently “Almost Sufficient” and in line with 2°C warming. We also rate Norway’s target as “Insufficient” when compared with its fair-share contribution to climate action. Norway should provide additional, predictable, finance to others to meet its fair-share contribution. Norway’s rating does not consider exported emissions from its large oil and gas production sector.

The CAT rates Norway’s policies and action as “Almost Sufficient”.

The “Almost sufficient” rating indicates that Norway’s climate policies and action in 2030 are not yet consistent with the 1.5°C temperature limit but could be, with moderate improvements. If all countries were to follow Norway’s approach, warming could be held at—but not well below—2°C.

Current policies are projected to lead to emission levels of 41MtCO₂e by 2030, which is 21% below emissions in 1990. Norway will need to adopt further policies in order to meet its recently strengthened 2030 target.

Norway’s electricity generation is almost exclusively renewable: in 2020, 90% of electricity was generated by hydro power plants and 2.6% from wind farms. Less than 2% of generation was from thermal power plants, mostly in industrial heat processes. As a result of its prominent hydropower supply, Norway can play a key role in balancing the electricity grids of neighbouring countries, depending on the weather in a given year.

Norway is home to the biggest hydrocarbon reserves in Europe, making it the world’s fifth largest exporter of crude oil, and its offshore drilling activities have been subject to a carbon tax since 1991. In 1999, this was increased, and in 2005 Norway joined the EU ETS.

By 2018, around 80% of greenhouse gas emissions were taxed, with the highest tax charged on domestic aviation and mineral oil. Through higher taxes, investments in carbon capture and storage (CCS) have been viable since 1996, after which nearly 1 MtCO₂e a year has been captured from the Sleipner Vest oilfield. In January 2021, the Norwegian government announced plans to gradually raise its carbon tax until it reaches NOK 2,000 (USD 220) by 2030. Despite Norway successfully utilising this technology on a number of its oilfields, it remains prohibitively expensive and has rarely been deployed successfully elsewhere, with the future of this technology remaining uncertain.

Despite Norway’s relatively high carbon tax, its oil and gas sector continues to be a large emissions source, making up over a quarter of total emissions in 2020. The vast majority of emissions resulting from this sector are from combustion abroad. While this enormous source of emissions is not counted under Norway’s emissions inventory, it far outweighs total domestic emissions and represents a blight on Norway’s climate record. The newly elected government has refused to consider a phase-out of this sector, confirming its commitment to allowing an expansion of drilling and exploration in the Barents Sea, though this decision is currently being challenged in the European Court of Human Rights.

While the decarbonisation of Norway’s transport system is one of the three main goals of its National Transport Plan 2022–2033, almost half of the NOK 1,200 billion (USD 132bn) allocated to measures covering the period of the plan still flowed into the construction and improvement of roads and highways. Relatively high road infrastructure investments like this are, to an extent, a byproduct of Norway’s low population density. However, there is a stated commitment to increase government spending on key public transport projects in the four largest urban areas and reduce ticket prices in the main cities.

In 2021, battery electric vehicles (BEV) alone reached a 65% market share. By February 2022, BEVs and hybrid electrics combined reached an 86% share of new sales, far ahead of any other country in the world, and on track to reach 100% by the end of 2022. The increasing share of electric cars in new sales has also had an impact on the overall share of zero emissions vehicles: by the end of 2020, 16% of Norway’s car fleet was fully battery electric, with a further 6% hybrid electric.

During the COVID-19 pandemic, Norway amended its Petroleum Taxation Act to temporarily allow oil and gas companies to deduct investments from the tax base. Companies were also able claim the tax value of losses incurred in 2020 and 2021 from the State.

The full policy and action analysis is available here.

Upon a change of government in late 2021, Norway has committed to strengthening its 2030 target to at least a 55% reduction below 1990 levels, however, this target still needs to be officially submitted to the UNFCCC. We rate this strengthened target as “1.5°C Compatible”. The “1.5°C Compatible” rating indicates that Norway’s domestic target in 2030 is consistent with the 1.5°C temperature limit. If all countries were to follow Norway’s approach, warming could be held well below 2°C.

We rate Norway’s target as “Insufficient” when compared with its fair-share emissions allocation. The “Insufficient” rating indicates that Norway’s fair share target in 2030 needs substantial improvements to be consistent with the 1.5°C temperature limit. With Norway’s domestic being 1.5°C aligned, improvements should come in the form of additional support for emissions reductions achieved in developing countries in the form of finance and technical support. If all countries were to follow Norway’s approach, warming would reach up to 3°C.

Norway’s international public finance contributions are rated “Insufficient”. The country is the only one to meet our benchmark for current contributions based on the 100 billion commitment and is committed to increase its finance in the period post-2020. However, its recent contributions are, on average, lower than they were in the lead up to the Paris Agreement. If Norway were to deliver the proposed increase, it would be rated “Almost sufficient”.

Norway’s climate finance is not sufficient to improve the fair share target rating, and the CAT rates Norway’s overall fair share contribution as insufficient.

Norway has a substantial carbon sink in its forests - equal to around half of Norway’s annual emissions. Forest cover has been increasing. The volume of growing wood stock increased between 2011-2020 by over 12%. According to the national forestry accounting plan, Norway’s average annual removal from this sector will amount to slightly over 24 MtCO₂e between 2021-2025.

Norway has committed to a 90-95% GHG emissions reduction below 1990 levels by 2050 and included this target in their long-term strategy submitted to the UNFCCC. While the target generally covers the key elements, it should be noted that Norway has not yet committed to an actual net zero target. Despite not being a net zero target, if we were to rate its 2050 target using the same rating methodology, it would be rated as ‘Average’.

The full target analysis is available here.