oil and gas investors. The Norwegian gas transport system is highly regulated to avoid high
tariffs associated with natural monopolies. Gassled, a joint venture, owns most of the gas
infrastructure, while Gassco, a 100% state-owned
neutral and independent operator, ensures equal
access for all. Gassco’s duties include administering system capacity, coordinating and
managing gas streams, and running the infrastructure in accordance with regulations under the
Petroleum Act. Oil transport infrastructure is less
regulated, as it makes up a smaller part of the
value chain in the oil industry. The infrastructure
is independently owned, where owners and users
negotiate agreements on access to pipelines
governed by regulations.
In addition, R&D support has been vital to the
competitiveness and innovation of the Norwegian
petroleum industry. The Ministry of Petroleum
and Energy established Oil and Gas in the 21st
Century (OG21) in 2001, which brought together
oil companies, research institutions and suppliers
to agree on a joint national strategy for the country’s oil and gas sector. The government encourages R&D through legislation or direct allocations
to the Research Council of Norway, which funds
the PETROMAKS 2 and DEMO 2000 research
programmes. PETROMAKS 2 promotes
long-term research and competence-building,
while DEMO 2000 supports pilot and demonstration projects in the industry.
Resource rents from Equinor, in which the
Norwegian state has a 67% holding, and IOCs
contribute to the sovereign wealth fund. Equinor
(then Statoil) was established in 1972, with the
state as the sole owner, but was partially privatised in 2001. The Norwegian government now
receives state’s direct financial interest (SDFI)
from Equinor and from all other offshore operators. The government covers its share of costs
and investments in the Norwegian continental
shelf and receives a corresponding share of
income as SDFI. The state also receives taxes
from more than 50 international companies
involved in exploration, production and infrastructure off the Norwegian coast (Fig. 92).
The combination of a sophisticated tax system, well-functioning infrastructure and R&D
support makes Norway attractive for oil and gas
production, which provides the tax revenues used
to finance the energy transition. However, Norway is exceptionally resource-rich and this system of financing is unlikely to work in other
countries (Fig. 93).
(3) Denmark
Government grants and subsidies have given wind
energy producers the financial support they needed to develop and integrate wind into the electricity system. In the early years of wind
development, the Danish government provided
wind energy producers with capital grants, up to
30% of their installation costs. The grants were
progressively phased out as wind installations
became cost-effective. In the 1990s, several
measures were initiated to support wind projects
for the first five years of their operations. These
included a fixed feed-in tariff, where the price paid
for the electricity generated from wind was set at
85% of the utility’s production and distribution
costs. Wind projects also received refunds from
carbon and energy taxes. More recently, under the
Promotion of Renewable Energy Act 2009, wind
producers receive an environmental premium
added to the market price, along with an additional
compensation for balancing costs. Falling development costs mean that wind energy is now close
to becoming cost-competitive with conventional
fossil-fuel plants without subsidies. The Danish
government therefore hopes to phase out wind
energy subsidies soon (Fig. 94).
Government support has led Danish firms to
become world leaders in the manufacture and
deployment of offshore wind turbines. Although
only 10% of Europe’s total wind capacity is
installed in Denmark, Danish companies manufacture—either wholly or partly,—more than
90% of wind turbines deployed in Europe. This
demonstrates the strength and global competitiveness of the Danish turbine manufacturing
industry. In addition, Danish companies are also
202
W. Xiaoming et al.
tariffs associated with natural monopolies. Gassled, a joint venture, owns most of the gas
infrastructure, while Gassco, a 100% state-owned
neutral and independent operator, ensures equal
access for all. Gassco’s duties include administering system capacity, coordinating and
managing gas streams, and running the infrastructure in accordance with regulations under the
Petroleum Act. Oil transport infrastructure is less
regulated, as it makes up a smaller part of the
value chain in the oil industry. The infrastructure
is independently owned, where owners and users
negotiate agreements on access to pipelines
governed by regulations.
In addition, R&D support has been vital to the
competitiveness and innovation of the Norwegian
petroleum industry. The Ministry of Petroleum
and Energy established Oil and Gas in the 21st
Century (OG21) in 2001, which brought together
oil companies, research institutions and suppliers
to agree on a joint national strategy for the country’s oil and gas sector. The government encourages R&D through legislation or direct allocations
to the Research Council of Norway, which funds
the PETROMAKS 2 and DEMO 2000 research
programmes. PETROMAKS 2 promotes
long-term research and competence-building,
while DEMO 2000 supports pilot and demonstration projects in the industry.
Resource rents from Equinor, in which the
Norwegian state has a 67% holding, and IOCs
contribute to the sovereign wealth fund. Equinor
(then Statoil) was established in 1972, with the
state as the sole owner, but was partially privatised in 2001. The Norwegian government now
receives state’s direct financial interest (SDFI)
from Equinor and from all other offshore operators. The government covers its share of costs
and investments in the Norwegian continental
shelf and receives a corresponding share of
income as SDFI. The state also receives taxes
from more than 50 international companies
involved in exploration, production and infrastructure off the Norwegian coast (Fig. 92).
The combination of a sophisticated tax system, well-functioning infrastructure and R&D
support makes Norway attractive for oil and gas
production, which provides the tax revenues used
to finance the energy transition. However, Norway is exceptionally resource-rich and this system of financing is unlikely to work in other
countries (Fig. 93).
(3) Denmark
Government grants and subsidies have given wind
energy producers the financial support they needed to develop and integrate wind into the electricity system. In the early years of wind
development, the Danish government provided
wind energy producers with capital grants, up to
30% of their installation costs. The grants were
progressively phased out as wind installations
became cost-effective. In the 1990s, several
measures were initiated to support wind projects
for the first five years of their operations. These
included a fixed feed-in tariff, where the price paid
for the electricity generated from wind was set at
85% of the utility’s production and distribution
costs. Wind projects also received refunds from
carbon and energy taxes. More recently, under the
Promotion of Renewable Energy Act 2009, wind
producers receive an environmental premium
added to the market price, along with an additional
compensation for balancing costs. Falling development costs mean that wind energy is now close
to becoming cost-competitive with conventional
fossil-fuel plants without subsidies. The Danish
government therefore hopes to phase out wind
energy subsidies soon (Fig. 94).
Government support has led Danish firms to
become world leaders in the manufacture and
deployment of offshore wind turbines. Although
only 10% of Europe’s total wind capacity is
installed in Denmark, Danish companies manufacture—either wholly or partly,—more than
90% of wind turbines deployed in Europe. This
demonstrates the strength and global competitiveness of the Danish turbine manufacturing
industry. In addition, Danish companies are also
202
W. Xiaoming et al.