Global warming and energy security are arguably two of the greatest challenges the world faces today. The culprit is, as we all know, fossil fuel. Norway has, due to its geographical location a vast coastline, easy access to large bodies of water and plenty of wind – great and unexplored opportunities to expand its renewable energy production, both on and offshore. So why is Norway so slow at adapting these new technologies? This is the main question that is explored in Hanson, Kaasa and Wicken’s new book on Innovation as Climate Policy and Business Development.

Frode Søreide
Scientific associate at the TIK-centre

While remaining a considerable exporter of both petroleum and hydroelectricity, Norway has in many respects been an outsider when it comes to clean energy policies, or lack thereof. As a result, Norwegian domestic production of electricity has come to a complete halt. Another reason for this outsider status is likely due to the two already very large incumbent energy sectors mentioned above.

From the early 1900s production of hydro-electrical power has been heavily politicized and closely tied in with the interests of labour movements, power-intensive industries and government. The supply of cheap energy has been the lifeline of major Norwegian electrochemical and electrometallurgical industries. According to Hanson, Kaasa and Wicken it has allowed Norway to indirectly transport “solidified energy” to the rest world through materials and products that were created as a result of Norwegian hydropower. In addition to industry, production of hydropower covers nearly all of Norway’s energy needs on land (offshore activities are not covered) at a low price.

In the 1970s Norway struck oil and quickly became the third largest oil exporting nation in the world, as well as a significant supplier of natural gas. Much of the industry operating on the Norwegian continental shelf is under national control, and the rest is heavily taxed. In this respect it has close similarities to the hydropower sector, and is the reason for Norway’s very considerable sovereign wealth fund (The Norwegian Pension Fund – Global)

Investments into new renewable energies (as opposed to old ones such as hydropower) are, in addition to being associated with high risk, costly. As such, it might seem contrary to sound judgement to implement these, as they will lead directly to increased energy prices in the domestic market whether the energy is exported or not. If it is not exported, energy prices will be driven up by the increased cost of production associated with energy sources such as wind, wave, and biomass power. If it is exported, the prices will increase as a result of the relatively higher prices on the European market.

If Norway is already self-sufficient with regards to clean hydropower and the transition to new renewable energy sources is both costly and risky, why should we concern ourselves with this at all? It comes down to a discrepancy between environmental and energy policies. Norwegian oil production is already weaning and will at some point come to an end. Norway has made a commitment to reduce its carbon emissions significantly by 2012 and finally reach carbon neutrality by 2030. In addition, clean energy export could be a future source of revenue when Norwegian oil production is a matter of the past. The future of Norwegian industry, and by extension, the future of energy demands, is filled with uncertainty. This, coupled with a lack of clear framework condi-tions and incentives has impeded the transition from what is largely a petroleum and hydropower-based system to one of new renewable energies.

This book sets the ambitious target of laying down a framework for understanding how such transitions could come about. While mainly dealing with the Norwegian challenges in transition to new renewable energy, it draws extensively on experiences from other European countries. In addition to the three editors Keith Smith, Anna Bergek, Steffan Jackobsson, Andreas Tjernshaugen and Oluf Langhelle, who are all leading experts in their fields, have made contributions.

One strength of this book is that it offers the reader an opportunity to pick and choose from a wide variety of topics, while it at the same time paints a broad picture of the conditions for establishing new renewable energies in Norway.

The framework is firmly based in the tradition of innovation studies and evolutionary economics. Concepts and categories, which should be well known to those in the field, should undoubtedly be useful and interesting to policymakers, the business sector, researchers and scientists.

This book represents a noteworthy and arguably overdue departure from neo-classical economic thinking in the debate about Norwegian energy policies, and will hopefully serve as a catalyst for further research as well as renewed discussion.

Energirikdommens paradokser – Innovasjon som klimapolitikk og næringsutvikling
Editors: Jens Hanson, Sjur Kaasa and Olav Wicken
Published: 2011
Publisher: Universitetsforlaget AS
ISBN: 9788215018348