WOULD GAIN A GREAT DEAL: 'We argue that Norway would stand to gain a great deal if it became the first major petrostate to successfully transition away from oil because it would generate significant commercial and reputational dividends for its private sector, diplomats and citizens,' write the authors of this op-ed.
What is at Stake in Norway's Post-election Climate Negotiations
The faster Norway embarks on a responsible but speedy end to its reliance on oil, the greater the potential reputational, diplomatic, and commercial gains for Norway, write three NUPI researchers in this op-ed.
After the election victory of the “left-side” in the September 2021 general election in Norway, one of the key issues in the negotiations to form a new Norwegian government will be how to address the future of oil exploration. To have a majority in the parliament, The Labour Party (Ap), Centre Party (Sp) and the Socialist Left Party (SV) need to reach a common position on this issue. During the election SV have been adamant that all exploration should stop, while Ap and Sp was in favour of a gradual reduction in exploration.
The debate in the run-up to the election centered around the costs of transitioning away from oil weighed against the environmental benefits. Within this framing, the economic and international advantages of a fast transition tended to get overlooked. We think that it is thus crucial for the new government to take a full account of the potential benefits at stake in the oil debate. Indeed, we argue that Norway would stand to gain a great deal if it became the first major petrostate to successfully transition away from oil because it would generate significant commercial and reputational dividends for its private sector, diplomats and citizens.
The Benefits of Leading and the Costs of Lagging
In short, Norway should not only factor in the costs, but also consider the benefits that can be accrued from being the firstto successfully make this transition. In this election the question was no longer whether Norway should halt exploration and transition towards a green economy, but how much longer it can delay the inevitable. Our argument is the sooner Norway embarks on this process, the larger the gains can be.
We believe that the knowledge gained in the process – both in terms of managing such a transition as well as in terms of the new technology and expertise that will be developed along the way - will become a valuable commercial commodity. If Norway becomes the model for a successful transition others will want to learn from the Norwegian experience, knowhow, and technology. This knowledge could also become the nucleus for a major new development partnership model where Norway assists developing countries with their own transitions away from oil. As we have seen with initiatives such as Oil for Development, such partnerships also create opportunities for Norway’s private sector and citizens.
Meeting our Net Zero Targets is not only an Obligation, it is also an Opportunity
The IPCC scientists are clear in their warnings that if we are not able to reach the net zero emissions goal by 2050, the cascading and compound effects on the global ecosystem will be severe. Indeed, at an open debate on Climate Security earlier this year, Secretary-General António Guterres listed cutting climate emissions as first among four priorities on the UN’s climate security agenda. Echoing this, Norway has committed to using its term on the UNSC (2021-2022) to make the case that “addressing climate change - one of the biggest security threats of the 21st century – should be at the core of its mandate”.
Norway is currently hitting far above its weight because its global reputation in peace and development is grounded in its domestic achievements in human development. Norway’s integrity generates significant commercial and diplomatic opportunities for its citizens. Yet, persisting with oil exploration threatens Norway’s hard-won reputation.
For example, in a recent Global Policy article economics professor Branko Milanovic publicly said what many of Norway’s friends privately point out: that Norway’s green diplomacy lacks credibility as long as its economy remains carbon-based. To illustrate his point about the gap between Norway’s practice and its preaching, Milanovic compared Norway’s beahviour with the British East India Company’s opium war in the 19th century, when Britain banned opium sales at home whilst it at the same time waging a war for the right to sell opium to the Chinese.
The reputational gap between Norway’s green signalling and its attempt to cling on to oil as long as possible is echoed in Time magazine’s coverage of the Norwegian election, where political scientist Ian Bremmer points out that beneath Norway’s green veneer, it remains the most fossil fuel dependent industrialised democracy in the world. The day after the Norwegian election, the Danish newspaper Dagbladet Information made a plea in Norwegian on their front page saying that if Norway with its oil billions cannot manage a quick transition, no one else can.
Yet, this is also why transitioning presents such an unusual opportunity: it is precisely because it is well known that Norway’s high standard of living stems from its careful management and distribution of its oil wealth, that it would be so politically significant for Norway to transition away from oil quickly and efficiently. It could show the world that not only is it possible to profit from it economically, but also diplomatically in terms of reputational gains for the state, its citizens and private sector.
If Norway does not have the courage to transform, who will?
Just as ending oil quickly would produce positive international side effects, the decision to persist would have negative ramifications abroad. Should Norway seek new oil fields, it would send a signal for other oil producers to also continue to deflect pressure. As Milanovic put it, if Norway – who has significant adaptive capacity and resilience as one of the richest countries in the world – will not cease exploration, how can we hope to convince Nigeria?
By persisting with oil exploration, Norway risks becoming the poster-child example that big oil prefers to emphasize adaption to the symptoms of climate change rather than facing up to the measures necessary to transform the global economy in order to achieve zero emissions.
Thus, placing a moratorium on oil exploration is not only the best choice for the environment, it would also close the cognitive dissonance between Norway’s stated goals and its practices. This would provide a major boost to Norway’s influence in all international climate forums, and have countless spin-offs in the security, trade, energy, and other sectors.
The Choices Facing the new Government
Norway’s new government essentially has two choices. One path leads to Norway becoming a model for transitioning away from oil and becoming a credible global leader in multilateral efforts to solve the climate crisis, with significant commercial gains for Norway in the global knowledge economy.
The other path, should Norway further delay the inevitable and continue its oil dependency, will not only harm the biosphere but undermine Norway’s reputation on the world stage.
The so-called middle way is a false choice. The longer Norway delays the transition the more costs it will accrue, including to its global reputation. The faster it embarks on a responsible but speedy end to its reliance on oil, the greater the potential reputational, diplomatic, and commercial gains for Norway.
A Norwegian version of this op-ed was first published by Aftenposten 20 September 2021.