In a Globe and Mail column dated April 27, Tony Keller asks, “why can’t Canada be Norway?” and suggests we should drill, baby, drill, as long as global markets want oil and gas. As we ponder this interesting question, I offer a few additional perspectives.
The Norwegian model dates back to the 1970s. At that time, oil production was increasing rapidly and climate change was not a pressing concern. Canada should have imitated Norway, but we did not. A half-century later, renewables are cheaper, billions are invested in research and development to find alternative sources, countries are increasing carbon taxes and considering carbon border adjustments, and climate change is everywhere. The International Energy Agency (IEA) said in May 2021 that achieving net zero by 2050 meant no investment in new fossil fuel supply projects. The context has changed dramatically from 50 years ago.
In Norway, 60 per cent of oil and gas production is controlled by Equinor, the country’s largest oil and gas company, which is 67 per cent owned by the government. For decades, Norwegian oil and gas profits have been widely redistributed and used for public ends. This is indeed a good model and I look forward to an enthusiastic response from the oil and gas industry and its backers to the obviously absurd suggestion that the Canadian government retroactively nationalize 67 per cent of the sector based on its valuation in 1972.
Because of its oil model, Norway has one of the largest public investment funds in the world today, with close to $1.75 trillion in assets, larger than Canada’s main pension funds combined. The fund, Norges Bank Investment Management, recently committed to drive its portfolio companies to net zero by 2050 “through credible targets and transition plans for reducing their Scope 1, Scope 2 and material Scope 3 emissions.”
Norges Bank has also decided to exclude and divest from some companies deemed to have unacceptably high emissions, including Cenovus Energy, Canadian Natural Resources, Imperial Oil and Suncor.
To be like Norway, I recommend all Canadian pension and public investment funds set credible targets and transition plans for all their portfolio companies to achieve net-zero emissions by 2050 by reducing their Scope 1, Scope 2 and material Scope 3 emissions and divest and exclude the same companies from their portfolios.
Norway has had a carbon tax since 1990. Today, the price is approximately $117 per ton of CO2. We suggest that Canada immediately adopt this carbon tax, instead of the current $65 per tonne, and that we close existing loopholes. Norway also plans to raise its carbon tax to approximately $254 per ton by 2030. Let’s do the same.
As of 2020, 98 per cent of electricity generation in Norway was from renewable sources. In Canada, 83 per cent of our electricity is from non-emitting sources. Not bad, but we can do better. Let’s invest massively to complete our transition to renewable electricity generation instead of spending billions to subsidize our fossil fuel sector.
Norway is also the world leader in electric vehicles per capita, with EVs making up approximately 25 per cent of all registered cars. Last year, 80 per cent of cars sold in Norway were EVs. In Canada, the rate of EVs per capita is about two per cent and EVs made up less than 10 per cent of total car sales in 2022. Let’s adopt Norway’s aggressive EV policies to help speed up our transition.
To be like Norway, Canadian pension and public investment funds should set transition plans for their companies to achieve net-zero emissions by 2050 by reducing their Scope 1, Scope 2 and material Scope 3 emissions, says Sen. Julie Miville-Dechêne.
Norway is not a member of the European Union but it recently implemented the EU taxonomy of sustainable activities. This taxonomy is a critical tool to distinguish between “green” and “brown” investments and steer capital accordingly. Canada should adopt the EU taxonomy as well, instead of trying to come up with its own dubious “transition” taxonomy. But doesn’t the EU taxonomy allow for investments in natural gas? Yes, under certain strict conditions that few Canadian projects are likely to meet.
It's true that Norway recently increased oil and gas production, but there is an obvious reason for this: the urgent need to replace Russian gas exports to Europe, especially to Germany, as a result of the war in Ukraine. But this resurgence will likely be temporary as Europe moves aggressively to reduce its dependence on fossil fuels and accelerate its energy transition. Even the IEA’s plan to address the energy crisis called for adhering to its Roadmap to Net Zero. In any case, Canada cannot send gas to Europe, and Germany is only interested in our renewable hydrogen.
We note finally that supply-side policies to reduce greenhouse gas emissions are becoming mainstream and are supported by sound economic arguments, including guaranteed emissions reductions, limits on international carbon leaks and fewer chances of locking in fossil fuel infrastructure for decades, delaying our energy transition.
For all these reasons, I agree with Keller. Let’s be — completely — like Norway
Julie Miville-Dechêne was appointed to the Senate in June 2018 after a successful career in the public service sector. She spent 25 years working as a reporter and foreign correspondent for Radio-Canada. In 2007, she became the first female ombudsperson of Radio-Canada. In 2011, she was named chair of the Quebec government’s Conseil du statut de la femme. Since her appointment, Miville-Dechêne has introduced two Senate public bills: Bill S-211, a bill against forced labour and child labour in supply chains; and Bill S-210 that would protect minors from exposure to online pornography. She is also vice-chair of the Standing Senate Committee on Transport and Communications and co-chair of the All-Party Parliamentary Group to End Modern Slavery and Human Trafficking.