The average Norwegian, better known for loving nature than destroying the planet, is more likely than anyone else to drive to work in an electric car and warm their home with a heat pump. When they turn on the kettle in the morning or charge their phone at night, Norwegians plug into an electricity grid that runs almost entirely on renewables. Their politicians write cheques to save trees in tropical forests and politely pressure other countries to protect the environment, too.
But on one metric, Norway’s leafy green image darkens to an oily black. Citizens of the rich Nordic nation dig up more petroleum per person than Russians, Iranians, North Americans and Saudi Arabians.
“Norway claims to be a climate leader, but in reality it is a climate hypocrite,” said Frode Pleym, the head of the Norwegian branch of campaign group Greenpeace. “If Norway were an advertising agency, they would indeed be deemed to be very successful.”
Famed for its fabulous fjords and fairytale forests, Europe’s northernmost country is the closest the world has to what could be called a green petrostate. Its 5.5 million inhabitants are adopting clean technologies faster than anyone else – while its political and industry leaders drill furiously for fossil fuels to sell to Europe. It is a paradox that has led some to paint Norway as a climate hero and others to decry it as a carbon villain.
But whether the country deserves either title depends on a deeper issue that has divided people fighting to stop the planet from heating: how much does the supply of fossil fuels matter in a world where people keep demanding more of them?
Norway is the wealthiest country in the world that is not classed as a tax haven. For decades, its politicians have spun a rags-to-riches tale that puts the discovery of vast petroleum reserves at the centre of its success. “In Norway, the story goes, we were a really poor country, then we found oil, and now we are rich,” said Anne Karin Sæther, a project manager at the Norwegian Climate Foundation. “But Norway was among the 10 richest countries in the world before we found oil – and that is suppressed in the Norwegian narrative.”
What sets Norway apart is how it has managed its wealth. Rather than line the pockets of suited executives and distant shareholders, Norwegian bureaucrats poured petroleum profits into a pot that has become the world’s largest sovereign wealth fund. Today it holds more than a trillion dollars in assets and covers an average of 1.5% of all the world’s listed companies. Tasked with a mandate to safeguard wealth for future generations, the fund now also uses its clout to speed the shift to a clean economy.
“As the climate crisis has developed, the fund has been thinking more and more about what it should do as a financial investor,” said Carine Smith Ihenacho, the chief compliance officer at Norges Bank Investment Management, which owns the fund. It lobbies companies in its portfolio to set net zero targets and argues the business case for developing credible transition plans – divesting from “climate laggards” who refuse to engage. “For us, climate risk is financial risk,” said Ihenacho.
The pressure that Norway applies with its petrodollars is just one of the unexpected ways in which the country is shaping global efforts to decarbonise. Last month, a fertiliser producer south of Oslo opened Europe’s biggest green hydrogen factory. A little way down the road, a cement plant is set to become the first in the world to capture carbon during the production of concrete. Norway already has more heat pumps per household than anywhere bar Japan, which uses them mainly for cooling. And by the end of the year Norwegian streets may become the first in the world on which electric vehicles outnumber combustion engine cars.
Analysts say the Norwegian public’s hunger for clean technologies – and their leaders’ willingness to back them early – has spurred global innovations that drive quality up and push prices down. The capital, Oslo, for instance, is the first public authority to set a target of zero-emissions construction sites, which it will mandate from the start of next year. The move has already encouraged manufacturers to bring electric construction machinery on to the market that can help decarbonise building sites around the world.
But even as Norway has championed the switch to a clean domestic economy, it appears to have bet that the rest of the world will not do the same. Its government continues to license fossil fuel extraction projects in the face of stern scientific warnings that there are already enough oil platforms, gas wells and coalmines to blow through the global carbon budget for 1.5C (2.7F). The International Energy Agency has sounded the alarm for the last three years that further fossil fuel exploration is not compatible with its scenarios for reaching net zero emissions by 2050, but to little avail.
The Norwegian defence is that its fossil fuels are produced more cleanly and with higher ethical standards than those of the autocracies and flawed democracies that dominate petroleum production. Climate activists counter that it is unfair of Norway, which has become extremely rich from its oil industry, to drill even more at the expense of poorer producers, who would effectively have to rein in their supply if the world is to have a chance of meeting its climate targets.
