Prevention of climate change - Norwegian climate policy Steffen Kallbekken, Senior Research Fellow, CICERO

2 Overview Climate policy targets Current emissions Reducing emissions: possibilities and challenges How can Norway be a frontrunner? …I will give you problems – not solutions

3 Climate policy targets Klimaforliket/Government white paper /7 Over-fulfilling the Kyoto commitment by 10% Carbon neutral by 2050 (or 2030) 30% (or 40%) reduction from 1990 to 2020 …15-17 Mt of which should be domestic Norway should be a frontrunner = stimulate others to set ambitious targets

4 Emissions Will meet our Kyoto commitments (-10%) Kyoto target ~50 Mt, over-fullfilment ~45 Mt Emissions in 2010: 53.7

5 Reducing emissions The Klimakur 2020 report Identified 160 measures with 22 Mt potential A carbon price of NOK per ton would be sufficient to meet the target Cost to society: 5 billion NOK/year …a bit more than we spend on wedding gifts (NOK 3.3 billion) and less than we spend on cosmetics (8 billion) Easy…?

6 A closer look at Klimakur Macro analysis, 12 Mt domestic emissions reductions achieved by:

7 Easy? An exampel to follow? Reduced economic activity + carbon leakage Transport: double price will give 12% reduction short-run, 30% in the long-run Carbon neutral biofuels?

8 Carbon leakage 100% leakage within a cap!! % of Norways emissions inside ETS (2013) Cuts in Norway means the EU can emit more! …unless we buy and burn permits Reduce aluminium production in Norway by 1 kg - Saves 2.2 kg CO 2 and ~15kWh (7.5 Kg CO 2 in Germany – if we buy and burn permits) - Chinese aluminium 16.5 kg CO 2 /kg aluminium - Cut 1 ton in Norway to increase global emissions by 2 tons?

9 The acceptability challenge Transport: double fuel price to cut emissions by 30%? 55% of adult Norwegians would like to cut current fuel taxes Only 13% want to increase the current tax rates Is a major increase politically feasible? Can it be made feasible?...half would support a 20% increase if revenues were earmarked...improved public transport = greater support

10 Is bioenergy carbon neutral? Most of industry reductions is switching from coal to wood as reducing agent (94% of ”additional measures”) 40-63% of transport sector cuts comes from biofuel Assumes biofuels are carbon neutral …because what is released will eventually be recaptured. Eventually = not carbon neutral until then (Anyway, bioenergy should be used for heating not for transport)

11 My perspective To be a frontrunner Norway must lead in a way that makes it attractive to follow! Billions spent on expensive cuts domestically will not convince anyone else …yet credibility depends on domestic cuts Keep a global perspective! (electricity, biofuels) Focus on solutions which can be scaled up and used by others Focus on technologicial and political innovation (create a policy model)

12 Points to discuss What are the Norwegian climate policy targets? How can Norway be a frontrunner? Is promoting biofuels good climate policy? How do we trade off domestic emissions reductions against creating an attractive example to be followed by others?