Norway ratified the Paris Agreement on 20 June 2016. Norway was initially committed to a target of at least a 40% reduction of greenhouse gas emissions by 2030 compared to 1990 levels. Norway intends to fulfill this commitment through a collective delivery with the EU and its Member States. In February 2020, Norway submitted an enhanced climate target. The current target is to reduce emissions by at least 50% and towards 55% by 2030, compared to 1990 levels.

Norway's key national policy instruments may be summarised as follows:

• Norway's International Climate and Forest Initiative (NICFI), where Norway has pledged up to 3 billion NOK a year to help save the world's tropical forests while improving the livelihoods of those who live of, in, and near the forests.
• Norway is a party to the EU emissions trading system (EU ETS). The quota system covers about half of the Norwegian emissions, mainly from the petroleum and mainland industry.
• The national CO2 tax is payable on mineral oil, petrol, gas, natural gas and LPG (imported or produced in Norway).
• Norway has several support mechanisms for the development of new technology for the reduction of GHG emissions and energy efficiency, including technology for zero-emission transport solutions both onshore and offshore.
• A combination of taxation rules and incentives for the benefit of electric vehicles and a goal that all new passenger cars and light vans sold should be zero-emission by 2025, see below. Further, additional goals are, inter alia, that 100% of the new heavy vans are electric in 2030, 100% of the new city buses are electric within 2025 and that 75% of the long-distance buses are electric or hydrogen vehicles.
• Furthermore, direct regulations have been implemented in certain specific areas, i.e. a prohibition against gas flaring in the Norwegian petroleum industry and a prohibition against the use of mineral oil for heating.

The initial climate target is established by law through the Norwegian Climate Change Act. According to section 1 of the Act, its purpose is to promote the implementation of Norway's climate target as part of its transformation process to a low-emission society by 2050. As mentioned above, Norway has after the enactment strengthened its GHG reduction targets and will work for a reduction of at least 50% and towards 55% by 2030, compared to 1990 levels.

There is no general prohibition against the use of certain fossil fuels or nuclear power in Norway, however, a prohibition against the use of mineral oil for the heating of buildings has been adopted. There are important exceptions from this prohibition, including buildings used for agriculture and the use of mineral oil in district heating.

Most regulations apply to the production of energy, and not to consume. The electricity produced in Norway stems from renewable sources, mainly hydropower and to an increasing extent wind power. Two nuclear reactors exist for research purposes, and no license has ever been granted for a nuclear power plant for the purpose of energy production. Furthermore, as the gas from the Norwegian continental shelf is mostly exported to the European continent by pipelines or as liquefied natural gas, Norway does not have an onshore transmission system for gas.

The following legislation relates directly to the reduction of GHG emissions (the list is not exhaustive):

• The Act relating to Norway’s climate targets (The Climate Change Act) introduces a legally binding goal of a 40% reduction of GHG emissions by 2030 compared to 1990 levels.
• The Act relating to greenhouse gas emission allowance trading and the duty to surrender emission allowances (The Greenhouse Gas Emission Trading Act) implements the EU ETS in Norway.
• The Land Act has been changed to facilitate a prohibition on new cultivation of bogs, c.f. The Land Act Section 11. Any prohibition will be decided by the Government and effectuated through regulations.
• The Regulations relating to restrictions on the manufacture, import, export, sale and use of chemicals and other products hazardous to health and the environment (The Product Regulations) chapter 3 requires fuels traders to include biofuels in all fuels sold for road traffic, whereas at least 24.5% of the trade of the fuel used in highway transport shall be biological fuel per January 2021, cf. also further below.
• The Act relating to public procurement (The Public Procurement Act ) contains a new environment section that shall contribute to reduce environmental influence which is destructive and instead promote solutions for the climate.
• The Regulation relating to a prohibition on the use of mineral oils for the heating of buildings is further described below.
• The Regulations relating to the recycling of waste (Waste Regulations) section 9-4 introduce a prohibition against the displacement of biodegradable waste.

Norway participates in the EU Emissions Trading System (EU ETS) and the emissions trading system in the Kyoto protocol.

The CO2 tax on mineral products and the CO2 tax on emissions from the petroleum activities on the continental shelf were introduced in 1991. The purpose of the taxes is to contribute to cost-effective reductions in greenhouse gas emissions CO2. The CO2 tax is payable on mineral oil, petrol, gas, natural gas and LPG (imported or produced in Norway). The taxation rates on fossil energy are high, and the Norwegian government announced in 2021 a plan to more than triple the CO2 tax. The rate for most industries at present is NOK 590 per ton (NOK 800 for oil producers and aviation), whereas it will be increased to NOK 2,000 per ton (approx. $ 240) by 2030. By 2021, a CO2 tax on CO2 emissions from waste incineration has also been implemented.

Not included in any tax regime are emissions of methane (CH4) and nitrous oxide (N2O) from agriculture.