Elisabeth Sæther, the state secretary of Norway’s petroleum ministry, said the country was working to reduce its “already low” production emissions and phase out unabated fossil fuels globally – but that “the world will still need oil and gas”. She cited an analysis commissioned by the ministry that found an increase in Norwegian production could lower global emissions, though she cautioned that the uncertainties were large.
Activists have dismissed the argument that more oil could somehow be good for the climate as outlandish – fewer emissions, after all, means burning fewer fossil fuels.
But should Norway rein its production in, other producers will have an incentive to ramp theirs up. Studies estimate that for every 10 barrels of oil Norway stops producing, other suppliers will make six to nine more.
Norwegian economists have wrestled fiercely with the implications of these effects – with some arguing that a cut to production would still be effective and others suggesting it could increase emissions if the replacement fuels come from countries with dirtier production practices.
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But while the global impact of Norway’s fossil fuel frenzy is hard to quantify, the effect at home is clear. Norway has cut its greenhouse gas emissions by just 11% since 1990 – four times less than coal-hungry and car-loving Germany – despite its roaring success at electrifying the economy and running it on renewables. The expansion of the oil and gas industry has been the biggest barrier to progress, and the task is growing harder as easy-to-access fields are used up.
Norway’s conundrum is also an economic one. One quarter of the country’s GDP comes from oil and gas but its biggest customer, the EU, promised in 2019 to become the world’s first climate-neutral continent – a feat that will entail slashing demand for fossil fuels hard and fast. No petroleum-producing country has yet charted a path for how to transition to a clean economy fairly, although neighbouring Denmark, which extracts far smaller amounts of oil and gas than Norway, became the first country to set an end date for production in 2020.
Norway has done “some very wise things” in managing its petroleum resources, said Erlend Hermansen at the Centre for International Climate Research in Oslo (Cicero), but it faces a hard landing if it does not plan for its decline. “How do you transform that business in a society that’s going to net zero? That’s the billion dollar question.”
In the short term, the answer appears to be that it will not. Since Russia’s full-scale invasion of Ukraine sent European lawmakers scrambling for gas suppliers, Norway had ramped up production.
“The war changed everything,” said Frode Alfheim, the head of trade union Industri Energi. “The little uncertainty about the future of oil and gas has been prolonged for many decades. I feel sure that if you want to start working as an apprentice today, you’ll retire as an oil and gas worker.”
Norwegian gas has helped keep the lights on across Europe while reducing the need to burn dirty coal in German power plants or ship in liquefied natural gas that was fracked in the US. But by the same logic, it has also reduced the pressure on European leaders to invest in renewables, energy efficiency and demand reduction measures that the continent is failing to roll out fast enough.
One group of Norwegian researchers has argued that another global treaty akin to the Paris agreement is needed to address the inherent tension between supply and demand for fossil fuels in a globalised world. If only some countries restricted their fossil fuel demand, they wrote in the journal Science, global prices would fall, encouraging “free-riding countries” to consume more. And if only some countries restricted supply, prices would rise, encouraging other countries to produce more. “But by restricting their own fossil fuel supply as well as their demand, a coalition of the willing can eliminate global price changes that result from their policies,” they wrote.
So far, such ideas have made little headway in mainstream climate diplomacy. The Beyond Oil & Gas Alliance launched three years ago by Denmark and Costa Rica counts just a dozen sovereign states among its core members. An effort to create a fossil fuel nonproliferation treaty, spearheaded by Tuvalu and Vanuatu and endorsed by the World Health Organization and the European parliament, is supported by 13 governments, most of whom are small island states. Norway is a member of neither group.
In fact, Norway is expected to hand out 80 oil and gas licences this year, according to analysis from the International Institute for Sustainable Development and shared exclusively with the Guardian. It estimates this will result in 771m tonnes of pollution from greenhouse gases. The Norwegian petroleum ministry, which awarded 62 licenses last year, said it has not yet processed applications for this year and that it is working to reduce emissions by at least 55% by 2030.
Bård Lahn, a researcher at the University of Oslo who studies Norway’s fossil fuel policy, said: “Another perspective is that we are at a political impasse, where we need to reduce both supply and demand for fossil fuels, but it’s very hard for someone to take the first step.
“We need someone to chart the course, show it’s possible and gain experience with it. In that sense, it would be good if Norway – as probably one of the best-placed ‘petrostates’ to make such a transition – would start. And maybe others would follow.”
