In terms of its ambitions and use of instruments, Norway's climate policy is very similar to the EU's policy.
The country has endorsed the goal that the concentration of greenhouse gases in the atmosphere must not result in a global increase in temperature of more than 2° Celsius.
With effect from 1 January 2008, Norway became part of the EU's emissions trading scheme, which will be Norway's most important instrument for fulfilling its obligations under the Kyoto protocol. Since most of our operational entities are located in Norway, the scheme will be an important framework condition with which we must comply.
We are the dominant operator in the oil and gas activities on the Norwegian continental shelf (NCS). However, offshore installations are not allocated free allowances.
Our annual emissions from the offshore installations during the period 2008 to 2012 will be around 10 million tonnes of carbon dioxide. This represents around 80% of the annual emissions from the NCS. This will make us a significant buyer also in the EU's Emissions Trading Scheme (ETS). We have prepared for this since the emission trading unit was established in 2005 as part of the electrical trading department.
As in the EU, the Norwegian allowance system involves the allocation of free allowances based on the principle that allowances will be distributed that cover 81 per cent of the emissions during the period 1998 to 2001.
For process emissions, the allowances are somewhat higher, but any expansion of activities entailing emissions after that period is not taken into account. Thus, the Mongstad refinery will only be allocated allowances for roughly 70 per cent of its emissions, while the receiving and processing plant for gas at Kårstø will be allocated 35 to 40 per cent. In Norway, an allowance will be reserved for new facilities with the exception of gas-fired power plants.
For new gas-fired power plants based on CCS, an allowance will be reserved from which gas-fired power plants can be allocated free allowances. Free allowances will not be allocated for offshore activities. In addition to the cost of buying allowances, the activities will pay carbon dioxide tax, so that the costs of emissions will be kept at the same level as when the allowance system was introduced.
As in the EU, there are limits on the use of credits from the Kyoto mechanisms to fulfil the allowance obligation. In Norway, only 13 per cent of emissions can be used for this purpose. This is also the case for offshore installations, even though they do not receive free allowances but must buy all their allowances in the allowance market.
We wish to contribute to Norway's fulfilment of national and international environmental obligations. Through the Norwegian Oil Industry Association (OLF), therefore, we have recommended that the money from offshore carbon dioxide taxation should be used to establish a Norwegian climate fund.
The revenue from the carbon dioxide tax for the period 2008 to 2012 will be approximately NOK10 billion. This amount of money could be a significant contribution to climate mitigation measures in Norway. A dialogue has started between the authorities and OLF on the possibility of establishing such a fund.
Kyoto Business Development
StatoilHydro is financing reductions in greenhouse gas (GHG) emissions abroad through the flexible project mechanisms of the Kyoto Protocol - the Clean Development Mechanism and Joint Implementation.
We are making active approaches to national oil companies and other international entities, offering clean energy solutions that can be implemented in combination with the Kyoto mechanisms' value proposition. The goal is to make reductions in GHG emissions as cost-effective as possible, while promoting sustainable development.
We have developed an extensive collaboration with the Mexican national oil company Pemex with a view to identifying and developing emission reduction opportunities in the oil and gas sector in Mexico, and we are engaged in similar activities in several other locations in which we are present.