Norway’s Pivot Away From Oil Shows What Scotland Could Do With Independence | Sunday National | August 2019

In the 1970s and ’80s, North Sea oil was the key symbol of Scotland’s political impotence and lost economic sovereignty.

In the future, renewable energy could occupy a similar place in our national psyche.

Maybe it already does—or is beginning to.

As the climate crisis intensifies—July was the hottest month ever recorded in human history—other small European countries are using the full powers of independence to navigate the challenges of environmental breakdown.

Norway, as ever, is a case in point.

In March, the Norwegian government announced that the country’s $1 trillion sovereign wealth fund, the largest of its kind anywhere on earth, was going to ditch investments in companies committed to major new fossil fuel extraction projects.

The move was politically significant and, from a Scottish perspective, strangely poignant. 

Norway has built-up its vast national fortune, otherwise known as the Government Pension Fund Global (GPFG), over the past 50 years by saving and investing the money generated by its share of North Sea oil and gas reserves.

Margaret Thatcher may have squandered peak Scottish oil tax receipts on ill-fated experiments with the free-market, but the Norwegians have managed their resources much more strategically.

What they did spend of the GPFG—no more than four per cent of the fund’s surplus, annually—was limited to infrastructure programmes that would yield long-term returns; the rest they stowed away for future use.

Like Scotland, Norway has been hit hard by volatility in the global oil markets.

Production levels have declined rapidly over the past two decades, from a high of 3.5 million barrels per day in 2001 to fewer than 1.9 million in 2015.

After the oil price crash in 2014, 50,000 Norwegians lost their jobs, with lay-offs concentrated in and around the national oil capital of Stavanger, a medium-sized city on the country’s picturesque west coast.

But unlike Scotland, Norwegian oil workers were cushioned from the worst effects of the slump by an expansive welfare state and publicly-funded retraining initiatives.

At the same time, ordinary Scots were being forced to endure Tory-imposed welfare reforms, lacerating austerity cuts, and the longest pay squeeze since the Napoleonic wars.

To that extent, it is jarring, as a Scot, to see what Norway has achieved.

I’ve visited the country a number of times over the past few years, most recently this summer, and, on each occasion, I’ve been struck by the same distinguishing factors.

Granted, it might cost £16 for a slice of pizza and a warm Nordic beer, but the roads are impeccably maintained, the trains are disconcertingly well run (especially by Britain’s dismal standards), and public services—housing, schools, and healthcare—are all generously funded.

What’s more, Norwegians seem to approach their responsibilities in the fight against climate change with a genuine sense of urgency.

In 2016, Norway pledged to reach the all-important zero-carbon threshold at some point within the next 15 years, two decades ahead of the 2050 deadline set by the Paris climate accords.

In 2017, it became the first country to officially ban public contract procurements that contribute to the destruction of the rainforests.

And today, thanks largely to a system of public subsidies and tax breaks, it has the highest per capita rate of electric and hybrid car ownership in the world.

Norway’s environmentalism is driven, in part, by its proximity to the crisis.

Nowhere on earth is warming faster than Svalbard, the tiny island settlement in the country’s far Arctic north.

Since the early 1970s, temperatures in Svalbard have risen by a staggering four degrees—five times faster than the global average—resulting in severe disruption to the local ecology and a rising incidence of glacial landslides and avalanches.

And yet, Olso’s shifting energy priorities are guided by a hefty dose of realism.

Norway is one of the world’s largest oil-producing states and the single largest producer of oil in western Europe.

Petroleum accounts for one-fifth of its GDP and almost half of its total exports—oil has been central to Norway’s prosperity since the middle of the last century.

But Norwegians know this dynamic can’t last.

The international economy is moving away from fossil fuels at incredible speed.

According to some estimates, renewables are gaining ground in the global energy system “faster than any fuel in history” and will become the world’s chief source of power within the next two decades.

“Wind, solar, and other renewables will account for about 30 per cent of the world’s electricity supplies by 2040,” The Guardian reported in February.

“While oil took almost 45 years to go from one per cent of global energy to ten per cent, and gas took more than 50 years, renewables are expected to do so within 25 years.”

Countries that fail to adapt to this transformation—particularly countries with large oil and gas sectors—are going to find themselves stranded; trapped between shrinking markets on one side and redundant, wasting assets on the other.

Some experts think the fossil fuel sector is already hurtling towards bankruptcy.

They argue that the value of the multi-billion dollar investments currently keeping the carbon economy afloat will collapse, in dramatic fashion, once the planet more fully embraces alternative energy sources.

As a result, there will be a huge global economic crash, leading to mass corporate insolvencies and widespread job losses.

Given that the oceans are heating up much faster than scientists had initially anticipated—and that we are, at best, a generation away from the crucial two-degree tipping-point in the global warming process—this scenario doesn’t seem all that far-fetched.

Indeed, as one environmental activist put it to me not that long ago, in the bluntest terms possible, “Either the oil majors are fucked—or we are.”

