Summary in English

Policies for a swifter transition and reduced risk

The core task in the commission’s terms of reference has been to describe a policy that will prepare, implement and handle the consequences of such a transition, including a structuring of the petroleum policy that is compatible with reaching the climate goals.

Based on this, the commission has answered two main questions: How will Norway handle the climate risk that follows stricter climate policies and an accelerating global energy transition, and how will Norway best stimulate sustainable growth within zero emission industries? The commission emphasizes that although climate transition forms the basis for their work, they have, in accordance with the terms of reference, not considered or proposed any climate policy measures but mainly focused on how to adapt policies in order to avoid climate risk and secure the highest possible value creation. As such, global climate policies are a crucial framework condition for the climate transition, in interaction with mechanisms like energy transition, technology development and the development in the financial markets.   

The commission has based its discussions on an extensive amount of domestic and international research and reports. The commission has placed importance on producing a facts and analysis basis that may be of value to the public debate concerning climate transition and climate risk. This is an analysis the commission mostly agrees upon, even if individual members are not to answer for the text’s every reasoning or wording.

As a starting point for the discussion about which challenges Norway is facing in a climate transition, in chapter 2 the commission has shed light on the Paris Agreement’s goals and different scenarios for global temperature rise and global energy consumption and discussed the expected development within global climate policies. The commission has then evaluated which consequences the global climate and energy transition have for the Norwegian petroleum industry (chapter 3) and further which macroeconomic consequences the climate transition will have (chapter 4).

On this basis, the commission presents proposals for the overall policy and measures for transition (chapter 5), indicates some vital areas where increased political efforts may generate new value growth for Norway (chapter 6) and suggests a structuring of the petroleum policy that enables it to handle the increasing climate risk in a new era for Norway as an oil nation (chapter 7).

The commission’s evaluations

The climate change in itself and the tendencies within global and European climate policies, technology and financial markets are presently creating new framework conditions for the Norwegian economy and policies, which will have a radical effect on the Norwegian economy and society. 

The global energy transition is moving more swiftly than most would have believed just ten, five or even one year ago. Nordic and European neighbouring countries have presented extensive initiatives within green energy and technology development, which implies we are facing a growing competition over green growth opportunities. A probable result of the climate changes becoming increasingly visible and more dramatic the world over is that within a few years there will be major and perhaps abrupt tightening of global policies. This will entail a great risk to the Norwegian economy and put pressure on business and industry to undergo a transition.  

This will particularly apply to the Norwegian petroleum industry. Even though the petroleum industry has made an invaluable contribution to the Norwegian economy and society for decades and will continue to do so for a long time yet, the world is now facing a period where due to the continental shelf’s maturity and because of climate policies there will be a decrease in the petroleum industry’s activity. This will have negative impacts on the Norwegian economy. Reduced activity may result in reduced state revenue, less latitude in general government budgets in the years to come, reduced employment, especially in Western Norway, and loss of a large part of Norway’s export revenues. This comes on top of the challenges society is faced with due to population ageing and the financial consequences of the Corona epidemic.  

The commission is of the opinion the present framework conditions for the petroleum industry entail a risk of making investments for a longer time than what is socio-economically profitable. This will increase the Norwegian economy’s vulnerability to future price falls and a decline in the petroleum production. A successful petroleum industry climate transition means minimizing the risk of losses in case of a fall in demand while simultaneously extracting those resources that are socio-economically profitable within the frames of the Paris Agreement and transitioning the production to the lowest possible emission level. Consequently, there is need for measures that reduce exposure to climate risk in the petroleum industry while simultaneously transitioning the petroleum and supplier industry towards new low and zero emission operations.

At the same time, we have to reorganize the rest of the economy and cut emissions according to our obligations in the Paris Agreement in a way that does not result in activity and emissions being transferred from Norway to other countries. The commission believes that during this transition it is important we establish new and green value chains to serve as drivers of growth in the Norwegian economy. This will contribute to a strengthening of Norwegian competitiveness, make the economy less oil-dependent and ensure a continuous high level of value creation, employment and export despite decreasing petroleum activity. The commission believes that the earlier the transition is initiated the greater the chance we have to take advantage of the opportunities for new and profitable value creation.