National legislation regulates CCS through the regulations to the Act Relating To Petroleum Activities chapter 4a, the regulations relating to the exploitation of subsea reservoirs on the continental shelf for storage of COâ‚‚ and relating to the transportation of COâ‚‚ on the continental shelf, the regulations relating to material and documentation with an examination of and utilizing of submarine reservoirs on the continental shelf to store the CO2 and the regulations relating to pollution control chapter 7A, together with implementing the EU directive 2009/31/EC on the geological storage of carbon dioxide.

The Norwegian government and the industry have for some time been planning for a full-scale project on industrial CCS in Norway, which the Norwegian government now has suggested shall be realized with substantial subsidies from the Norwegian state. The full-scale project has in Norway been named Longship (Nw:"Langskip") and includes capture, transport and storage of CO2. The project includes the capture of carbon at one or two industrial sites in the Oslofjord region: First the government will realize the cement production at Norcem's facilities in Brevik. Second the waste-to-energy at Fortum Oslo Varme's site in Oslo, on the condition that Oslo Fortum Varme has sufficient self-finance and gets financing from the European Union or others as well. The government's recommendation involves that the Norwegian state shall contribute NOK 16.8 billion. In December 2020, the Parliament approved the 2021 budget and thereby approved the Longship project.

The CO2 will be transported as liquid CO2 from Norcem and Fortum to a temporary storage terminal in Øygarden with ships, and further transferred to the Norwegian west coast. Finally, the CO2 will, be transported through an offshore pipeline and injected and stored in dedicated underground reservoirs. The transportation and storage part of the project is owned and operated by Northern Lights DA, a joint venture between Equinor, Shell and Total. The first phase of the project has a capacity of 1.5 million tons of CO2 per year and is expected to be completed in 2024.

There are different support programs for the deployment of small-scale power production and energy efficiency through the national funding program Enova. These programs provide limited amounts to the deployment of for example solar power (maximum NOK 28,750) and heat pumps (NOK 5–10,000).

On a larger scale, the Norwegian government has through Enova granted NOK 2.3 billion to Equinor for the construction of the floating offshore wind farm Hywind Tampen, 140 kilometers off the Norwegian coast, northeast of Bergen. The wind farm will supply the Snorre and Gullfaks platforms with clean energy. The investment decision was taken in October 2019 and the project is expected to total almost NOK 5 billion.

Further, Enova will support the pilot test project of future-oriented battery technology developed by the company Freyr with NOK 142 million. Freyr will produce lithium-ion batteries with a technology that will improve and reduce the climate footprint, compared to the already existing battery technology. The pilot factory aims to verify and develop production technology on an industrial scale, in order to reduce risks that may arise in the future when establishing a large-scale battery factory. The pilot project has an estimated start-up in 2022 and the industrial production of batteries in the course of 2023.

As regards onshore large-scale power production, there are no government subsidies. The production of renewable energy receives support from the consumers of electricity through the el-certificate and guarantees of origin (GoO) schemes. El-certificates and guarantees of origin are electronic documents that are granted to a producer of renewable energy for each MW of produced electricity. The el-certificates scheme obliges consumers to buy EI-certificates when they consume electricity and is a collaboration with the Swedish state. The hydropower plants must be commissioned within 2021 to participate in this arrangement. The GoO scheme stems from the Renewables Directive and provides the producers with GoOs that the producers may sell in the GoO market. None of these schemes are seen as state subsidies/governmental funding.

The most important measure to reduce GHG emissions in the built environment in Norway is the prohibition on the use of mineral oils for the heating of buildings, see above. From 1. January 2022 it will also be prohibited to use mineral oils for the heating/drying of buildings under construction (which was previously exempted from the prohibition).

Furthermore, Norway has implemented the EU Directive 2002/91/EC on the energy performance of buildings and is preparing to implement Directive 2010/31/EU 2012/27/EU as amended by Directive 2018/844/EU. The legislation is implemented through – amongst others – changes in the Regulations on technical requirements for buildings and the Energy Labelling Regulations for Buildings.

In addition, there are several programs granting government funding to different measures, e.g. for energy efficiency, through the national funding program Enova.

The main national measure to reduce GHG emissions in the transport sector is the combination of taxation rules and incentives for the benefit of electric vehicles, including an exemption of purchase tax and VAT, government funding for the deployment of charging infrastructure, significantly reduced road toll and ferry prices, in addition to free use of the bus, taxi and carpool lanes. The Norwegian government is also gradually increasing the carbon tax in order to incentivize the use of more environmentally-friendly vehicles. These measures have been successful and have resulted in a significant increase in the sale of electric vehicles; in 2020 54% of all new cars sold in Norway were electric vehicles.

Furthermore, there is a requirement for the introduction of biofuels in all fuels sold for road traffic. The requirement is  24.5 volume percent from 1 January  2021, whereas  9 volume percent must qualify as so-called advanced biofuels stemming from residual and waste from the food industry, agriculture and forestry. All fuel traders must each year report to the Norwegian Environment Agency the types of biofuels they use to comply with these requirements.

