Ahead of the World Economic Forum's 2013 Global Energy Architecture Performance Index report released by the World Economic Forum on December 11, 2012, Arthur Hanna, managing director of Accenture's Energy Industries Group, explained in a series of blog posts why Norway's top spot in the index was just a matter of luck.
Norway's abundant energy resources are part of the reason why it ranked first in the World Economic Forum's 2013 Global Energy Architecture Performance Index (EAPI).
The EAPI scores and ranks 105 countries around the world on the extent to which their energy systems contribute to economic growth and development, environmental sustainability, and energy security and access—the three elements of the Energy Triangle. But can Norway's performance be explained by good geological luck alone?
Norway's energy resources helped drive high scores.
Most of the oil and gas consumed in Europe comes from Norway. This boosts Norway's GDP. According to the Norwegian Petroleum Authority, in 2010, gas and pipeline transport services accounted for 21% of GDP and 26% of revenue. According to the International Energy Agency, hydropower provides more than 95% of Norway's electricity**. The International Energy Agency (IEA) contributes to some of the lowest domestic and industrial electricity tariffs in IEA member countries.
But sound policies imply the sustainable exploitation of these resources.
Norwegian pension has proven to be a visionary and beneficial mechanism for managing Norway's resource windfall. Filtering revenues through this helps to avoid overheating and inflation that is often associated with large resource gains, and investments in the energy sector also have spillover effects for the engineering and ICT sectors. Resource revenues are also invested across the country, not just in the industrial sector.
Hydrocarbon revenues in the UK have pushed up the pound exchange rate, affected exports, and have been used to prop up short-term expenditures since the 70s of the 20th century, with little performance after 40 years of mining compared to the UK. Norway.
Norway's policy also takes into account the country's environmental responsibilities. Over the past decade, the flagship Enova SF program has increased the energy efficiency of Norwegian industry above the EU average. The Clean Energy Initiative ranks third among IEA member countries in R&D investment,** committing to achieving carbon neutrality in Norway by 2030, bringing forward the original 2050 deadline. Norway wants to be the catalyst for a new climate change treaty to replace the Kyoto Protocol.
There is still work to be done.
Norway's oil and gas industry is the largest CO2 emitter, with relatively poor vehicle efficiency for passenger car fleets compared to the European average. To address these challenges, Norway's Environment Minister Bard Vegar Solhjell recently pledged to invest more than $8.2 billion to drive industrial CO2 emissions reductions to meet the country's goal of reducing emissions by 30% by 2020. The transportation, manufacturing, and oil and gas sectors must meet most of these requirements.
Norway's future is bright.
Norway has confirmed plans to work with the UK and Germany to build an undersea power interconnection network, which will strengthen the Nordic power grid and improve its own security. ENOVA SF's measures to improve energy efficiency mean that increased energy intensity should also be avoided. Norway recently signed an agreement with Russia to acquire a 54,000-square-mile continental shelf for the further development of oil and gas deposits.
Overall, a strong energy policy, combined with a variety of energy sources, has provided Norway with cheap, safe and relatively clean electricity and generated a large and stable national income.