C. Norway

Abstract

This year, Norway did not ratify or accede to any new international agreements related to environmental protection, climate change, and natural resource management. In September, the multilateral Free Trade Agreement between the three European Economic Area (EEA) European Free Trade Association (EFTA) states (Iceland, Liechtenstein, and Norway) and the United Kingdom entered into force. The agreement was created in the wake of the United Kingdom’s withdrawal from the European Union (EU) agreement and, apart from the European Economic Area Agreement (EEA Agreement), is the most comprehensive free trade agreement that Norway has ever joined. Through areas such as trade, competition, investments, and public procurement, this agreement seeks to provide a high level of protection of climate, environmental, and labour rights. Furthermore, the United Kingdom is the largest market for offshore wind in Europe, and the country to which Norway exports the most. In 2020, Norwegian companies exported goods worth almost 135 billion Norwegian krone (NOK) to the United Kingdom, corresponding to 22 percent of all Norwegian exports, while imports amounted to almost NOK 42 billion. This agreement seeks to enable future cooperation and development of the offshore wind industry and the energy transition but also facilitate other green technology areas where cooperation with the United Kingdom will continue to be important, such as carbon capture and storage, batteries, and hydrogen. As of this year, Norway has participated in eleven EU programs and thirty-one EU agencies, by virtue of the EEA Agreement and other bilateral agreements with the EU. Several of these programs focus on environmental, climate, and sustainability issues. One example is Horizon Europe, the EU’s key funding program for research and development, aiming to tackle climate change, achieve the United Nations 2030 Sustainable Development Goals, and boost the EU’s competitiveness and growth. In February, Norway decided to suspend further environmental cooperation with Russia due to Russia’s war actions against Ukraine. Norway and Russia have been engaged in bilateral cooperation since 1992 in areas such as conservation of biodiversity, pollution prevention, marine environment, and monitoring of the air quality in the border regions of the two countries. In March, Norway and Germany signed two joint declarations to mark the beginning of closer cooperation for increased production of renewable energy and the development of green industries. These ambitious declarations outline the next steps in cooperation regarding hydrogen, battery technology, offshore wind, and carbon capture and storage. The goal is to achieve shared climate goals, create new green industries and jobs, and strengthen energy security between the two countries. In April, Norway and the EU reached a political understanding in relation to ensuring sustainable fishing and granting access for EU fleets fishing in the Northeast Arctic, an area comprising the waters around the archipelago of Svalbard and the international waters of the Barents Sea. First, the understanding reiterates Norway and the EU’s international legal obligations to ensure sustainable management of marine living resources in the Northeast Arctic. Second, the understanding allows EU fleets that are fishing for cod in the waters around the archipelago of Svalbard to continue fishing, in line with their historic fishing rights. Third, reference was made to a continuation of established practice for setting the limit for total allowable catch (TAC) for EU vessels fishing in Svalbard waters in its regulations. This allowed the EU to set a final TAC of 19,636 tons for polar cod through amending the 2022 Fishing Opportunity Regulation, which replaced the previous TAC of 4,500 tons, which expired on by the end of April. In July, Norway signed a new cooperation agreement with the United Nations Environment Programme (UNEP) of approximately US $53 million (NOK 520 million). The new agreement will, for example, provide funding for UNEP’s three new thematic funds to address achieve Climate Stability, Living in Harmony with Nature, and a move Towards a Pollution-Free Planet (<https://www.unep.org/news-and-stories/story/norway-steps-support-unep-landmark-partnership>). In September, Norway and Tanzania issued a joint statement on the continuation and expansion of their climate partnership, which has been ongoing since the two governments signed a memorandum of understanding in 2008. The aim of the renewed bilateral cooperation is, among other things, to strengthen, implement, and realize Tanzania’s climate policy and ambitions. Some new thematic areas that were proposed include support for national climate implementation and increased support for international climate finance, and support for decentralized climate finance and investments. The partnership also aims to address climate change as a cross-cutting issue in the agriculture