Noorwegen moet in 2030 CO2-neutraal zijn (en)

EUOBSERVER / BRUSSELS - Norway's Labour-led coalition government on Thursday (17 January) reached an agreement with three opposition parties that the country should become carbon neutral by 2030 - some 20 years earlier than its previous target.

The move makes Norway's policy on cutting CO2 emissions one of the world's most ambitious.

As the world's fifth-largest exporter of oil and Western Europe's biggest exporter of natural gas, Norway has found itself under increasing pressure to improve its environment profile.

The new plan includes offsetting Norwegian emissions by stopping deforestation in developing countries and planting trees. On the domestic front, money is to be earmarked for investment in renewable energy and new taxes on fuel introduced as part of a 'carrot and stick' strategy promoting more environmentally friendly behaviour and reducing greenhouse gas emissions.

The Nordic country, which is not a member of the EU, also aims to become a leader in the global technology race in the new experimental and costly technology known as carbon capture and storage (CCS). The idea is to trap emissions that cause climate change before they are released into the atmosphere.

So far, Norwegian company StatoilHydro operates Europe's only commercial CCS project, in the Sleipner natural gas field in the North Sea.

At the same time, however, a state-funded large-scale project to store carbon from power plants beneath the seabed is currently being held up by EU state aid rules.

According to the Norwegian plans, a new CCS plant should be operational by 2014 and able to trap emissions from a gas-fired power and heating station at StatoilHydro's refinery in Mongstad, north of Bergen.

But EU state aid rules, which Norway as part of the European Economic Area (EEA) is obliged to follow, may prevent the government from providing the huge financial resources needed to lift the project off the ground.

Since the Norwegian government notified Brussels of the project in autumn 2007, letters have been sent back and forth between Oslo and the EFTA Surveillance Authority (ESA).

ESA is the independent body monitoring the EU regulations Norway respects in return for access to the internal market.

"We are independent, but in close co-operation with the commission on this," an ESA insider admitted.

One way of winning permission to fund the CCS project is to label it "a project of common European interest". There are also hopes that new guidelines for state aid in relation to environmental projects, set to be presented by the commission next week, could include carbon capture and storage.

While waiting for approval from Brussels, the decision on whether to invest in the test plant has been postponed until the end of 2008 - officially to allow more time to find foreign investors for the project.

The Norwegian ministry of petroleum and energy has so far signed deals with Dong, Shell, StatoilHydro and Wattenfall - but only for cooperation during the planning phase.

While state aid is a likely no-go area for Brussels, the CCS technology may not be. In an attempt to push carbon capture technology, the commission is currently planning a directive on the geological storage of CO2.