The commission believes that for such a transition to succeed the full potential of the economy must be utilized. We have to rethink the use of resources in the production, value chains and business models and concerning decision-making processes in the public sector. Among other things, this requires a political understanding of the need for system level measures: more political solutions that include the society as a whole and fewer special agreements that do not contribute to the whole.

The commission also emphasizes that a climate transition cannot be solved solely through extensive funding of different industries and enterprises. This may result in extensive costs for transition and general government budgets and have a negative effect on Norwegian competitiveness. Consequently, the commission is of the opinion that a policy for new, profitable business activity and job opportunities must prioritize cost efficient financial measures that reduce public spending. The private sector must adapt to the market opportunities the climate transition provides and the political framework conditions must enable predictable climate goals and a broad range of regulations, charges and measures that support a profitable climate transition.

The commission’s recommendations

On this basis, the commission presents overall systemic measures to improve the Norwegian adaptability as well as extensive political and financial measures to secure an efficient realization of a climate transition. Suggestions for measures are also presented that may be used to advance promising areas of opportunity for Norway and suggestions for how the petroleum policy may be structured to secure transition and reduce climate risk exposure.

The commission is of the opinion that a climate transition can only succeed through political collaboration and consistent leadership, both from members of the present government and from those with ambitions of becoming members. The required transition leadership must first and foremost manifest itself through a national goal across party lines of zero emissions by 2050. This end goal for the climate transition must be anchored in the global 1.5°C goal so that global emissions is the determining factor: Norwegian policies must contribute to a global climate transition and the Norwegian climate policy must not allow for measures that contribute to increased global emissions.

The commission believes that for every social sector there should be developed strategies for the sector’s contribution to the realization of a long-term objective of zero emissions. As part of such a process one should map out dependency between sectors and based on this work out national transition strategies that establish binding goals and describe specific measures, deadlines and cost limits within the most important areas of opportunity.

The commission believes that in the realization of climate transition strategies one must emphasize overall transition measures with clear and consistent political policy guidelines. The commission is of the opinion that the climate transition must be more strongly integrated in the exercise of public ownership, where one should also increase the use of public procurement to create a domestic market for zero and low emission solutions. In addition, one must also adapt the policy implementation system to utilize synergies between emission cuts and value creation and also enable export of new technology and solutions.

The commission believes the climate transition will be most effectively advanced through a predictable and increasing path of price movements for the carbon tax. For business and industry exposed to competition one must continue the EU carbon market as the central measure and evaluate further taxes only if the carbon market fails. To ensure trust in and support for the climate transition the commission also believes that the distributional effects of climate policy measures, both socially and regionally, should always be clarified and that other possible measures are carried out to secure a positive overall distributional effect.

Promising and vital priority areas for Norway

Based on transition policies, framework conditions and general measures as described above, the commission is of the opinion that even though the state should to a certain degree offer support to establish new value chains, it is vital that the market should largely determine which solutions, businesses and industries will succeed in the transition. This way one may utilize the opportunities for value creation optimally in the climate transition and simultaneously contribute to avoidance of the destructive consequences following extensive climate change.

Consequently, the commission emphasizes some important value chains where Norway benefits from favourable natural, technological and financial conditions when facing a growing global demand as a result of the climate transition. These value chains are connected to electrification, bioeconomy, hydrogen, carbon capture and storage and also Norway as a financial actor. The commission also wants to emphasize the need to develop a circular economy: primarily with a more sustainable and resource efficient economy in mind, but also because a circular economy will be a future framework condition for Norway as a result of development of standards in the EU.


