Feature Report: The Energy Sagas

4 items of content in this feature report

The Saga of energies

The History of Energy in Norway

In partnership with La Recherche and L’Histoire

Norway, a country with a population of only 4.9 million spread over a long, narrow stretch of territory, has an energy model that's unique in Europe.

It relies on its abundant hydropower resources to provide most of its electricity at very low cost. The discovery of major oil and gas reserves in the North Sea in the second half of the 20th century not only guaranteed its energy independence, but also made Norway the world's third largest energy exporter, after Russia and Saudi Arabia. Norway's oil industry, which is largely managed by the State, accounts for 21% of its GDP.

Considered to be one of the best pupils in terms of compliance with the Kyoto Protocol, thanks to its carbon-neutral homes and industries, Norway has adopted new environmental standards. Nevertheless, a rapid reduction in the use of fossil fuels is highly improbable.


  • The History of Energy in Norway
  • Energy Choices
  • Norway today
  • Future Challenges

Norway's Energy Choices Over the Years

  • Middle Ages
  • XVIth
  • XIXth
  • XXth
  • XXIth
 
Middle Ages: Water, A Major Source of Energy
Moyen-Âge
© THINKSTOCK

In the Middle Ages, the powerIn physics, power is the amount of energy supplied by a system per unit time. In simpler terms, power can be viewed as energy output... of waterfalls, strengthened by meltwater in the spring, was utilized to turn mill wheels. Wood was the main source of energy for heating homes.

16th Century: Development of the Wood Industry
XVI
© Jakub Halun / WIKICOMMONS

The introduction of the water-driven saw (see picture) in the 16th century had a decisive impact on the Norwegian economy, by allowing the country to make use of its vast wood resources. Timber was floated down the rivers to sawmills located on the seacoast. To prevent deforestation, a number of sawmills were shut down by royal decree in 1688.

 
1814-1840: A Long Period of Economic Stagnation
1814
© Nasjonalbiblioteket / WIKICOMMONS

On October 10, 1814, Norway separated from Denmark and united with Sweden. The common market with Denmark ceased to exist, and the British market was closed to Norwegian timber. As a result, the country fell into a deep economic decline and was bypassed by the industrial revolution. A shift towards more unfettered trade practices spurred an economic revival, with the spectacular development of the merchant marine between 1850 and 1880.

1890: The Lure of the Far North
1890
© ERIK VEIGARD / SCANPIX / AFP

During a good part of the 19th century, the Svalbard archipelago, situated 960 kilometers north of the Norwegian mainland (see picture), attracted scientific expeditions from all over Europe intent on discovering new natural energy resources. The presence of coalCoal is ranked by its degree of transformation or maturity, increasing in carbon content from... seams was mentioned by whalers as early as the 17th century. At the end of the 1890s, when global coal prices were rising sharply, a number of small companies—consisting of one or two houses open for a few months of the year—began to spring up in the region.

1890-1900: The Rise of Hydroeclectric Power
1890
© Nasjonalbiblioteket / WIKICOMMONS

At the end of the 19th century, the development of hydroelectric power (known as white coal), enabled the country to use its plentiful water supplies to power its factories. The Norwegian government, which has always had an interventionist approach, bought its first waterfall in 1895 in order to supply electricity to the Setesdalsbanen railway line. To protect its energy independenceThe ability of a country or region to meet all its energy needs without having to import primary or final energy. , Norway adopted laws forbidding foreigners from owning waterfalls, mines or forests.

The foundations for industrialization were thus established.

 
December 2, 1905: Norsk Hydro is Founded
1905
© Norsk Hydro history gallery / WIKICOMMONS

The Norwegian energy company Norsk Hydro was founded by the engineer and industrialist Samuel Eyde (see picture) with the financial support of the Wallenbergs, a wealthy Swedish family, and several French banks. The company built its first hydroelectric power plant near Oslo in 1907. Over a period of 10 years, the country built 11 hydroelectric power plants (currently there are more than 600). Even today, hydropower accounts for almost all of Norway's electricity production.

1900-1920: The Battle for Coal
1900
© Store Norske

Several countries engaged in a race to secure Svalbard's coal, with industrialists from America, Britain, Sweden, Russia and Norway all scrambling to buy up the local companies. On the political front, Norway, Sweden and Russia laid competing claims to the islands. Norway finally gained sovereignty over the archipelago in 1920, and the drop in world coal prices marked the end of the race. The State-owned company Store Norske established its mark and is still today Norway's sole coal producer.

