Why don’t we do what matters? The world should demand that Norway uses its oil wealth for a green future | Erik Solheim

by Erik Solheim

A close to united Norwegian political elite portrays the climate challenge as an existential crisis. It is the biggest challenge of our time. It is a matter of the survival of humanity. It’s about the future of our children and grandchildren. There is no shortage of big words.

What is not discussed is the only Norwegian initiative that could mean something important to the world. Investing part of the Norwegian oil wealth in a green future.

Could one of the reasons why our nation Norway has many climate sceptics be that people see through the gap between high-voltage rhetoric and low-voltage measures? Norway’s greenhouse gas emissions are one thousand parts of the world’s total emissions, slightly higher than our share of the world’s population.

If Norway disappeared into the North Sea, it would be sad, but hardly mean anything for global climate emissions.

A typical Norwegian election campaign consists of portraying the climate challenge as steps towards the end of times and then proposing cycle paths in Oslo, light rail in Bergen, more heat pumps, meatfree dinners or the protection of forests. I have fought for all this. This creates a better and healthier Norway. But it means next to nothing for the Earth’s climate.

Melkøya, the gas plant in Arctic Norway, is an illustrative example. The government has decided to electrify the plant. Had this been used as a driving force for technology development and the rapid roll-out of floating offshore wind, it could have been important. As a stand-alone Norwegian measure, it creates a lot of domestic political noise with minimal global effect.

I doubt that the called for windmills in Finnmark will ever be built. All this to clean 1/50th of the Norwegian and 1/50,000th part of the global emissions. It is a paradox that even a modest use of the oil wealth would send Norway straight up into the global climate leader’s seat.

Let’s assume that Prime Minister Store announced at the climate meeting in Dubai that Norway will spend 0.5% of the Oil Fund on a risk relief mechanism for private investments in renewable energy and other green technologies.

The seven billion USD that was set aside will trigger tens of billions in private investment in solar energy, offshore wind, green hydrogen, electric batteries, tree planting and all the other measures the world needs.

It would be a global game changer. The whole world would turn to Norway. Many other funds would follow. The most incredible thing is that this is an almost risk-free measure. 0.5% of the Fund amounts to seven billion USD.

There is no indication that renewable and other green investments are particularly unprofitable. But if that were the case, the biggest risk we take would be a somewhat lower return on seven billion than on the remaining 1,5 trillion USD. In the Norwegian national rhetoric, politicians claim that the Oil Fund is savings for future generations. This is empty rhetoric.

Only a productive Norway that follows the economic development can secure mine and others’ pensions in the decades to come. In the same logic. Is there anything more important for future generations than investing in solutions to the climate threat?

A global climate collapse will erase hundreds of billions from the Oil Fund’s bottom line. A green mechanism for risk relief of private capital can be organized as a special fund or as part of the large fund. It will be necessary to recruit managers with special expertise.

We can choose to invest everything abroad to avoid pressure on the Norwegian economy or we can use a part for the necessary Norwegian transition from oil into renewables and secure future jobs. Using the Oil Fund for the green transition would bring a national compromise. It is economically rational, but environmentally harmful, for Norway to pump oil now that it has great value.

But it is unlikely to be long before the price of oil falls drastically, and expensive Norwegian oil will be in trouble. Perhaps the environmental parties can accept taking out the surplus now, if it is invested in the future? Labor, Conservatives, and the trade union movement will win time for the transition phase.

With loud rhetoric and changing governments, Norwegian emissions have been stable since 1990. When we hear from leading politicians that we will now cut 55% by 2030, it is, to say the least, not credible. We cut below 1% last year. The oil fund has received permission to invest up to 2% of the fund in renewable industry.

So far it has only led to three very small investments, all in Europe. The fund is required to invest only in Western countries. This is totally illogical when almost all economic growth, most technological development and also the increase in emissions takes place in Asia.

60% of humanity lives in Asia and countries such as India, Indonesia and Vietnam are growing at record speed. China alone this year accounts for between 60 and 80% of all new solar energy, wind power, hydropower, green batteries, electric cars and high-speed trains worldwide. Bill Gates writes in his book on climate that he will not engage in symbolic politics, only in measures that affect at least one percent of global emissions.

This is a fist bump into Norwegian environmental policy. The only known new Norwegian measure that can affect one percent of global emissions is if the oil fund invests in green technology. Strong moral arguments can be made that the Oil Fund should invest for a better world. The fund has increased 240 billion USD this year, mostly thanks to Vladimir Putin and his war on Ukraine.

Britain’s former Prime Minister Gordon Brown recently asked Norway to give back more than pocket money from this war profit. But above all, green investments from the Oil Fund are a national compromise where we use the profits from oil for a better world.

And it is close to the only thing Norway can do that will affect the globe, not just refine the 1/1000 parts of the emissions that comes from Norway.

[The above article was published in Dagens Næringsliv, 27 November 2023
and it is reproduced with the permission of the author for educatioal and non-commercial use]