Norway should set a national goal to become world leading as a developer and supplier of electrification products and services globally. Based on this goal, there should be developed a national strategy for accelerating solutions that can; actuate the potential for value creation and export in electrification; enable sustainable growth in renewable energy production to strengthen green, export oriented industrial production; direct international investments towards energy-intensive industries to Norway; and meet an expected increased European demand for stable zero emission energy supplies. Norway should also develop more international connections in order to strengthen energy security, increase import revenue and provide long term security to investors concerning Norwegian integration with the European energy market.

The commission’s minority, the member Arnstad, dissents from the suggestion of developing new international connections and refers to the reasons for this at the end of the summary.


A transition must ensure one utilizes the total potential within bioeconomy, which include Norwegian aquaculture, fisheries and agriculture and forestry. In this instance one must enable the development and utilization of new technology, digitalization and research that can allow for improved utilization of resources and increased productivity as well as lower emissions. Norway should meet the world’s growing demand for healthy and low emission food through a specific research and innovation effort and an increase in sustainable aquaculture and plant-based food production and also new utilization of bioresources that may contribute to higher production and lower emissions.

Carbon capture and storage

Climate transition in Norway and the world at large will include carbon capture and storage as a central part of the solution to bring global emissions towards zero. Consequently, it is necessary for Norway to prepare for carbon storage infrastructure and contribute to a funding model where companies also partly take the risk, giving the companies positive and correct incentives for low and zero emission solutions and the state adequate quality assurance of their investments. This effort mut also include the potential of other types of carbon capture and storage like for instance negative emissions and direct air capture.


The commission believes that a high level of competence, industrial establishment and good access to both energy and natural gas create favourable conditions for Norway to become a leading supplier of hydrogen and hydrogen-derived products as well as technology and services for hydrogen production and distribution. As part of a national strategy, measures must accordingly be implemented to accelerate solutions that may actuate the potential for value creation and export hydrogen holds, both from renewable energy (so-called green hydrogen) and hydrogen from natural gas, where CO2 is captured and stored (so-called blue hydrogen).

Financial measures

Norway’s financial measures and regulations should be structured as to reduce climate risk and contribute to climate transition in the best possible way. The commission therefore recommends the Government Pension Fund is addressed with the expectation they must be world leading in developing, understanding and applying knowledge about climate risk. Clear expectations must also be addressed to state-owned enterprises concerning involvement and reporting on climate transition. The private sector should also be addressed with requests for climate risk reporting according to the Accounting Act and Oslo Stock Exchange’s criteria for climate related reporting.

Petroleum policies that handle climate risk and stimulate transition

The commission is of the opinion that consideration of climate risk for the Norwegian economy and the need for climate transition within Norwegian business and industry imply that the framework conditions for the Norwegian petroleum industry must be changed. The current framework has been set up to provide incentives that accelerate investments and develop the petroleum industry for increased extraction of oil and gas on the Norwegian continental shelf. Up until June 2020 the incentives were moderate, but for the next eight–ten years they are very strong. Throughout the period of growth for Norwegian oil and gas this has been rational from a financial point of view.

However, the future will not be like the past. Through the Climate Act, Norway has committed to extensive emission reductions towards 2050. The EU are tightening their climate goals and are aiming for net zero emissions by 2050. Globally there is an ongoing accelerating transition to renewable energy. A growing number of the world’s largest banks and investors are making it clear they will not fund petroleum activities in the Arctic, where most of the undiscovered Norwegian petroleum resources are presumed to lie. There are also signals in the financial markets that the uncertainty related to the value of future petroleum reserves is growing. These conditions imply that new investments in oil and gas production, typically with a 30 years horizon, constitute a considerable and increasing risk. The framework conditions for oil and gas production should be adapted to this reality and contribute to reducing the risk of investments that will not be socio-economically profitable if the world succeeds with its climate policies. This will the reduce the Norwegian economy’s vulnerability to a potential abrupt and considerable future decrease in the petroleum activities.

