{"id":13881,"date":"2016-11-04T19:31:21","date_gmt":"2016-11-04T23:31:21","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/norways-love-affair-with-oil-gas-on-the-rocks\/"},"modified":"2016-11-04T19:31:21","modified_gmt":"2016-11-04T23:31:21","slug":"norways-love-affair-with-oil-gas-on-the-rocks-2","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/norways-love-affair-with-oil-gas-on-the-rocks-2\/","title":{"rendered":"Norway\u2019s love affair with Oil & Gas on the rocks?"},"content":{"rendered":"

As far as the economy is concerned, a conversation about Norway might as well be a conversation about oil and gas.\u00a0 The Norwegian government holds a 67% stake in the country\u2019s largest oil & gas company, Statoil, and has counted on the petroleum sector for significant portion of GDP revenues since the 1970s.<\/p>\n

\"Figure<\/a><\/p>\n

Figure 1: Macroeconomic Indicators for the Petroleum Sector, 2015 [1].<\/p>\n

\"Figure<\/a><\/p>\n

Figure 2: Norway\u2019s government cash flow from petroleum activities, 1971-2015 [1].<\/p>\n

\u201cWe know there is a paradox. We have been living well from oil and gas. But there is no country in the world that has done more to undermine the oil and gas industry than Norway [1].\u201d \u00a0\u00a0–Vidar Helgesen, Norway\u2019s\u00a0Minister of Climate & the Environment<\/strong><\/p>\n

Despite oil & natural gas being the largest sector contributor to Norway\u2019s GDP, the country uses almost none of it (an estimated 99% of Norway\u2019s energy use is hydropower).\u00a0 In fact, the government prides itself in its commitment to sustainability, and has gone to great lengths to reduce emissions by subsidizing innovation, implementing a carbon tax, and publicly setting a target for Norway to be 100% carbon neutral by 2030. \u00a0Oh, and let’s not forget\u00a0the legislation largely responsible for Norwegians becoming the #1 buyers of Tesla’s electric vehicles outside of the United States; the Norwegian government eliminated import tax on the vehicles (automotive tax in Norway is typically around 50%), parking, tolls, charging station fees, and even allowed Tesla owners\u00a0to drive in bus lanes [2].<\/p>\n

\"Figure<\/a>
Figure 3: Registered Electric\u00a0Vehicles in Norway [2]<\/figcaption><\/figure>Demand for power caused by population growth and economic development is outpacing innovation of technology producing alternative sources of energy; although Statoil management predicts\u00a0the energy mix will continue to shift\u00a0gradually towards\u00a0renewables and away from coal and traditional oil & gas, they argue that critics of the industry will need to get used to the idea of relying on Petroleum for at least a couple more decades if they want to keep the lights on. \u00a0That being said, the firm is very much in favor of governments taxing emissions (Norway was one of the first countries to approve the climate agreement signed at the 21st Conference of Parties, COP21, in December 2015)\u00a0[3].<\/p>\n

“It might sound strange that an oil and gas company that kind of produces carbon is advocating ‘please put a tax on carbon’, but that’s actually what we’re doing.\u00a0 Last year we sent a letter to Christiana Figueres and the ones running the Paris agreement that said, ‘please introduce a CO2 tax because we need that’.” -Bjorn Otto Sverdrup, Statoil’s Senior Vice President for Sustainability, in an interview with ABC News [5].<\/p>\n

Statoil\u00a0has gone to great lengths to demonstrate true commitment to implementing sustainability measures, investing\u00a0heavily in R&D to develop technology that reduce greenhouse\u00a0emissions, while holding suppliers accountable to the same high standards. Additionally, the company\u00a0has\u00a0contributed over $1.3B to\u00a0sustainability\u00a0projects focused on planting trees and regenerating natural resources in various countries including Brazil, Indonesia, and Guyana [4].<\/p>\n

Ok, so what should Statoil do next?<\/p>\n

Innovation, innovation, innovation\u2026 but not alone. \u00a0No firm is in a position to combat global warming single handedly, and even a small coalition could create a first mover disadvantage given the high costs. \u00a0It was just announced this morning that Statoil is teaming up with 9 other major players in the oil industry to launch the Oil and Gas Climate initiative, a platform by which they will jointly develop\u00a0carbon capture and storage technologies over the course of the next decade [6]. \u00a0The energy sector should continue building these types of partnerships to share the cost burden as well the benefits of technological advances, in order to meet the energy demands of the future.<\/p>\n

    \n
  1. http:\/\/www.norskpetroleum.no\/en\/economy\/governments-revenues\/<\/a>\u00a0Accessed November 2016<\/li>\n
  2. http:\/\/qz.com\/119662\/why-tesla-is-focused-on-oil-rich-norway-as-it-expands-beyond-the-us\/<\/a>\u00a0Accessed November 2016<\/li>\n
  3. http:\/\/www.statoil.com\/no\/InvestorCentre\/AnnualReport\/AnnualReport2015\/Documents\/DownloadCentreFiles\/01_KeyDownloads\/Annual_report_on_form_20-F.pdf<\/a>\u00a0Accessed November 2016<\/li>\n
  4. http:\/\/phys.org\/news\/2016-08-paradox-nation-norway-climate-leader.html#jCp<\/a>\u00a0Accessed November 2016<\/li>\n
  5. http:\/\/www.abc.net.au\/news\/2016-09-27\/norwegian-paradox-fighting-climate-change-selling-fuels\/7876368<\/a>\u00a0Accessed November 2016<\/li>\n
  6. http:\/\/seekingalpha.com\/news\/3221336-big-oil-invest-1b-10-years-carbon-capture-technology?uprof=45<\/a>\u00a0Accessed November 2016<\/li>\n
  7. http:\/\/www.statoil.com\/en\/technologyinnovation\/researchinstatoi\/pages\/default.aspx<\/a>\u00a0Accessed November 2016<\/li>\n<\/ol>\n

    Other sources:<\/p>\n

    http:\/\/www.climatechangenews.com\/2016\/09\/28\/leading-scientist-tells-norway-to-stop-looking-for-oil\/<\/a>\u00a0Accessed November, 2016<\/p>\n

    http:\/\/www.oilandgasclimateinitiative.com\/<\/a>\u00a0Accessed November, 2016<\/p>\n

    http:\/\/www.statoil.com\/annualreport2009\/en\/sustainability\/climate\/pages\/climate.aspx<\/a>\u00a0Accessed November, 2016<\/p>\n

    http:\/\/www.statoil.com\/annualreport2011\/en\/shareholderinformation\/pages\/majorshareholders.aspx<\/a>\u00a0Accessed November, 2016<\/p>\n

    http:\/\/www.offshoreenergytoday.com\/norway-statoil-increases-oil-and-gas-production-by-17-pct-in-2q\/<\/a>\u00a0Accessed November, 2016<\/p>\n","protected":false},"excerpt":{"rendered":"

    Trouble in energy paradise as Norway’s Statoil tries to balance sustainability and profitability in the face of climate change.<\/p>\n","protected":false},"author":1918,"featured_media":14241,"comment_status":"open","ping_status":"closed","template":"","categories":[955,1288,1968,157,185],"class_list":["post-13881","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-alternative-energy","category-carbon-emissions","category-norway","category-oil-and-gas","category-renewable-energy"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/climate-change-challenge-2016\/","yoast_head":"\nNorway\u2019s love affair with Oil & Gas on the rocks? - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/norways-love-affair-with-oil-gas-on-the-rocks-2\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Norway\u2019s love affair with Oil & Gas on the rocks? 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