Call for free quotas

December 21, 1999, 08:00 CET

Proposals to make all Norwegian industry pay for greenhouse gas emission quotas would impose a special cost on Statoil's land-based operations.

This comment on the majority report by a government-appointed commission of inquiry on such quotas comes from environment adviser Frede Cappelen at the group.

He believes that charging for such quotas could undermine the profitability of Statoil's Mongstad refinery near Bergen and its methanol complex at Tjeldbergodden in mid-Norway.

"These facilities wouldn't be able to pay for quotas corresponding to 30 per cent of their emissions unless matching costs are imposed on their competitors, which we don't expect to happen," says Mr Cappelen.

Norway's Storting (parliament) last year rejected a government proposal to tax carbon dioxide emissions from mainland industries.

Instead, the administration was asked to develop a system for trading emissions of carbon dioxide and other gases which contribute to the greenhouse effect.

This system would aim to ensure that Norway meets the emission reduction targets imposed by the Kyoto protocol of 1997.

A crucial issue for the commission has been whether industrial sectors previously exempted from Norwegian carbon dioxide tax should be allocated free quotas. The alternative is that the latter must all be bought from the government or the market.

Free quotas have been rejected by a majority on the commission. But a minority comprising Øystein Dahle from the Worldwatch Institute and Statoil's Gerd Halmø want free quotas to safeguard industry competitiveness.

The commission's report will now be circulated for comment before the government draws up its proposals for the Storting.

"We must expect the Storting to reject proposals which would give Norwegian industry a cost handicap in relation to its competitors when emission trading is adopted," says Mr Cappelen.

He believes that charging for quotas would make it difficult to continue developing Norwegian industries based on national oil and gas resources.

"It could also mean job losses in an industry with environmental standards which rank among the highest in the world, and hit local communities in the regions."