1921: Organization of the Electricity Sector
1921
© Norges vassdrags- og energidirektorat / WIKICOMMONS

The Norwegian state set up its electricity sector with the creation of Norges vassdrags- og energidirektorat (Norwegian Water Resources and Energy Directorate), which manages the country's power plant operations.

April 1940: The Race to Build the Atomic Bomb
1940
© Ole Friele Backer / WIKICOMMONS

By 1934, Norsk Hydro had already built its first commercial heavy water (deuterium oxide) plant at its Vemork facility in Norway. The unit was capable of mass producing the material, which was used for conducting atomic bomb experiments. Hitler invaded Norway in 1940 and took hold of the plant. In 1942, having learned about Germany's nuclear ambitions, the Allies undertook a series of sabotage missions at the facility to prevent the enemy from acquiring its heavy water stocks.

1962-1965: The Riches of the North are Discovered
1962
© ConocoPhillips/Norwegian Petroleum Museum

The discovery of gas in the Netherlands at the end of the 1950s caused people to wonder about the fossil fuelFuel is any solid, liquid or gaseous substance or material that can be combined with an oxidant... potential of the North Sea, which until then had been relatively ignored. Aware of the economic potential of its seabed, Norway proclaimed its sovereignty over the continental shelf. Only the king or his direct representative is allowed to award hydrocarbonOrganic compound consisting of carbon and hydrogen. Hydrocarbons are the principal constituents of crude oil, natural gas and petroleum products. exploration and production licenses. In April 1965, a total of 22 exploration, drillingThe process of boring a hole into the ground using special equipment... and production licenses were granted to oil companies.

1969-1972: Beginnings of the Oil Adventure
1969
© WIKICOMMONS

Norway's oil development got underway for good in 1969 when the Phillips Petroleum Company discovered the huge Ekofisk field 320 kilometers southwest of Stavanger. Today Ekofisk is still the largest field in the North Sea. The Norwegian oil and gas company Statoil was founded in 1972.

Late 1970s: Dams Face Strong Opposition

The ever-expanding hydropower industry came under attack from indigenous peoples in the north upset about being forced to relocate. Arne Naess, founder of the Deep EcologyThe science that deals with the relationships of groups of living things and their environment. movement, and a group of 300 militants, protested against plans to build a dam at the Mardalsfossen waterfall.

1990: Creation of The Petroleum Fund
1990
© WIKICOMMONS

Norway's economy has become highly dependent on the oil industry. Despite having one of the world's highest standards of living, the country wants to prepare for the time when its oil and natural gas reserves begin to run out. In 1990 it set up a sovereign wealth fund, managed by the Norwegian central bank, where surplus wealth produced by petroleum income is held. It was the first sovereign wealth fund in the world.

1992-1996: Organization of the Electricity Market
1992
© THINKSTOCK

Two State-owned enterprises, Statkraft and Statnett, were set up to manage the country's power plants and power grids. Statnett operates 10,000 kilometers of high voltage power lines and about 100 substations. To facilitate interconnections between their power grid systems, Norway and Sweden established a common power market in 1996, that was later joined by Finland and Denmark. In 2008, the Scandinavian and Dutch power grids were connected by an underwater cable.

 
April 27, 2010: End of the Border Conflict with Russia
2010
© www.kremlin.ru. / WIKICOMMONS

After more than four decades of negotiations, Norway and Russia signed an production sharing contract (or agreement)Oil contract under which the oil that is produced is shared between the state and the oil company... defining the maritime boundaries in the southeast Barents Sea, thereby opening up new possibilities for oil explorationAll methods used to discover new oil and natural gas deposits. in this area. In June 2013, the Norwegian government authorized drilling in the entire Norwegian section of the Barents Sea.

April 2014: The Sovereign Wealth Fund Goes Green
2014
© IGOR GEDILAGHINE / AFP

The fund, which derives its income from oil and gas profits and is considered to be the world's largest sovereign wealth fund (about €750 billion), sets a goal of doubling its interest in environmentally sustainable projects. The country's objective is to make the fund a showcase of transparent and ethical investment. For example, it can't invest in tobacco or defense companies.     

May 2015: The Sovereign Wealth Fund Pulls Out From Coal

The Norwegian parliament's finance committee unanimously agrees to reduce the fund's coal assets. Mining or energy companies that generate more than 30% of their output or revenue from coal-related activities are removed from the fund.

