The Norwegian Government will establish a CO2-compensation scheme for the manufacturing industry. The purpose is to prevent Norwegian manufacturing industry from moving their enterprises to countries with less strict climate regulations.
– We want to provide a good framework for further development of this industry in Norway. Accordingly, we will use the possibility to compensate, says Prime Minister Jens Stoltenberg.
Carbon leakage occurs when emission of CO2 is transferred to other countries instead of being reduced. This is neither good climate policy nor good industrial policy. The CO2-compensation scheme will prevent such leakages. The scheme will be administrated by the Climate and Pollution Agency (Klif).
- The scheme will ease the burden for the power intensive industry and will ensure that a good climate policy is combined with a good industrial policy, says Minister of the Environment Bård Vegar Solhjell.
The introduction of the EU Emission Trading Scheme (EU ETS) in 2005 has led to an increase in electricity prices in Norway. This is the result of power companies’ transfer of EU ETS costs into the power prices. Thus, Norwegian hydro power also includes a CO2 element even though it has zero emission. This has led to a weakening of the competitiveness of Norwegian enterprises as compared to enterprises in countries without equally strict climate regulations.
- The Norwegian manufacturing industry is at the front of their business sector when it comes to low emissions and energy efficiency. We must ensure that the industry is able to develop further in an environmental friendly direction without strict climate regulations resulting in relocation of emissions and carbon leakage. A well-designed CO2-compensastion scheme in a transitional period will contribute to this goal, says Minister of Trade and Industry Trond Giske.
The EU has passed state aid guidelines that allows for CO2-compensation. The aim is to achieve greater global reductions in emissions by preventing carbon leakage from European industry to countries with less strict climate regulations. Norway is among the first to announce a framework for a national CO2-compensation scheme.
(NRK/Press release)