Alert to these shifts, Norway decided to take pre-emptive action by realigning the investment priorities of the GPFG and start dumping its carbon shares.

“They’re doing it because fossil fuel stocks are not producing the value that they have historically,” Tom Sanzillo, an environmental analyst, remarked in March, after Oslo made its announcement.

“It’s a warning to the oil companies that investors are looking at them to move the economy forward to renewable energy.”

As it stands, Scotland doesn’t enjoy Norway’s advantages—our situation is much more precarious and constrained.

Because we’ve never had control over our own North Sea resources, we’ve never been able to plan for the day when they would run out, or when the world wouldn’t want them anymore.

There may well be five, ten, or 20 billion barrels of oil left off the Aberdeenshire coastline, but production peaked years ago—and endlessly subsidizing yet more, increasingly inefficient, seabed exploration efforts is an expensive way of sabotaging national carbon emissions targets.

Add to that the bizarre and chaotic state of British politics right now, and you’ve got good reason to panic.

Not only is the UK currently on course to miss its carbon reduction targets over the next ten years, but Boris Johnson’s new cabinet is packed full of hardline climate deniers and political proxies for the oil lobby.

Jacob Rees-Mogg, the leader of the House of Commons, has repeatedly denounced “climate alarmism”; the foreign secretary Dominic Raab once called for the government to be more “transparent” about the “cost” of its climate policies; and, during the Tory leadership campaign, Johnson himself accepted donations from a company owned by a prominent climate change sceptic.

This isn’t the behaviour of a government determined to steer Scotland away from carbon dependency; it’s the behaviour of a government ready to let Britain burn on the altar of deregulation and No Deal Brexit.

There is some good news, however.

Scotland doesn’t have to be a passive spectator in our planet’s looming climate apocalypse.

We have options.

But in order to use them, our political class will have to accept the necessity of massive state intervention in the economy.

Shortly before the independence referendum in 2014, Mika Minio-Paluello, an expert on UK energy policy, wrote a paper for the Scottish Green Party that mapped out a sustainable future for the North Sea.

Minio-Paluello argued that an independent Scotland should adopt Norway’s approach to hydrocarbons by asserting a majority stake in the remaining oil fields and by hiking taxes on the oil industry.

This would have two effects, she said.

One, in the very short-term, it would allow Scotland to capture a larger share of oil revenues than it ever has as part of the UK. 

(Traditionally, Britain has been exceptionally bad at maximizing its per-barrel tax take from the North Sea.)

And two, it would turbocharge Scotland’s transition to a low carbon economy by enabling us to reduce extraction rates and redeploy North Sea expertise to the renewables sector.

As a side benefit, Minio-Paluello added, Scotland could reinvent itself as an international capital for the decommissioning of oil industry infrastructure.

“A significant number of jobs could remain in the oil industry through the process of disassembly,” she said.

“This number will be boosted if Scotland can position Aberdeen as a global centre for shutting down fossil fuel operations.

“The recalibration of infrastructure needed to power down and reduce energy waste would create new jobs, both in the installation phase and through maintenance.”

Any project as ambitious as this would require levels of public funding far beyond the current budgetary limits of the Scottish parliament; it would require, in effect, full independence and all the tax, borrowing, and monetary powers that come with it.

But money isn’t the real issue here: the cost of doing nothing as the planet boils will dwarf the spending needed to slash carbon emissions.

The real issue is political will.

After independence, there will be a standoff between those who accept the overwhelming urgency of the climate crisis and those who continue to view it as a secondary concern, behind economic growth.

Norway, despite all its progressive thinking on the climate, is having this debate as we speak.

Some, mostly younger and more radical, Norwegians want to shut the oil industry down altogether—or at the least impose much tighter restrictions on oil and gas exploration in the North Sea and adjoining Arctic territories.

Others argue that oil revenues are the bedrock of the country’s success and that drilling should continue for as long as it remains profitable, no matter the environmental consequences. 

The current, centre-right administration in Oslo tends towards the latter view.

The Norwegians I spoke to this summer were careful to note that the government’s decision to divest the GPFG from fossil fuels was only partial: an exception would be made, they explained, for firms, including BP and Shell, that maintain a sizeable interest in the renewables industry.

Moreover, the country’s much-vaunted push for carbon neutrality is compromised by the fact that it will be achieved through carbon offsetting, rather than the much more effective method of direct carbon emissions cuts.

This is the flip side of Scandinavian pragmatism: it can, in its own way, be profoundly inhibiting, even in the face of an immediate existential threat like climate change.

We all know that Scotland’s renewables potential is vast.

Green energy could support up to 200,000 Scottish jobs by the middle of this century—50,000 more than are currently supported by the UK oil industry—and our wind power alone could provide electricity for every home in the country.

The fossil fuel age is coming to a conclusive—and, in all probability, catastrophic—end.

Scotland can equip itself for the approaching storm now, or accept its status, yet again, on history’s sidelines.

Read the original piece at thenational.scot

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