A Constantly Evolving Energy Mix

A Major Oil and Gas Exporter

Initially fueled solely by hydroelectric power, Norway’s economic growth was driven from the 1960s onwards by the development of oil and gas resources in the North Sea. The traditionally interventionist State took a unique stance by setting up the world’s first sovereign wealth fund. Today, it is focusing on investments that support ethical and sustainable growth.

In the early 1970s, foreign companies dominated offshoreRefers to sea-based oil exploration and production operations, as in "offshore license" or "offshore drilling". exploration and the Norwegian government decided to get more deeply involved. The Norwegian oil and gas company Statoil was founded in 1972 and the principle of a 50% State interest for each production license was established (this rule was later changed). For over a decade, Statoil was awarded more than 50% of the exploration and production licenses granted by the government. The company was partially privatized in 2001.

In 2009, the oil industry accounted for more than 21% of the country's GDP, or three times more than manufacturing and 22 times more than primary industries. This huge inflow of wealth from taxes and partly State-managed oil production muted to some extent the environmental concerns raised by environmental parties. These included pollution off the Norwegian coast and the destruction of the local ecosystem in a country that had relied heavily on fishing since the Middle Ages.

Today, Norway has the largest natural gas reserves in Europe after Russia. Government estimates put the country’s remaining gas resources at 4.6 billion cubic meters, of which 40% have not yet been discovered. More than half of the known resources are located in the North Sea, and significant amounts of natural gas are thought to be found along the Norwegian Sea and the Barents Sea. Norway is a major gas exporter, notably to Germany and the United Kingdom (25% of exports each), France (nearly 15%) and the Netherlands (around 10%). The gas is shipped through 7,800 kilometers of gas pipelinePipeline used to transport gas over a long distance, either on land or on the seabed.. In 2007, Norway inaugurated Snøhvit, its first liquefied natural gas (LNG)LNG is composed almost entirely of methane. Liquefying the gas reduces its initial volume by a factor of around 600... terminal.

Norway also exports oil, with 90% of its crude production exported to the U.K., the Netherlands, France and Germany.

Hydroelectric Power: A Long-Used Resource

Used as an energy source since the Middle Ages, Norway’s abundant water resources allowed the country to develop hydroelectric power as of the end of the 19th century. Awareness of environmental issues grew in the 1960s and 70s, prompting the government to create one of the world’s first Environment Ministries.

Although hydroelectric is considered to be a renewable energyEnergy sources that are naturally replenished so quickly that they can be considered inexhaustible on a human time scale..., the construction of power plants next to waterfalls has been criticized for destroying the landscape and harming nature. In a country known for political negotiation, the hydroelectric power industry has been the focal point for violent opposition. In 1978, the government announced plans to build a dam and a hydroelectric power plant near the Alta River in northern Norway. The project, which involved flooding an ancestral village and creating an artificial lake, encountered stiff political resistance. The most radical groups called for civil disobedience, leading to a police intervention on a scale unseen since the Second World War. The plant was finally built in early 1982.

Economic stakes continued to overshadow social concerns and kept the country lagging behind in the development of alternative energies, especially wind power.

Today, hydro accounts for more than 95% of Norway’s electricity, with biomassIn the energy sector, biomass is defined as all organic matter of plant or animal origin... and waste-to-energy providing most of the balance. Hydropower output can vary considerably from year to year depending on rainfall and the amount of water in reservoirs. As a result, Norway exports electricity during wet years and imports during dry years, mainly from Denmark, Sweden and Finland.

High Electricity Consumption

Given the country’s extreme weather conditions, comfort is of prime importance. In 2008, Norway was the second largest per capita consumer of electricity after Iceland among International Energy Agency member countries, with 23,000 kWh used per person. That’s three times more than the average electricity consumption of European countries, among them France and Germany, and twice that of the United States.

Electricity was also behind the renewal of rail transportation in 1952, when the Norwegian government decided to electrify the half of its network that was most used (80% of traffic) and leave the rest to dieselDiesel is the name of an internal combustion engine that works by compression-ignition... locomotives. That said, road and air remain the preferred modes of travel in this relatively vast, narrow country with access to inexpensive fuel.

Today, transportation accounts for 37% of Norway’s greenhouse gas (ghg) Gas with physical properties that cause the Earth's atmosphere to warm up. There are a number of naturally occurring greenhouse gases... emissions and 50% of its oil consumption.