and energy sectors under the current programs supported by Norway. In September, a memorandum of understanding was signed between Norway and Indonesia, reaffirming the parties’ intention to enter into a climate partnership to support Indonesia’s Forestry and Other Land Use Net Sink 2030 Operational Plan and Norway’s support for Indonesia’s results in reducing emissions from deforestation and forest degradation through performance-based contributions. In November, the governments of Norway and Switzerland met to explore bilateral cooperation on carbon capture and storage (CCS) and carbon dioxide removal. Norway has more than twenty-five years of experience in subsea carbon dioxide storage with CCS projects such as Snøhvit and Sleipner. The Norwegian full-chain CCS project, Longship, represents one of several projects paving the way for CCS as a tool to decarbonize hard-to-mitigate sectors. For Switzerland, with more limited carbon dioxide storage potential, international cooperation is essential to contribute to the Swiss goal of net zero greenhouse gas emissions by 2050. The ambitious climate and environmental policy and accompanying regulatory measures at the EU level continue to influence Norway’s legal obligations. According to the dualistic system of the EFTA states, the obligation to implement an EEA regulation in Norwegian law takes place through incorporation. With large parts of the EU legislation from comprehensive packages of measures, such as the EU Green Deal, considered EEA-relevant, Norway may in the next years expect further developments in areas relevant to, for example, climate, energy, industry and the circular economy, construction, transport, food, ecosystems and biodiversity, and green financing. In January, the regulation relating to emission requirements for vehicles in connection with public procurement for road transport entered into force. This regulation has been changed several times the last few years, and a new version of the regulation was announced in December (and will come into force in January 2023). By stipulating requirements for zero emissions in public procurement of passenger cars, light vans, and city buses, the regulation seeks to fulfil Norway’s obligations under EU Directive 2019/1161 amending EC Directive 2009/33 on the Promotion of Clean and Energy-efficient Road Transport Vehicles. Also in January, amendments to Chapter 7 of the Pollution Control Regulations, where Section 7-6 stipulates new limit values for air pollution, were made applicable to Norwegian pollution legislation. The amendment has resulted in lower permissible limit values, and lowered the threshold for when measures to improve air quality should be initiated. The legislative amendment, which was primarily intended to ensure safe outdoor air quality for the population and ecosystems in Norway, was also intended to make the regulations easier to comply with and the duties more achievable. Furthermore, it implemented EC Directive 2008/50 on Ambient Air Quality and Cleaner Air for Europe, which is part of the EEA Agreement. In June, new legislation on organic production became applicable to Norway. The legislation is based on EU Regulation 2018/848 on Organic Production and Labelling of Organic Products, also known as the basic act, which regulates conditions under which agricultural and aquaculture products, foodstuffs, and feed can be labelled as organic. Further detailed secondary legal acts are based on this regulation. The basic act includes requirements that safeguard consumer trust, plant health, animal and fish health, animal and fish welfare, and the environment. In December, EU Regulation 2020/852 on the Establishment of a Framework to Facilitate Sustainable Investment (Taxonomy Regulation) and EU Regulation 2019/2088 on Sustainability-related Disclosures in the Financial Services Sector (Disclosure Regulation) entered into force in the EEA Agreement. To implement these regulations in Norwegian law, in December 2021 the Norwegian Parliament adopted the Act on the Disclosure of Sustainability Information in the Financial Sector and a Framework for Sustainable Investments (Sustainable Finance Act). The Act, which was projected to come into force in 2022, was made applicable to Norwegian legislation from January 2023 onwards. The accompanying Regulation to the Sustainable Finance Act was announced in December 2022, and will come into force in January 2023. The taxonomy of sustainable economic activities is a classification system that aims to facilitate financial markets to invest capital in profitable sustainable activities and projects. Sustainable finance is one of the key areas of the European Green Deal, which the EU presented in 2020, to make Europe the first climate-neutral region in the world by 2050. The taxonomy shall also contribute to preventing greenwashing and form the basis for standards and labelling schemes for green financial products and instruments. While the taxonomy does not set