The case in summary The support schemes for Norwegian industry are on the agenda because the Storting will decide on the new “compensation scheme” on the other side of the summer holidays. Several are critical of the cost development after the EU expanded the scheme. Others say that the scheme’s profile is not “green enough”. At the same time, the support for the companies is of existential importance for the industrial areas that are built around the metal works. The issue of CO2 compensation is both business, climate and district policy, and is called “a child’s egg” that could create even more controversy in the autumn. The summary is made by an AI service from OpenAI. The content is quality assured by news’s journalists before publication. – Yes, the arrangement can seem generous. But without this money, tens of thousands of Norwegian jobs in the district would have been wiped out, says Høyanger mayor Petter Sortland. – The way it works today, the scheme has become a real cash cow, says Lars Haltbrekken (SV). We are going back to usemja, but first one step back: Since 1917, smoke has been rising from the metal works in Høyanger. In the company of Odda, Sauda, Årdal, Sunndalsøra and other “power paradises”, the village in the Sognefjord is part of the Norwegian iconography: Small stubborn industrial communities built on will and hard work, and natural conditions: Almost every day the sky plays its harp on slope and let the water wash down the mountains around the industrial villages. Calculate which in turn becomes the most important investment factor: affordable and renewable hydropower. Around 50 percent of European aluminum production has been shut down since October 2021. Photo: Sunndal business park But the world has become a smaller place, and the competition tougher. In order to prevent industry from moving to low-cost countries with more relaxed environmental requirements, Hydro, Elkem, Alcoa and other industrial companies are “compensated” every year for staying in Norway. This is called CO2 compensation (see fact box) and has broad political support in the Storting. However, the cost trend makes many people wonder if the scheme costs more than it tastes. What is CO2 compensation? The CO2 compensation scheme is intended to compensate for the fact that the EU’s climate quota system results in increased power prices in Norway. The purpose of the scheme is to counteract carbon leakage, which means that power-intensive industry in Norway moves production to countries outside Europe that do not have as strict a climate policy. The expenses under the CO2 compensation scheme have increased sharply since the launch in 2013, mainly due to the increased allowance price. In March, the government and industry agreed on the following point for the CO2 compensation scheme, which will apply to the support years 2024–2030: An annual ceiling will be introduced on how much money can be paid out to companies. This licensing ceiling will be NOK 7 billion and the price will be adjusted annually. The leaf ceiling will not be affected by any adjustments in the CO₂ emission factor. The current system has a quota price floor where the industry only receives support if the quota price is higher than this floor. There is agreement to remove this quota price floor. A requirement is introduced in the scheme that 40 per cent of the compensation the companies receive over the period must be used for measures that contribute to emission reductions and/or energy efficiency in the company or in the company’s group. The measures are to be carried out in Norway. At the beginning of the 20th century, a cluster of industrial communities was established which became a pilgrimage destination for power socialists all over the world: Årdal, Rjukan, Ålvik, Glomfjord, Sauda and Tyssedal. To name a few of them. HøyangerOddaÅrdal NOK 3 billion deposited into account A little while ago, NOK 2,973,261,571 was deposited into Hydro’s account. The sender was the Ministry of Climate and the Environment, which had to adjust the transfers after the EU expanded the scheme to include businesses that produce their own energy. In Hydro’s case, the expansion means an additional profit of several billion kroner up to 2030. It is a lot of money, but good news for Hydro. And therefore good news for Høyanger. – This will benefit everyone, says Mayor Petter Sortland. – We are the municipality in the country that is most dependent on Hydro, says Sortland. Photo: news For more than a hundred years, the factory has set the frame and tone for the entire village. The number of births and marriages has followed the economic cycle of the aluminum price, and wrenches have passed from father to son to son. Or as an old saying goes: “When Hydro coughs, Høyanger harks”. And in recent years it has been rough for both of them. The commodity market suffered a setback during the pandemic; the municipality ended up on the Robek list; and the birth rate plummeted. In June, both got a boost when Climate and Environment Minister Andreas Bjelland Eriksen (Ap) spent NOK 83 million on a new pilot scheme. The goal is for the Høyanger factory to make the purest aluminum in the world. Mercedes-Benz and Hydro in Årdal have agreed that the latter will supply recycled aluminum for several of their car models. – Don’t mess with the CO2 compensation The rationale for the CO2 compensation has historically been threefold. Of course it is expensive, but the billion transfers are: Good district policy Good climate policy (prevents “carbon leakage”) Good business policy In February, the scheme was nevertheless strongly supported by the professional economists in the Financial Policy Committee. Committee leader Ragnar Torvik recommended scrapping the entire scheme, citing that it was “enormously expensive”, “inefficient” and “a threat to computing power”. A few months later, the government and industry responded to the criticism by agreeing that the scheme should have an annual ceiling of NOK 7 billion, and that 40 percent of the money should be earmarked for climate measures and energy efficiency. The settlement is an attempt to answer what have been the main objections to the scheme: That it is