A Major Oil and Gas Exporter

Initially fueled solely by hydroelectric power, Norway’s economic growth was driven from the 1960s onwards by the development of oil and gas resources in the North Sea. The traditionally interventionist State took a unique stance by setting up the world’s first sovereign wealth fund. Today, it is focusing on investments that support ethical and sustainable growth.

In the early 1970s, foreign companies dominated offshore exploration and the Norwegian government decided to get more deeply involved. The Norwegian oil and gas company Statoil was founded in 1972 and the principle of a 50% State interest for each production license was established (this rule was later changed). For over a decade, Statoil was awarded more than 50% of the exploration and production licenses granted by the government. The company was partially privatized in 2001.

In 2009, the oil industry accounted for more than 21% of the country's GDP, or three times more than manufacturing and 22 times more than primary industries. This huge inflow of wealth from taxes and partly State-managed oil production muted to some extent the environmental concerns raised by environmental parties. These included pollution off the Norwegian coast and the destruction of the local ecosystem in a country that had relied heavily on fishing since the Middle Ages.

Today, Norway has the largest natural gas reserves in Europe after Russia. Government estimates put the country’s remaining gas resources at 4.6 billion cubic meters, of which 40% have not yet been discovered. More than half of the known resources are located in the North Sea, and significant amounts of natural gas are thought to be found along the Norwegian Sea and the Barents Sea. Norway is a major gas exporter, notably to Germany and the United Kingdom (25% of exports each), France (nearly 15%) and the Netherlands (around 10%). The gas is shipped through 7,800 kilometers of pipeline. In 2007, Norway inaugurated Snøhvit, its first liquefied natural gas (LNG) terminal.

Norway also exports oil, with 90% of its crude production exported to the U.K., the Netherlands, France and Germany.

Hydroelectric Power: A Long-Used Resource

Used as an energy source since the Middle Ages, Norway’s abundant water resources allowed the country to develop hydroelectric power as of the end of the 19th century. Awareness of environmental issues grew in the 1960s and 70s, prompting the government to create one of the world’s first Environment Ministries.

Although hydroelectric is considered to be a renewable energy, the construction of power plants next to waterfalls has been criticized for destroying the landscape and harming nature. In a country known for political negotiation, the hydroelectric power industry has been the focal point for violent opposition. In 1978, the government announced plans to build a dam and a hydroelectric power plant near the Alta River in northern Norway. The project, which involved flooding an ancestral village and creating an artificial lake, encountered stiff political resistance. The most radical groups called for civil disobedience, leading to a police intervention on a scale unseen since the Second World War. The plant was finally built in early 1982.

Economic stakes continued to overshadow social concerns and kept the country lagging behind in the development of alternative energies, especially wind power.

Today, hydro accounts for more than 95% of Norway’s electricity, with biomass and waste-to-energy providing most of the balance. Hydropower output can vary considerably from year to year depending on rainfall and the amount of water in reservoirs. As a result, Norway exports electricity during wet years and imports during dry years, mainly from Denmark, Sweden and Finland.

High Electricity Consumption

Given the country’s extreme weather conditions, comfort is of prime importance. In 2008, Norway was the second largest per capita consumer of electricity after Iceland among International Energy Agency member countries, with 23,000 kWh used per person. That’s three times more than the average electricity consumption of European countries, among them France and Germany, and twice that of the United States.

Electricity was also behind the renewal of rail transportation in 1952, when the Norwegian government decided to electrify the half of its network that was most used (80% of traffic) and leave the rest to diesel locomotives. That said, road and air remain the preferred modes of travel in this relatively vast, narrow country with access to inexpensive fuel.

Today, transportation accounts for 37% of Norway’s greenhouse gas emissions and 50% of its oil consumption.

The Norwegian Power Mix in 2012

The power mix is the percentage of fossil, nuclear and renewable energy used to produce electricity. It isn't concerned with the problem of energy use in transportation and industry. The situation in Norway is simple: hydropower accounts for almost all of the country's electricity supply.

Changes in the Norwegian Energy MixThe range of energy sources of a region.

The term energy mix refers to how final energy consumption in a given geographical region breaks down by primary energyAll energy sources that have not undergone any conversion process and remain in their natural state.. source. The Norwegian energy mix is characterized by a sharp increase in natural gas and the continued dominance of hydropower.

