From the reservoir in Høyangerfjella, the “heritage silver” rushes down into the turbines and transforms the water into current. The simple and affordable access to power was the starting point for the Norsk Aluminum Company establishing itself in Høyanger in 1915, and since then the village and the metalworks have merged. Without one, not the other either. A bit like an old married couple. Or as the old saying goes: “When Hydro coughs, Høyanger harks”. A hundred years later, the European quota market led to increased power prices and “price contagion” from the continent. In order to “compensate” for the power-demanding industry which lost its most important competitive advantage, a scheme was introduced in 2013 (see below) which every year supports industrial companies along the Norwegian coast with large sums. And going forward, the state will have to dig even deeper into its pockets. The government estimates that the compensation scheme will cost a total of NOK 76 billion in the period up to 2030. Photo: Ministry of Climate and the Environment This is the CO2 compensation scheme The CO2 compensation scheme compensates electricity-intensive and competitive companies for the increase in electricity prices as a result of the EU’s climate quota system (EU ETS). The purpose of the compensation scheme is to reduce the risk of carbon leakage. By “carbon leakage” is meant that companies move investments or production from Europe to third countries with less strict climate policies, with increased emissions as a consequence. The scheme is based on Esa’s guidelines for CO2 compensation, which opens the way for state aid to selected industrial sectors that are assessed as particularly exposed to carbon leakage. Esa’s guidelines correspond to the EU’s guidelines that apply to EU countries. Source: regjeringa.no – The scheme is expensive and not very effective. When the Financial Policy Committee presented a study of the capacity of state finances last week, the call was therefore clear: The government must discontinue the support scheme. As soon as possible. For at least three reasons: The scheme is becoming more and more expensive. The industry should get used to the expectation that the state will always stand up, a mentality that was reinforced during the pandemic. The scheme removes incentives for power saving and locks the industrial structure in old models. The committee members followed up the appeal in a joint Aftenposten chronicle. “The compensation scheme is expensive, not very effective, economically inefficient, weakens the power of growth in the economy and counteracts the necessary adjustment in both Norway and other countries”, they concluded. Høyangerfjell wind power plant is planned in the mountain area between Høyanger and Viksdalen. The project has a potential scope of between 50-80 turbines. Photo: Steinar Lote – The most important industrial policy arrangement in the country Attande in Høyanger, mayor Petter Sortland (Ap) knows that there is a fire under his feet at the facility which he characterizes as “existentially decisive” for life in the village. Without the scheme, no cornerstone company. And without her, no basis for life. – This is the most important industrial policy arrangement in the country. There is no subsidy, but reimbursement for a politically determined additional cost that only happens to the industry in Europe, he says. He also reacts to the fact that the selection is moving into the half-way part of politics. – The case gives the impression of being a political expression of opinion, more than a professional analysis, he says. In a joint letter to the ministry, the Labor mayors in Årdal and Høyanger point out that the arrangement “should be strengthened” as a result of the “extraordinary power income” to the state. In the state budget for 2024, the government increased the so-called “quota price floor” to make the expenditure item “more manageable”. Espen Barth Eide, who was then climate and environment minister, added that the government would enter into a dialogue with the industry about the scheme to ensure predictability for the industry and “economic viability for the state”. – This is the most important industrial policy arrangement in the country, says Høyanger mayor Petter Sortland (Ap). Photo: Hallgeir Vågenes / VG – Without compensation, there is a high risk that this industry will disappear A couple of hours away from Høyanger is Svelgen, which lives in close symbiosis with the Elkem factory. The smelting area produces silicon and ferrosilicon, important components in the green shift. – Without CO2 compensation, there is a high risk of this industry disappearing from Norway and Europe, says Elkem employee Hroar Holm Carlsen, who is also a Høgre politician. He asks: – Is it better to only produce non-energy-intensive goods in Norway, and be dependent on importing these goods from other countries where they are produced with coal power? He rejects that electricity subsidies make energy efficiency less profitable, as the government committee claims. news has previously written about an adjustment to the regulations that the Ministry of Climate and the Environment considered to be an “unwise gift package” to the industry. Leaders of the Financial Policy Committee presented a study of the capacity of state finances this week. The recipient was Finance Minister Trygve Slagsvold Vedum (Sp). Photo: Alf Simensen / ALF SIMENSEN – The scheme is enormously expensive and a threat to the economy Ragnar Torvik is the leader of the Advisory Committee for Fiscal Policy Analysis, which recommends scrapping the scheme. He repeats the accusation that the scheme is “inefficient”, “enormously expensive” and “a threat to computing power”. – It makes it unprofitable to invest in energy efficiency, and is also more expensive for society than the 76 billion that must be paid from the public sector, because it reduces the adaptability and productivity development in the Norwegian economy, he says to news. Torvik, who led the tax committee in 2022, rejects that the input is political as much as scientifically based. – The Fiscal Policy Committee’s task is to assess the long-term viability of the state finances. Our appeal is based to the highest degree on a solid professional assessment. Amanda Iversen Orlich 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 scheme that is financially viable, ensures predictability and contributes to emission reductions and energy efficiency. IE&FLT Cay Nordhaug, working committee member in IE&FLT – The best thing Norway can do for the climate in the world is to have as much industry as possible. Abolishing CO2 compensation is a policy for lost jobs and increasing global emissions. In return, the jubilation had been through the roof in Moscow and Beijing. What Torvik forgets to mention is that public sector income is increasing. The state has income from the sale of climate quotas, and in addition increased tax and dividends from the power sector. An analysis from Oslo Economics shows that the CO2 compensation until 2030 only costs a sixth of the public sector’s total income from the quota system. Oddmund Haugen Halvor Molland, Hydro – If one is to assess the CO2 compensation scheme based on the effect on state finances, it is also true that the CO₂ price contagion has a large upside for the state. When the price of power increases, it is demanding for the industry and for ordinary consumers – but for the state this means much greater income. The revenue the state has as a result of the CO2 price now accounting for around half of the Norwegian power price. This provides much greater income for the state than the expenses incurred in the CO2 compensation scheme. Elkem Hroar Holm Carlsen, Elkem Bjølvefossen – Now the industry, trade unions and Norwegian Industry are in dialogue with the government about the scheme, with the aim of securing a robust scheme that contributes to predictable framework conditions for the industry. We are happy about that, and we hope the politicians see the importance of ensuring equal conditions of competition for Norwegian industry going forward through the green shift.
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Proposal to abolish support scheme creates unrest in industrial society – news Vestland
