"The Norwegian energy sector needs clarity. I can provide it"

The renowned magazine Recharge News meets Ketil Solvik - Olsen, energy spokesman for the Progress Party.

The original article can be found on Recharge News, but is available to subscribers only

An opposition energy spokesman says government's incoherent strategy is hurting local industry.

The role of politics in the energy sector is to remove as much uncertainty as possible, says Ketil Solvik-Olsen, energy spokesman for Norway's opposition Progress Party. He claims the red-green government has failed to create the clarity that business needs.

Norway's energy sector suffers from the lack of a coherent and consistent policy and strategy, says Solvik-Olsen. The 38-year-old economist from Bryne, outside Stavanger, probably attends more energy-related conferences and seminars than anyone else in Norway, and is a likely candidate to become minister of oil and energy if the right-wing parties win the next election in 2013.

Solvik-Olsen points at a long list of issues that he says must be addressed: the future of the energy-intensive industries; Norway's role in the European power sector; implementation of the EU renewables directive and ongoing discussions with Sweden on a joint support system for renewables - all these questions are interlinked and must be treated as such, he says.

"Business needs predictability. Our role as politicians is to reduce the number of Xs and Ys [uncertainties]. If we are removing Xs and Ys, then we do a good job," Solvik-Olsen says.

There are many unknowns in the Norwegian energy industry. Both the oil and gas sector and the renewables community have been asking the government for white papers that outline a strategy and stimulate an informed public debate.

One crucial issue is the future of energy-intensive industries, predominantly aluminium, which consume 30-40 terrawatt hours annually. How the regime for energy-intensive industries will look post-2012 — in the next phase of the EU Emissions Trading Scheme — is important for the power balance.

"If the energy-intensive industries close down their factories, there will be no need for new investment in power production," says Solvik-Olsen.

"The government should go as far as EU regulations accept in eliminating CO2 costs for industries exposed to carbon leakage, even if this includes some kind of indirect subsidy," he adds.

The power sector fears a collapse of prices in the Nordic market if large industry consumers close. Solvik-Olsen says a stable and long-term framework for the energy-intensive industries is therefore of vital importance.

He believes the Norwegian hydropower sector can deliver electricity to industry and, in future, back up the power system in Northern Europe. "But we need knowledge to foster a discussion on the implications of such a strategy. How far are we willing to go if more pumped storage and more peak-hour production will have a negative impact on biodiversity? Decisions must have legitimacy in public opinion. Pros and cons must be evaluated in an open and integral process," he says. An intense discussion on high-voltage power lines through the beautiful fjord of Hardanger also highlights the need for an overall strategy, according to Solvik-Olsen. "We cannot always take the shortest route to decisions. We must choose the path that gives maximum legitimacy."

He points out that politicians often lack the knowledge to question and analyse the picture presented by the bureaucrats and businesses involved. "Norway has had nine energy ministers in the past 13 years, and none of them has had much background in the field, if any at all. In the first couple of years, a minister will not know much more than the bureaucracy tells him." A big questionis how Norway, which is outside the EU, will implement a renewable-energy directive. The 27 EU member states were set targets for 2020 nearly two years ago, and most have now submitted detailed action plans. Norway still does not have a target, and negotiations with Brussels are moving slowly. "Even people from Statkraft ask us in the opposition if we know what's going on in the negotiations with Brussels on the renewables directive and with Sweden on the green certificate system," Solvik-Olsen says.

He is in favour of a renewables target as a medium-term goal, but says it must be left to the market to realise the aims. "We are concerned about costs for consumers," he says.

Solvik-Olsen is worried about the lack of certainty for investors. Introduction of a joint certificate system for new renewable electricity in Norway and Sweden has been on the agenda for years. "Investors will not take decisions based on promises. They want to see the agreement and know the details," he says.

An issue that has been on the agenda for the past 18 months is state-owned Statkraft's request for a capital injection and a change in dividend policy. The Ministry of Trade and Industry has still not given an answer. This, from Solvik-Olsen's point of view, is bad ownership. "The minister [of trade and industry], Trond Giske, cannot remain silent. He must give an answer," says Solvik-Olsen.

He adds that his Progress Party and its possible coalition partner Høyre want Statkraft to grow outside Norway's borders, and that a semi-privatisation of the company might be a good idea.

Solvik-Olsen also sees understanding of global energy markets as essential. He says the potential impact of shale gas on energy markets must be considered. Lower prices for natural gas in the US are influencing prices of liquefied natural gas. Possible discoveries of shale gas in Europe might change the picture even more. "This could have a very big impact on Norway as a gas exporter and also on the future of renewable energy, as abundant gas reserves in Europe could reduce the support for wind and solar. As politicians, we need a qualified opinion about this. Let's get it on the table," he says.

Anders Bjartnes

Published: Friday, September 24 2010 | Last updated: Monday, September 27 2010