far too expensive That it does not stimulate emission reductions – We are satisfied that we reached an agreement, says Frode Alfheim, who is the confederation leader in Styrke. – My message to the Storting is clear: Don’t mess with the CO2 compensation. Prime Minister Jonas Gahr Støre visiting Hydro Herøya in Porsgrunn. Photo: NTB – The scheme has become a real cash cow The Storting will decide on the proposal for a new scheme after the summer holidays. A call to the opposition shows that the last word has not been said. – The way it works today, the scheme has become a real cash cow for Hydro, says Lars Haltbrekken, representative of the Norwegian Socialist Party. He clarifies that the CO2 compensation scheme is important to keep the industry in Norway, but that it is “completely pointless to let Hydro get so much money”. See response from Hydro below. Hydro: – The scheme can help to accelerate climate and energy measures Anders Vindegg, information manager at Norsk Hydro – Norwegian industry has cut 40 per cent of its greenhouse gas emissions since 1990, and Hydro has cut 55 per cent of the emissions from our works. We have an ambitious program to cut more, and to develop aluminum production with zero emissions. – The CO2 compensation scheme shall reduce global CO2 emissions by counteracting so-called carbon leakage. It is not a theoretical problem. In recent years, Europe has lost a lot of industrial capacity at the same time as new industry has been established in countries with much higher emission intensity. – Around 50 per cent of European aluminum production has been shut down since October 2021, while at the same time there has been production equivalent to that which has been shut down in Europe in countries outside Europe. The global climate effect is negative – emissions increase as a result of aluminum produced with a European power mix (with a large proportion of renewable and nuclear power) being replaced by production based on a high degree of fossil power. – Although the CO2 compensation scheme is a tool for cutting global emissions, the whole road has contained orders to ensure efficient energy use and promote the use of renewable energy. As part of the agreement between the government and the parties in working life, there is also a special Norwegian requirement that 40 per cent of the funds companies receive from the CO2 compensation scheme must be used for climate and energy measures in Norway. – Hydro is positive about this and believes that the climate and energy link in the CO2 compensation scheme can contribute to further accelerating climate and energy measures in the industry. – The size of the CO2 compensation scheme depends on how high the CO2 prices are and how large the CO2 pass-through factor is. The latter is a quantity which, in turn, reflects how often gas and coal power are used in terms of the power price. When the CO2 price in the ETS increases, and the CO2 surcharge is high, the CO2 price effect in the Norwegian power price is also large. This means that the CO2 compensation scheme, all other things being equal, increases in scope. Sofie Marhaug in Raudt points out that the state is among the largest owners of Hydro. – The government should use the ownership to give up some of the compensation, she says. She is pleased that the draft of the new scheme sets stricter requirements for climate measures. – It is right and important to cut the emissions that are still in the industry. Lars Tore Endresen / news Andreas Bjelland Eriksen, Minister for Climate and Environment The government wants the CO2 compensation scheme to contribute to the restructuring of Norwegian industry, strengthen Norwegian competitiveness and preserve Norwegian jobs. We have a good dialogue with the parties, and want to find a long-term and predictable solution for the arrangement that is financially viable, ensures predictability and contributes to emission reductions and energy efficiency. Geir Anders Rørbakken Ørslien Anne Marit Post-Melbye, acting subject manager at ZeroIt is right and important that a climate requirement be set for 40 per cent of the CO2 compensation. The scheme is expensive, but should secure industry in Norway and other European countries with stricter and more expensive climate policies. Climate requirements must contribute to restructuring and to ensure that the industry continues to be competitive also in the longer term. news Maria Ekornes Myhre, Elkem There has been no link between the scheme and emission reductions, but in future 40% of the compensation will go to climate and energy efficiency. Elkem already has the cleanest production of silicon in the world and we have a goal of net zero emissions by 2050. To get there, there is a need for framework conditions that make it possible for us to have a competitive industry while at the same time cutting emissions. Yann Valerievich Belov / n18575 Sofie Marhaug, RaudtRaudt has always been against Hydro being compensated for self-produced power. It makes little sense. The decision from ESA is an example of unwise overrule by the EU. Having said that, the state is one of the largest owners in Hydro. Raudt believes that the government should use the ownership to give up some of the compensation. William Jobling / news Lars Haltbrekken, The SVCO2 compensation scheme is important for maintaining the industry in Norway. However, there must also be demands for emission reductions and ENØK measures for those who receive the money. That is why last autumn SV won through in the budget negotiations for such requirements to be included in the scheme. We now expect the industry to come forward with far greater emission cuts and measures to reduce electricity consumption. Anders Eidesvik / news Frode Alfheim, confederation leader in Styrke In the last two years, great uncertainty has been created around CO2 compensation in the industry. We have worked for a long time to ensure the integrity of the scheme. It is a very extensive political work that has been carried out by both the shop stewards and employees in the union. Published 17.07.2024, at 19.01
ttn-69
Are the billion transfers to industrial societies worth the price? – news Vestland