The commission majority points out it is the presently 87 fields in production on the Norwegian shelf and 95 discoveries in already licensed areas that will make up the foundation for Norwegian oil and gas production for decades to come. There is a long lead time from exploration and discovery to investment decision and start of production on the Norwegian shelf. This increases the uncertainty and risk of making investment decisions that will be unprofitable. Climate risk is not only about avoiding losses in individual projects but also about transition of the Norwegian economy and opening up for more activity for the supplier industry within new, sustainable industries.

The commission’s minority, the member Heggelund, agrees that lower demand and petroleum revenue represent a climate risk to Norway, but do not share all the evaluations of the analyses in this chapter, some of which will become more evident in the reasons for the dissents from the various proposals at the end of this summary.

On the basis of this, the commission’s majority, members Arnstad, Bjørlo, Bjørnland, Gjørv, Halvorsen, Helgesen, Holden, Lund, Lunde, Nøstbakken, Osmundsen, Schjelderup, Sivertsen and Sundland, present a proposal for new policies aiming at handling risk related to oil and gas and to stimulate transition in the oil and gas industry. When it comes to reducing climate risk, the commission suggests the following measures:

Limiting the awards of new licenses

The commission’s majority, members Arnstad, Bjørlo, Bjørnland, Gjørv, Halvorsen, Helgesen, Holden, Lund, Lunde, Nøstbakken, Osmundsen, Schjelderup, Sivertsen and Sundland, are of the opinion that limiting the awards of new licences is a is a cost-efficient way of reducing the transition risk following the transformation from a fossil economy to a renewable energy economy.

Future licence awards must be limited to expansion or extension of existing production in mature areas – the so-called ‘predefined areas’ according to the Ministry of Petroleum and Energy – where there is existing infrastructure already and where the climate risk will accordingly be lowest. Such a measure may be a moratorium: If in future one might develop profitable projects for emission free production and utilization of Norwegian oil and gas, the resources are still there, and the decision can be reversed without harmful consequences for the climate.

This majority believes limitations of new awards should be combined with proposals for stress testing of PDOs and neutral petroleum taxes. If such measures, that result in real climate risk reduction in the oil and gas industry, are not implemented, the majority believes there should be a stronger moratorium on new licences.

The commission’s minority, the member Heggelund, dissents from the suggestion and refers to the reasons for this at the end of the summary.

Stress testing of climate risk for Plan for Development and Operation (PDO)

The commission’s majority, members Arnstad, Bjørlo, Bjørnland, Gjørv, Halvorsen, Helgesen, Holden, Lund, Lunde, Nøstbakken, Osmundsen, Schjelderup, Sivertsen and Sundland, believe limitations on new awards will only have little impact on decisions regarding development and operations the next few years. These decisions will also be encumbered with climate risk to a larger or smaller extent. Climate risk the next few years was however considerably increased as a result of the tax changes that were passed in June 2020.

The commission’s minority, the member Heggelund, does not share this reasoning but still supports the proposal.

The commission believes that the licence holders’ Plan for Development and Operation (PDO) should include a realistic climate stress test of the socio-economical profitability of the development of the specific field. The basis for the stress test should be scenarios for the path of price movements for oil, gas and CO2, including a scenario based on the Paris Agreement’s ambitions. If such socio-economical profitability is not established as probable, the commission recommends that the PDO is not approved and that any exceptions are only caried out after being processed in Parliament. If such stress testing is made a requisite of future PDOs the climate risk related to oil and gas investments will be detailed in a more transparent way.

Neutral petroleum tax

The commission’s majority, members Arnstad, Bjørlo, Bjørnland, Gjørv, Halvorsen, Helgesen, Holden, Lund, Lunde, Nøstbakken, Osmundsen, Schjelderup, Sivertsen and Sundland, are of the opinion that the petroleum tax should be changed to become neutral and not enabling investments that are unprofitable before tax become profitable after tax. This means that one or more of the special tax deductions must be made less favourable for the companies than they were at the beginning of 2020.

