April 20th, 2021

Carbon tax in Norway has been a success since 1991

By Letter to the Editor on January 23, 2019.

In his Jan. 11 letter to the News, MP Glen Motz includes the following two sentences regarding carbon taxes in Norway: “Norway has had both a carbon tax and oil and gas industry. Their emissions have gone up.” This statement is correct as Norway’s greenhouse gas (GHG) emissions in 2017 were 52.7 million tonnes, up from 51.7 million tonnes in 1990 (Statistics Norway). These amounts are determined as per international agreements and include all emissions generated within Norway’s boundaries, including those produced for exported products. Despite the increase, it is wrong to conclude that carbon taxes in Norway have not had an impact.

Norway has had carbon taxes since 1991. The rate varies with industry sector with some totally exempt. The highest carbon tax rate is on oil and gas production, which in 2015 was about $71 Cdn./tonne of carbon dioxide (CO2). (ClimateActionTracker.org).

This provided economic incentive to oil and gas producers to improve efficiencies resulting in an emissions intensity of 55 kg of CO2 per tonne of oil equivalent produced, which is much less than the world average of 130 kg (ClimateActionTracker.org). It also provided incentive for development of a carbon capture project that injects CO2 removed from natural gas into caverns below the sea floor (PMR – Carbon Tax Guide).

Other indications that carbon taxes have been successful are a 40-per-cent reduction from 1990 to 2014 in Norway’s energy intensity (Mainland energy use/Mainland GDP)(PMR – Carbon Tax Guide) and that they remain part of Norway’s overall strategy to reduce GHG emissions.

Despite the high carbon tax rate, Norway’s oil and gas production has almost doubled since 1990 and the associated emissions from the production has increased from 8 million tonnes (1990) to 14.7 million tonnes (2017) (Statistics Norway). But since 95 per cent of Norway’s oil and gas is exported, a large portion of these emissions are actually due to foreign customers, which account for 7.6 million tonnes (1990) and 14 million tonnes (2017). Subtracting these from the amounts in the first paragraph results in 44.1 million tonnes (1990) and 38.7 million tonnes (2017), a drop consistent with the 40-per-cent decrease in Norway’s energy intensity. This shows that Norway’s GHG emissions would have decreased if it had not increased its oil and gas production to supply foreign markets.

Canada’s situation is similar to Norway’s as it is also an exporter of oil, natural gas and petrochemicals. For exporting countries, including GHG emissions for exported products in a country’s total emissions can overshadow gains in reducing domestic GHG emissions and, in my opinion, should not be included in a country’s emissions total.

If Canada or Norway didn’t produce these products some other country would and the same or more emissions could be generated in a country less committed to reducing GHG emissions, a worse situation for the world

Denis Hoffman

Medicine Hat

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