This Energy Transition Norway report describes DNV’s view of the most likely development of Norway’s energy future, and details the dynamics, challenges and opportunities ahead. The forecast also provides a basis for assessing whether Norway is likely to meet its energy and climate-related targets.
Highlights from the report
- Norway is not likely to meet its 2030 climate targets
Norway has ambitious climate targets that involve reducing emissions by 55% by 2030 compared with 1990 levels, with a further reduction down to net zero by 2050. Our forecast shows that Norway will most likely only achieve a 24% reduction by 2030 and an 79% reduction by 2050.
- Growing renewable electricity is urgent to fertilize green industrial growth and fulfill decarbonization targets
Norway’s electricity production is historically almost entirely based on hydropower, but over the last few years onshore wind representing around 10% of generation capacity has been added. In the coming decade, we foresee a significantly increased electricity demand, but slower electricity production growth. Households, service industries, as well as the electrification of transport, will consume the existing Norwegian electricity surplus. This will lead to a deficit of domestic electricity supply for further decarbonization plans as well as new industrial growth within sectors such as battery factories, green steel, alumina and electrolysis-based hydrogen production.
- Oil and gas exports are set for a continuous decline, resulting in dramatic losses of export revenue
Norway is the world’s fourth largest gas exporter, the eleventh largest oil exporter, and almost 90% of its production is exported. However, Norwegian oil production will start to decline after 2025 when several fields are at the end of their lifetimes and when global demand for oil begins to fall; by 2050, exports will be less than 20% of today's level. We see gas production and export remaining at present levels until around 2030, from when they enter a gradual decline as European gas demand declines in line with aggressive climate policy and renewable energy competition. Assuming constant prices, this 63% reduction in oil and gas exports will result in a 210bn NOK annual loss in revenue.
- Norway has a solid platform to grow green exportorientated industries — but that needs supporting policies
- Norway is especially well positioned for a leading role in floating offshore wind (FOW) power production. Hywind Tampen in the North Sea will be the world’s largest FOW development when it is commissioned in 2022.
- CCS will have a significant role to play in decarbonizing the power system globally, as well as heavy industry. Norway is well positioned to receive CO2 captured by European industry or power plants and store it in reservoirs under the seabed. Norway’s CCS initiative, Longship, is a leading example of public private project/policy initiative that can lead to opportunities for future growth, expertise and technology transfer.
- Shipping is a hard-to-abate sector where direct electrification is expected to play only a minor role beyond the short-sea segment. Norway has extensive experience and a lead in LNG, batteries and hydrogen, including hydrogen fuel cells, for domestic short-sea shipping. Extending this leadership into research, piloting and development of low- and zero-carbon fuels, batteries and related infrastructures for deep-sea shipping is a promising opportunity.
- Industrial development policies will be instrumental for unleashing industry opportunities enabling green industrial growth. Building a domestic industry will require opening up the policy toolbox to decide how best to support industry and technology initiatives at various stages of maturity, and to stimulate market and supply-chain creation through projects that enjoy the enthusiastic buy-in of local communities, and the nation as a whole.
Without aggressive expansion policies for electricity and other green industry exports, Norway faces a substantial drop in energy related export revenue.