The Norwegian Government presents updated plans for the energy sector: Offshore wind and hydrogen central new components in green transition
On Friday 11 June 2021, the Norwegian Government approved a long-awaited white paper. The document is titled “Putting Energy to Work”, and contains the most recent and updated policy plans for the energy sector in Norway. Among the initiatives is a novel “Roadmap for hydrogen”.
Further, and particularly noteworthy, are the plans for development of offshore wind on the Norwegian Continental Shelf (the “NCS”). To that end, in addition to the white paper, the Government issued proposals for amendments to the Offshore Energy Act 2010 and the Offshore Energy Regulation. Further, a guidance to the application processes was issued.
The Ministry of Petroleum and Energy sees the following as the near-to-mid-term future for the Norwegian energy sector, with 2021-2030 as the horizon:
- An increase in domestic production of electricity to 169 TWh in 2030, up from approximately 154 TWh in 2020. Consumption is expected to increase to 155 TWh in 2030, up from 137 TWh. Licencing of new onshore wind projects is set to continue when a number of statutory changes have been passed in 2022-2023.
- Commercial-term development of the offshore wind area Sørlige Nordsjø II. Sørlige Nordsjø II is located near the border with Denmark, not far from the Ekofisk field. No subsidies are foreseen to be given, as The Ministry believes commercial development should be feasible with bottom-fixed installations.
- Development of the offshore wind area Utsira Nord, with a Government-sponsored support scheme. Utsira Nord sits south of Bergen, and is expected to be constructed using floating turbines due to the considerable sea depth.
- Strengthening the grid both onshore and offshore. State-owned TSO Statnett will be appointed as operator of new grid infrastructure offshore. The development of offshore wind grid infrastructure will be explored further in the coming months. The point of departure is that the users (i.e. offshore wind developers) will finance the infrastructure.
- A major push for the production, utilisation and export of domestically produced hydrogen. The Ministry has drafted a “roadmap for hydrogen”, which sets out the short term (2025) and mid-term (2030) ambitions to be achieved through a cooperation between the public and private sector. The short term ambitions focus on the maritime sector, on production facilities for blue hydrogen and pilots for developing and demonstrating new technology, while the mid-term ambitions focus on the logistics, full scale production of blue hydrogen with CCS, and market opportunities in Europe for produced hydrogen. The white paper further outlines the policy instruments to be applied by the Ministry to support the ambitions, including initiatives to apply Contracts for Difference (CfDs).
- Continued exploration and production of oil and gas. New licencing rounds will be held as planned. The start of production on giant oil field Johan Sverdrup has resulted in a net increase in Norwegian domestic production since 2019. Production is expected to continue to increase until the mid-2020s. The petroleum industry will be subject to an effective total carbon tax (including the EU-ETS) of 2000 NOK/200 EUR per tonne in 2030.
A link to the government press release can be found here.
The immediate reactions to the white paper have been reasonably positive. Parliamentarians, organizations, academics and business will scrutinize and debate the presented white paper in the weeks and months to come. Arntzen de Besche is looking forward to participating in this process.
About the white paper format: A white paper is primarily a plan. Without corresponding decisions by the Government or Parliament, little changes with immediate effect. A white paper can nonetheless set in motion extensive debate. Further, its handling in Parliament often results in parliamentary decisions and requests that are binding and sets the course for the detailed regulation and hard policies to come.