The Norwegian Oil and Gas Association, the powerful oil lobby in Western Europe's largest oil producer, criticized on Friday the Government's plan to more than triple carbon taxes, saying such a steep increase would raise the costs of oil production and reduce Norway's competitiveness.
The Norwegian Government unveiled on Friday a comprehensive climate action plan for emission reductions by 2030.
"For the first time, a government is putting forward a compelling, comprehensive plan for cutting emissions in every sector. We must make sure that it pays to cut greenhouse gas emissions," Norway's Minister of Climate and Environment Sveinung Rotevatn said in a statement.
Norway plans to reduce its emissions by at least 50 percent - aiming for a 55-percent reduction - by 2030 compared to 1990 levels.
Under the Government's white paper on the climate action plan, the carbon tax rate would be raised from its current average level of about US$70 (590 Norwegian crowns) per ton CO2 equivalents to US$237 (2,000 Norwegian crowns) per ton CO2 equivalents in 2030.
The biggest carbon emitters in Norway, which include oil and gas producers, currently pay a carbon tax of around US$95 (800 Norwegian crowns) per ton CO2 equivalents.
"This will progressively increase the cost of emitting CO2 and give stronger incentives to reduce emissions. The Government's policy is not to increase the overall level of taxation. Any tax increase will therefore be offset by reducing other taxes correspondingly," the Government said today.
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"The government will show how the oil and gas industry will cut, by 2030, its emissions by 50 percent," Prime Minister Erna Solberg told a news conference, as carried by Reuters.
The carbon tax raise would be a significant cost increase for the industry and could weaken the competitiveness of the Norwegian Continental Shelf, Anniken Hauglie, Director General of The Norwegian Oil and Gas Association, NOG, said in a statement, commenting on the plan.
The petroleum industry in Norway is among the industries paying the highest total CO2 price globally through the carbon tax and quotas, Hauglie said, noting that the Government and industry should work to avoid making Norway uncompetitive by saddling the industry with high costs. Government and industry should work together for a framework that would achieve Norway's climate goals without losing the value, jobs, and government revenues from one of the most important industries, Hauglie noted.
By Charles Kennedy for Oilprice.com
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