COVID-19 crisis could yet hamper energy transition: Norway's energy minister

London — The pandemic-induced economic crisis could still turn out to hamper energy transition efforts rather than spurring the transition, and viable oil and gas companies are needed to help develop new, low-carbon solutions, Norway's energy minister, Tina Bru, said Sept. 1.

Speaking during Norway's online ONS conference, Bru, who became petroleum and energy minister in Western Europe's largest oil producing state in January, said it was too early to conclude whether or not the COVID-19 crisis would speed a transition to a lower-carbon world.

She defended Norway's granting of temporary tax breaks to oil and gas companies in response to the crisis, saying such companies were needed in the energy transition effort, for example in offshore wind, and that moving too fast to curb oil and gas could be counter-productive.

Summing up the state of the recovery from COVID-19 and this spring's price collapse, she said: "It looks like things are starting to stabilize, that we're seeing confident signs that we're moving in the right direction, but still there's a lot of uncertainty."

Responding to pressures from campaigners for a faster transition and reduction in Norway's dependence on oil and gas, she struck a defiant note, saying: "It's not like we've just now realised that one day oil and gas will be gone. We know that's going to happen... We've been transitioning for a while."

On the pandemic's aftermath, she said: "My fear has actually been this is going to slow down the transition that we know is needed because of the whole economic situation globally, and that's not something that is good for investments, whether it's in oil and gas or it's in renewables."

"That whole slowing down of the economy is not something that we need...We needed to go full speed ahead to assist us in the transition. It's too early to say what the long-term impact...will be. Hopefully we'll get back on track, hopefully it will also maybe spur investments in, say renewables, or other low-emissions solutions, and we're seeing signs of that."

Bru highlighted as a positive sign the EU's "green deal," intended to make the bloc carbon neutral by 2050 by investing in areas such as hydrogen and carbon capture.

Norway is leading European carbon capture efforts with its "Northern Lights" project, which will take CO2 from industries such as cement manufacture and inject them into depleted North Sea fields.

Bru insisted on the importance of oil and gas companies, and projects such as Hywind Tampen, an offshore wind farm that will provide power to mature oil fields such as Gullfaks, currently being developed by state-controlled Equinor.

Upstream taxation

Norway's June tax breaks help companies by bringing forward reimbursement of their capital spending, including on new projects submitted for approval by the end of 2022.

"There are positive signs [of recovery], but I still think it's a little bit too early to see. My main concern was we would lose many of those companies that we know we need to assist in the transition. We need this industry and the competence, the technology that exists here to guide us and to help us build the new jobs in other sectors," Bru said.

"I don't think we would ever see a big move toward, for example, offshore wind power in Norway without the big oil and gas companies joining also that transition."

Citing Norwegian public controversy over toll roads during elections last year, she insisted energy transition efforts had to be seen in a wider context.

"You can't move too quickly. You have to do this as a transition where you make sure that you carry with you the jobs, the people, the competence that they represent, into something new. If we move too fast I think we may end up taking big steps backwards, because we're going to meet a lot of opposition to some of the things that we, as politicians for example, impose."