MONGSTAD, Norway — This Nordic nation offers a window into how an economy fueled by oil and natural gas can attempt aggressive action on climate change.
Why it matters: It sounds contradictory, but given that our world has remained 81% dependent upon fossil fuels for the past 30 years, cutting greenhouse gas emissions while using these fuels is probably going to be unavoidable. In two separate upcoming decisions, Norway will show the extent to which it’s committed to its climate ambitions and diversifying its wealth, which is largely derived from oil.
The big picture: President Trump has said he likes Norway, though it’s not clear why.
- This admiration comes despite the fact that Norway has some socialist policies, most notably its staggering tax rate of 78% on oil and natural gas production.
- The money raised goes into its sovereign wealth fund, the largest in the world at nearly $1 trillion.
- That high tax rate was left out of a White House report issued last week seeking, in part, to debunk the notion that Nordic countries have socialist policies by pointing to their low corporate tax rates.
Driving the news:
- The Norwegian government will decide this autumn whether its sovereign wealth fund will divest from oil and natural gas stocks. If it does, it would boost efforts around the world to urge investors to drop fossil-fuel investments as concerns grow about climate change.
- Norway is also set to decide in the coming years whether to fund what would be one of the world's most ambitious initiatives to capture and store underground carbon dioxide emissions. The technology is technically possible, but prohibitively expensive in most instances.
- If Norway follows through here, it would be a pivotal step toward showing the financial commitment many experts say is needed to address climate change in our fossil-fuel driven world, including commitments laid out in the 2015 Paris climate accord.
Between the lines: Inaction on either of these fronts would raise a difficult prospect: If Norway — rich from its fossil fuels and genuinely ambitious about addressing climate change — doesn’t follow through, who would?
What’s next: After the decision about the sovereign wealth fund, the focus will turn to whether the carbon capturing project goes through.
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