As regards the shipping industry, passenger vessels and ferries, the main measures are electrification through requirements in public procurement processes combined with government funding. As of April 2021 more than NOK  900 million had been allocated towards charging infrastructure for electric ferries in the counties Vestland, Møre og Romsdal, Trøndelag, Nordland and Troms og Finnmark, and 39 ferry routes were partly or fully electrified. There is also a couple of ferry routes in development that will be served by hydrogen-powered vessels. Together with relevant stakeholders, the Norwegian government is exploring the possibility of expanding the use of electrification and hydrogen in the shipping industry, and the maritime sector as a whole.

Furthermore, there is a requirement for the introduction of biofuels in all fuels sold for road traffic. The requirement is 20 volume percent from 1 January 2020, whereas 4 volume percent must qualify as so-called advanced biofuels stemming from residual and waste from the food industry, agriculture and forestry. All fuel traders must each year report to the Norwegian Environment Agency the types of biofuels they use to comply with these requirements.

As regards the shipping industry, passenger vessels and ferries, the main measures are electrification through requirements in public procurement processes combined with government funding. As of June 2019 NOK 665 million had been allocated towards charging infrastructure for electric ferries in the counties Hordaland, Møre og Romsdal, Trøndelag, Nordland and Troms, and 33 ferry routes were partly or fully electric.

In industry, the main national measures are the EU ETS regime and the CO2 tax. Some specific prohibitions and support mechanisms apply; however, the main policy is that market-based mechanisms –carbon pricing through the EU ETS regime and the CO2 tax – shall constitute the main measures.

Within agriculture, the Norwegian government and the agricultural industry have agreed on a set of climate ambitions in 2019. The agreement deals with both emission reductions and increases the carbon offsetting, in total 5 million tonnes C02 equivalents in the period 2021 to 2030. The reductions shall be implemented within breeding, fertilization programs and the conversion to fossil-free use of energy in agriculture.

In terms of land use, bogs store large quantities of carbon. When cultivated, bogs start to release CO2 and other gases, a process that may last for decades. As a measure to reduce this negative impact, the regulations on cultivation were amended to prohibit the cultivation of bogs in 2020.

There are no specific measures to reduce GHG emissions in the electricity production sector. The Norwegian electricity production is based on hydropower production and to an increasing extent wind power. Accordingly, electricity production as such only emits CO2 to a marginal extent.

There are yet no specific regulatory measures in place as regards financial institutions and GHG emissions. However, Norway will in due course be bound by EU’s regulatory framework towards the financial sector when adopted in the EU and implemented in the EEA countries.

As regards the voluntarily and sector-driven initiatives, the recommendations from Task Force on Climate-related Financial Disclosures (TCFD) have been publicly supported by the Government and some of the most important financial institutions in Norway: Norges Bank Investment Management (NBIM), Oslo Børs (Oslo Stock Exchange), DNB and Storebrand. DNB has publicly announced that environment and climate aspects now are included in the bank’s credit assessments when granting credit.

Furthermore, Norway takes part in several international initiatives through governmental and private institutions. For example, Norges Bank (the Norwegian Central Bank) and Finanstilsynet (the independent government agency for financial supervision) are members of the Network for Greening the Financial System (NGFS), and NBIM, Nordea and Storebrand Asset Management takes part in the initiative from UN Environment to promote climate transparency through the implementation of the TCFD- recommendations.

We have had one prominent climate change litigation case in Norway. The case was brought by a coalition of environmental groups (NGOs) against the Norwegian state, represented by the Ministry of Petroleum and Energy, for issuing a block of oil and gas licenses for exploration and mapping of resources for deep-sea extraction on sites in the Barents sea.

The main argument presented by the NGOs was that the disputed administrative decision should be deemed unlawful for violating article 112 of the Norwegian Constitution. The article establishes a “right to an environment that is conducive to health and to a natural environment whose productivity and diversity are maintained.” The NGOs argued – amongst others – that if extracted, the oil and gas would contribute to substantial GHG emissions, inconsistent with what is necessary to prevent global warming exceeding the agreed and critical levels of 1.5°C / 2°C compared to pre-industrial levels in the Paris agreement.

It was also emphasized and argued by the NGOs that the consequences of any damage, oil spills and emissions of black carbon stemming from activities under the licenses would be unacceptable given that this particular area close to the ice zone was highly biologically sensitive.

Furthermore, the NGOs argued that issuing the licenses would amount to a breach of the European Convention of Human Rights article 2 – right to life and 8 – right to private and family life.

Last, the NGOs argued that a procedural mistake had been made in granting the licenses, by the government has failed to consider any potential climate emissions stemming from the oil that would potentially be extracted and exported from this area.

Both the District Court and the Court of Appeal ruled in favor of the government. In October 2020, the case was heard by the Supreme Court who rendered its decision in December 2020. In its decision, the court ruled 11 to 4 in favor of the government, which means that the decision from the district court was upheld. The Supreme Court concluded that the dispute oil drilling permits were not in breach of either the constitutional right to a clean environment or the European Convention on Human Rights. Furthermore, the court stated that the right to a clean environment did not bar the government from drilling for offshore oil in general and that Norway did not legally carry the responsibility for emissions stemming from oil exported and burnt in other countries.

The four dissenting judges were, however, of the view that a procedural mistake had been made in granting approval.

An unofficial translation of the Supreme Court Judgement can be found here.

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