The commission’s minority, the member Heggelund, supports the principle of neutral tax but dissents from the majority’s proposal and refers to the reasons for this at the end of the summary.

Transition tax on production to promote climate transition and low emission technology

The commission’s majority, members Arnstad, Bjørlo, Gjørv, Halvorsen, Helgesen, Holden, Lund, Lunde, Osmundsen, Schjelderup, Sivertsen and Sundland, are of the opinion that the Norwegian economy’s great exposure to oil and gas entails a considerable risk in a world where climate policies are being tightened, he energy transition is accelerating and the financial markets require sustainability. Consequently, it is proposed a petroleum production transition tax is implemented to ease this risk and contribute to a swifter climate transition.

There are several arguments for this kind of tax. A tax with exemption or reimbursement in instances where it can be documented that the petroleum products contribute to the development of low or zero emission energy supplies will provide an incentive to develop this type of solutions. A transition tax tied to the Norwegian petroleum industry’s global strain on the climate will also ensure that petroleum activities with risk of becoming unprofitable, even with a moderate tightening of climate policies or fall in producer prices, will not be carried out.

The net revenue from the tax should be earmarked for measures with the main objective of transitioning the Norwegian shelf towards supplying zero and low emission energy. This involves research, development, pioneer projects and regular operations with zero and low emission energy from the Norwegian shelf, like blue hydrogen and offshore wind and/or CO2 storage as its main or sole objective.

The exact version of a transition tax must be more closely considered. If for instance a tax is introduced on the total emissions from oil and gas consumption of NOK 100 per CO2 ton it will yield a net revenue of NOK 8–9 billion a year and be equivalent to approx. USD 4.6/barrel in today’s exchange rate and emission intensity.

The commission’s minority, members Bjørnland and Nøstbakken, dissent from this proposal. As do the commission’s member Heggelund. The members’ reasonings are stated at the end of the summary.

Reimbursement for exploration costs

The Norwegian rules on reimbursement for exploration costs were introduced to secure that exploration and extraction activities are as efficient as possible and can be considered as rational for this purpose: When exploration for oil and gas reserves is carried out it should after all be as done as efficiently as possible and not only by the large, established companies. Yet, the commission believes this scheme might increase the probability there will be investments in projects that are based on price expectations that are too optimistic and will be socio-economically unprofitable. This might the increase the macroeconomically risk for Norway. The commission’s majority, members Arnstad, Bjørlo, Gjørv, Halvorsen, Holden, Lund, Lunde, Osmundsen, Schjelderup, Sivertsen and Sundland, consequently believe the overall effect of the scheme should be reviewed.

The commission’s minority, members Bjørnland, Heggelund, Helgesen and Nøstbakken, dissent from the proposal and refer to their reasoning at the end of the summary.

Dissents from the commission’s proposals

Reasons for the commission’s members’ dissent are presented below.


The commission’s minority, member Arnstad, believes the access to clean and cheap energy is one of the great competitive advantages for the Norwegian industry. We are dependent on maintaining existing green industry and competence as a basis for the climate transition. Consequently, it would be wise to gather experiences from the submarine power cables currently under development before any new developments are sanctioned.

Limiting the awards of new exploration licenses

The commission’s minority, member Heggelund, refers to chapter 2.2.4 where it appears that in a scenario where the Paris Agreement’s goals are met fossil energy will still be part of the energy mix. The member agrees that decreasing demand and lower oil revenue represent a climate and welfare risk for Norway. Simultaneously there is a reverse risk of lost income and competence if profitable fields are not exploited, income and competence that are important in a transition perspective.

