found that the Danes consider climate change a
more serious issue than in many comparable
countries. More importantly, a significant
majority of Danes say they are willing to pay for
the transition to a cleaner energy system. This
sentiment is gaining momentum, as seen by the
rise in willingness to pay between 2015 and 2016
in Fig. 85. Finally, it should be noted that
younger people were more positive about contributing to the country’s energy transition than
older citizens.
4. Companies
(1) Summary
The Nordic cases illustrate that companies can
both finance and benefit from the energy transition. National oil companies (NOCs) have been a
key part of the transition in both Norway and
Denmark. In Norway, Equinor and several
international oil companies (IOCs) have helped
finance the transition through their petroleum
taxes. In Denmark, DONG Energy has transformed from being a conventional NOC into a
largely green energy service company that
develops offshore wind resources under the new
name of Ørsted. Both cases illustrate how companies, especially NOCs, can be key to the
energy transition. However, the Danish and
Norwegian cases also highlight that a series of
framework conditions must be in place if the
transition is to be successful.
Both Norway and Denmark illustrate the
importance of credible policies that include an
element of risk sharing. The Nordic countries are
characterised by strong institutions and widespread public-private partnerships, which have
enabled the energy transitions of both Norway
and Denmark. This is illustrated by the Norwegian petroleum tax system which, by incorporating an element of public-private risk sharing,
has helped attract investment in oil and gas
exploration and development. For example, the
government of Norway shares exploration risk
with oil and gas companies through tax exemptions and loss deductions. Likewise, the Danish
government’s subsidies for offshore wind and
support for R&D have been long term and
credible. This has allowed developers to reduce
deployment costs and finance their investments
through pension funds and other private
investors.
Government provision of public goods, such
as system integration and pipeline infrastructure,
has been key to both the Norwegian and Danish
energy transitions. In Norway, the petroleum tax
base rests on a publicly managed and regulated
infrastructure system for oil and gas transport.
Without this infrastructure, companies would be
less inclined to invest in Norwegian oil and gas
exploration and there would be less of a tax base
to finance the EV transition. Likewise, the Danish wind transition rests on public action to
improve infrastructure and reduce system integration costs. High levels of offshore wind integration have only been possible due to a
combination of interconnections with neighbouring electricity markets and incentives to
make conventional power plants more flexible.
Both public initiatives have reduced system
integration costs and made the Danish energy
system capable of integrating significant quantities of renewables (Fig. 90).
(2) Norway
Government EV subsidies have resulted in falling tax revenues from vehicles in Norway.
Vehicle taxes include a one-time purchase tax,
registration fee, annual road tax, and fuel and
CO 2 taxes, which represent on average 12% of
all taxes in Norway. Since the inception of EV
subsidies, these revenues have been decreasing
as the sale of conventional vehicles declines.
This trend will continue and the success of the
EV policy is therefore threatening to eliminate
vehicle tax revenues, which is an important
source of government income in Norway. For
example, if all new vehicles are zero emission by
2025 and current subsidies are continued, vehicle
tax revenues could be halved. EV subsidies are
thus becoming increasingly expensive, which
puts pressure on government revenues (Fig. 91).
Electrification of transport has so far been
financed by revenues from Norway’s oil and gas
200
W. Xiaoming et al.
more serious issue than in many comparable
countries. More importantly, a significant
majority of Danes say they are willing to pay for
the transition to a cleaner energy system. This
sentiment is gaining momentum, as seen by the
rise in willingness to pay between 2015 and 2016
in Fig. 85. Finally, it should be noted that
younger people were more positive about contributing to the country’s energy transition than
older citizens.
4. Companies
(1) Summary
The Nordic cases illustrate that companies can
both finance and benefit from the energy transition. National oil companies (NOCs) have been a
key part of the transition in both Norway and
Denmark. In Norway, Equinor and several
international oil companies (IOCs) have helped
finance the transition through their petroleum
taxes. In Denmark, DONG Energy has transformed from being a conventional NOC into a
largely green energy service company that
develops offshore wind resources under the new
name of Ørsted. Both cases illustrate how companies, especially NOCs, can be key to the
energy transition. However, the Danish and
Norwegian cases also highlight that a series of
framework conditions must be in place if the
transition is to be successful.
Both Norway and Denmark illustrate the
importance of credible policies that include an
element of risk sharing. The Nordic countries are
characterised by strong institutions and widespread public-private partnerships, which have
enabled the energy transitions of both Norway
and Denmark. This is illustrated by the Norwegian petroleum tax system which, by incorporating an element of public-private risk sharing,
has helped attract investment in oil and gas
exploration and development. For example, the
government of Norway shares exploration risk
with oil and gas companies through tax exemptions and loss deductions. Likewise, the Danish
government’s subsidies for offshore wind and
support for R&D have been long term and
credible. This has allowed developers to reduce
deployment costs and finance their investments
through pension funds and other private
investors.
Government provision of public goods, such
as system integration and pipeline infrastructure,
has been key to both the Norwegian and Danish
energy transitions. In Norway, the petroleum tax
base rests on a publicly managed and regulated
infrastructure system for oil and gas transport.
Without this infrastructure, companies would be
less inclined to invest in Norwegian oil and gas
exploration and there would be less of a tax base
to finance the EV transition. Likewise, the Danish wind transition rests on public action to
improve infrastructure and reduce system integration costs. High levels of offshore wind integration have only been possible due to a
combination of interconnections with neighbouring electricity markets and incentives to
make conventional power plants more flexible.
Both public initiatives have reduced system
integration costs and made the Danish energy
system capable of integrating significant quantities of renewables (Fig. 90).
(2) Norway
Government EV subsidies have resulted in falling tax revenues from vehicles in Norway.
Vehicle taxes include a one-time purchase tax,
registration fee, annual road tax, and fuel and
CO 2 taxes, which represent on average 12% of
all taxes in Norway. Since the inception of EV
subsidies, these revenues have been decreasing
as the sale of conventional vehicles declines.
This trend will continue and the success of the
EV policy is therefore threatening to eliminate
vehicle tax revenues, which is an important
source of government income in Norway. For
example, if all new vehicles are zero emission by
2025 and current subsidies are continued, vehicle
tax revenues could be halved. EV subsidies are
thus becoming increasingly expensive, which
puts pressure on government revenues (Fig. 91).
Electrification of transport has so far been
financed by revenues from Norway’s oil and gas
200
W. Xiaoming et al.