Energy mix source: 2011 International Energy Agency statistics, www.iea.org/stats

Choose two years to compare energy mix trends:

et

Energy mix source: 2011 International Energy Agency statistics, www.iea.org/stats

FEW NUMBERS

  • AREA
  • POPULATION
  • POPULATION GROWTH
  • AGEING POPULATION
  • GDP
  • GDP PER CAPITA
  • HUMAN
    DEVELOPMENT
    INDEX (HDI)
  • CO2See Carbon Dioxid EMISSIONS
 

Sources : World Bank, United Nations Development Programme (UNDP) and United Nations Population Division.

FEW NUMBERS

  • AREA

  • POPULATION

  • POPULATION GROWTH

  • AGEING POPULATION

  • GDP

  • GDP PER CAPITA

  • HUMAN DEVELOPMENT
    INDEX (HDI)

  • CO2 EMISSIONS

Sources : World Bank, United Nations Development Programme (UNDP) and United Nations Population Division.

Energy Choices for Future Generations

Melting ice in the Arctic, north of Russia, is opening the door to new oil and gas exploration in Norway. This isn’t stopping the country from being very active in the fight against global warmingGlobal warming, also called planetary warming or climate change..., with a very heavy carbon tax and advanced research into carbon capture and storage.

The Outlook for the Far North

décarbonisation
@ THINKSTOCK

Natural gas has already demonstrated its high potential in the region closest to Europe with the discovery of the Snøhvit and Shtokman fields in the Barents Sea, covering an area of 1.4 million square kilometers. The Norwegian government sees this as Europe’s new center of gravity for energy.
In 2011, Norway’s Statoil announced the discovery of two large neighboring oil fields in the Barents Sea that together could represent between 400 and 600 million barrels, yet did not make any decision about operation. Oil prospecting in this region is recent and did not take off until September 2010, when Norway and Russia signed an agreement on maritime boundaries. On June 19, 2013, the Norwegian government authorized drilling in the area while banning exploration within 50 kilometers of the ice shelf. This decision led to numerous protests from environmental groups and the opposition parties, who were worried about the impact that an oil spill could have on a local ecosystem trapped in water ranging in temperature from 1.8°C to 4°C. In particular, the issue of drilling around the Lofoten islands, a Norwegian archipelago located above the Arctic Circle that features abundant fish stocks and a large number of bird species, is currently dividing public opinion and could influence the next elections.

A Focus on Fighting Global Warming

éoliennes
@ THINKSTOCK

Norway’s active approach to prospecting for oil in the Arctic could make it look like a poor pupil when it comes to the environment and greenhouse gas emissions. Yet due to the historic predominance of hydroelectricity, Norway can already be considered a low-carbon economic power. The country, which signed and ratified the Kyoto ProtocolInternational agreement linked to the United Nations Framework Convention on Climate Change..., decided to raise the bar higher in 2008 by setting targets to reduce its emissions by 9% in relation to 1990 by 2012, 30% by 2030, and 100% by 2050, making it carbon neutral.
In 1991, the government introduced its flagship climate policy measure by approving one of Europe's heaviest carbon taxes on offshore gas and oil, as well as on transportation and heating. This certainly explains the oil industry’s leadership position in developing the technology for carbon capture and storage (CCS), a method that involves capturing and compressing exhaust gas carbon from boilers or gas turbines and injecting it under ground. In May 2009, the Norwegian government, Statoil, Shell and Sasol invested $1 billion to build the Mongstad Technology Center, the largest facility in the world dedicated to CCS research and development.
In its 2011 “Climate Cure 2020” report, the Norwegian government presented a strategy for achieving its objective of reducing the country’s greenhouse gas emissions by 30% by 2030. Although officials are already forecasting a steady increase in emissions from transportation and the oil and gas industry, the government is focusing primarily on domestic measures, R&D for carbon emission management solutions, and a 1% improvement in energy efficiencyIn economic terms, energy efficiency refers to the efforts made to reduce the energy consumption of a system... each year.

Promising Potential for Wind Power

In a country with inexpensive hydroelectric power, development of alternative energies has lagged. This has been the case for wind power despite its excellent potential, particularly along coastlines where wind speeds can exceed 10 meters per second. Only a tiny proportion of Norway’s electricity is generated by wind (less than 1%).
In 2007, the government launched a vast R&D program called “ENERGI 21” supported by the energy industry, the scientific community and public officials. In September 2009, StatoilHydro presented Hywind, its first floating wind turbine, off the North Sea coast. These new installations, which are mounted on a floating structure ballasted a few dozen meters below the water’s surface, open the door to electricity generation from deeper offshore locations (up to 700 meters), where the winds are strong and where the turbines do not spoil the view. Numerous subsidies have been granted to develop this relatively young wind industry.

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