16 February 2019, Oslo — Global efforts to fight a “crisis” of man-made climate change could spell a faster than expected end to Norway’s oil and gas industry, the nation’s central bank governor said on Thursday.
Norges Bank Governor Oeystein Olsen also said that western Europe’s largest oil and gas producer will still derive significant income from hydrocarbons in coming years but declined to predict a timeline for any future decline.
“A shift in consumption patterns and production methods towards lower emissions will reduce demand for fossil fuels. This can influence oil and gas activities in Norway,” he said in a speech to government and business leaders.
“We have always known that oil and gas activities will be phased out sooner or later. Oil and gas are non-renewable resources. A stricter global climate policy may mean that this will occur sooner than foreseen earlier.”
Almost 200 nations set a goal under the 2015 Paris climate agreement to phase out greenhouse gas emissions in the second half of this century to limit a rise in temperatures blamed for stoking more heatwaves, downpours and rising sea levels.
The United Nations says that existing government policies are inadequate to achieve the Paris goals and need to be tightened.
Norway’s Prime Minister Erna Solberg has said Norway can keep pumping for decades and still comply with the Paris Agreement.
“We are facing a climate crisis that can only be addressed by engaging in a common global effort,” Olsen said on Thursday.
Investors including Norway’s $1 trillion sovereign fund should manage climate risk along with other factors affecting their portfolios, he said. But he also emphasized that solutions to fight global warming must come from governments promoting change.
In an interview at his office in central Oslo, Olsen said the oil industry could remain important to the Norwegian economy for a significant time to come.
“But we should also be more aware, not least in light of climate change, that we need to develop other legs to stand on as well,” he added.
The oil and gas industry has been a key economic engine for Norway over the past 50 years, directly or indirectly employing 10 percent of all workers and providing half its export revenue.
State-controlled Equinor is Norway’s largest oil company, while smaller players such as Aker BP and Lundin Petroleum have achieved rapid growth in recent years.
“If global measures are introduced to limit warming, by putting a price tag on emissions and developing technology, it would curb fossil fuel prices,” Olsen said.
“I’m careful to emphasize that the oil industry should develop based on considerations of what’s profitable. I’m warning against actively forcing a downsizing beyond that,” he added.