This member notes that the majority believe a limitation of new license awards, a moratorium, is not an instant measure. The member does not agree with this. On the contrary, both awards in predefined areas and numbered licensing rounds are vital to the Norwegian industry. Without opportunities for new areas there are nothing but recession ahead for the industry. There is hardly a stronger signal of an orderly phasing out even though the majority wants to arrange this as a moratorium. The competitive ability on the Norwegian shelf is not related to investment costs, taxes and labour costs, these are higher here than in other countries. The competitive ability is related to competence and the long-term policies we follow. This kind of change will make investing in the Norwegian shelf much less attractive, which may again result in loss of competence. The risk is the companies will become plain operating-companies, where exploration and development branches are closed down. Large parts of the competence involved in exploration and development are also involved in new technology.

This member refers to the majority’s opinion that the moratorium might be reversed if certain criteria are met. This member believes this proposal may that these criteria will ever be possible to meet. If a new gas field should be discovered or one succeeds with CCS or there is a breakthrough for hydrogen, companies in a politically ordered decline are now expected to make great investments, which may include aspects like reestablishing vital competence in Norway. Obviously, this also applies to future investments in offshore wind in the licensed areas on the shelf. When a majority of the commission also wants a new excise tax on top of quota prices and a carbon tax that will both increase each year, it is hard to envisage interest in new investments on our shelf.

This member believes it is a paradox that the development towards such breakthroughs and exploration for fields that may ft this purpose should be politically stopped or hindered while traditionally ‘black’ fields may keep on as before. This member do not see we can now say there is a smaller climate risk in previous licensing rounds than there will be in future licensing rounds.

This member believes that price mechanisms are the most effective way of utilizing the market to reach climate goals, and thereby also contributing to reducing climate risk, in addition to pronounced emission reduction goals. These are specific policies we know contribute to innovation and transmission and policies that are today valid and reinforced on the Norwegian shelf.

Neutral petroleum tax

The commission’s minority, member Heggelund, supports the principle of a neutral petroleum tax but hesitates to confirm such a principle without any estimation of time or evaluation of income flow. There are no examples showing that licenses awarded under the petroleum tax system are not profitable to the corporation as well as socio-economically, and the system of approving PDOs is today structured to not sanction such projects. The state correctly takes a part of the risk under the petroleum tax system, but simultaneously the state benefits largely from the advantages. In a time where demands for socio-economical profitability no longer are fulfilled the tax system should likewise be changed.

Transition tax on production to further climate transition and low emission technology

The commission’s members Bjørnland and Nøstbakken agree it is appropriate that the oil and gas industry takes part in financing the development and expansion of CCS and other low emission solutions. The minority also recognizes that the transition risk for the Norwegian economy might be greater than the risk the oil and gas industry takes into consideration in their investments. Yet, the minority still believes a distorting tax on oil and gas production is not a suitable measure. The minority believes the petroleum tax system should be neutrally structured, combined with the presence of suitable measures for rectifying any externalities, like greenhouse emissions. This will secure efficient use of resources and that oil companies act in line with the interests of the state. Cutting otherwise socio-economically profitable oil and gas extraction through an excise tax will be an expensive way for society to finance low emission solutions.

The commission member Heggelund agrees it is appropriate that the oil and gas industry continues to take part in financing the development and expansion of CCS and other low emission solutions. This member still opposes the wish to impose another tax on production in Norway for the following reasons: 1) Price mechanisms for emissions, preferably combined with specific climate goals, is the most efficient way of contributing to transition an innovation, 2) the Norwegian petroleum industry, in collaboration with the state, already invest in infrastructure through the Northern Lights project and 3) an excise tax aiming to price emissions from use breaks with the Paris Agreement principle that the polluter should pay for their emissions. The emissions on the Norwegian shelf will be priced higher every year, through the quota system as well as through increased CO2 tax.

The Norwegian rules on reimbursement for exploration costs

The commission’s minority, members Bjørnland, Heggelund, Helgesen and Nøstbakken, state that the given grounds for the system for reimbursement for exploration costs are that current exploration activities shall be cost efficient and not reserved for the largest companies. Presently, the system serves this purpose well. This minority is therefore of the opinion that evaluating the effect of the system in a climate perspective is irrelevant.