requirements for private or public investments as such, it is a tool intended to make it easier for financial market participants to assess whether investments are in line with climate and environmental goals and provide companies with better opportunities to phase out activities that are not or less sustainable. The Taxonomy Regulation establishes the overall framework for the classification system and defines what constitute a sustainable activity. For an activity to be classified as sustainable, it must meet three criteria: (i) contribute significantly to at least one of six environmental goals; (ii) not be detrimental to any of the other environmental objectives; and (iii) the activity must be carried out in compliance with minimum safeguards connected to social and governance relations. The six environmental objectives are: (i) climate change mitigation; (ii) climate change adaptation; (iii) sustainable use and protection of water and marine resources; (iv) transition to a circular economy; (v) pollution prevention and control; and (vi) protection and restoration of biodiversity and ecosystems. The European Commission works continuously to establish detailed criteria for when specific activities can be defined as sustainable and are set out in so-called delegated acts. The first set of criteria came into force in the EU in January 2022 (and will come into effect in Norway in January 2023): Commission Delegated EU Regulation no. 2021/2800 (<https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32021R2139>). Since Norway had not fully implemented the EU regulations in 2022, the reporting requirements for Norwegian companies were more limited. However, these requirements will increase incrementally as implementation increases over the next couple of years. The Disclosure Regulation provides the general regulatory framework for the information that must be published by financial market undertakings. This regulation stipulates, inter alia, requirements for disclosure of information on how enterprises’ investments and operations contribute to sustainable development, and requirements for information to be provided when selling financial products. The participants obliged to deliver these obligations are financial market participants and financial advisers, as referred to in Articles 2(1) and 2(11) of the regulation. Besides the above-mentioned EU legislation, Norway legislated a general ban on heavy fuel oil throughout Svalbard’s territorial waters in January. The prohibition entails that it is not permitted to use or carry on board petroleum-based fuels with a higher viscosity, density, or solidification point than permitted for marine gas oil. Marine gas oil is defined in separate regulations issued by the ministry. The purpose of the ban is to avoid heavy fuel oil spills and limit pollution in the event of shipping accidents in the territorial waters around Svalbard by requiring diesel types that produce less severe pollution in the event of a spill. The prohibition is authorized by Section 82a of the Svalbard Environmental Protection Act. A ban was introduced in 2009, but it only applied in the protected areas in Svalbard. In recent years, however, shipping in the Arctic has gradually increased. A general ban on heavy fuel oil in Svalbard is therefore an important step towards the phasing out of heavy fuel oil as of 2024, which was decided by the International Maritime Organization. However, the ban will not enter into force for ships carrying coal or general cargo to and from Longyearbyen and Barentsburg until 2024. In June, the renewed Norwegian Plastics Strategy was announced. The Strategy brings together the government’s plastics policy and describes most of the measures that have been or are currently being implemented to reduce plastic litter and plastic pollution. Through targeting the entire life cycle of a plastic product, such as product frameworks for plastics, measures to reduce consumption, plastic waste from sea-based sources, and waste management, the Strategy takes a comprehensive approach. Also in June, the Norwegian government presented the Green Industrial Initiative. This roadmap represents a plan for the Norwegian government’s work to promote green industry. The document sets out ambitions, instruments, and measures to bring Norway into a low-carbon emission through the help of seven industries: offshore wind; hydrogen; batteries; the maritime industry; carbon dioxide management; forestry, wood, and bioeconomy; and the process industry. The government aims to facilitate faster development of projects within the areas, including through stronger capital instruments. As part of its green industry strategy, Norway also launched its first battery strategy, which represents ten actions for how Norway will further develop a holistic and profitable battery value chain, from sustainable mineral extraction to battery recycling. In September, the current Norwegian government proposed, for its 2023 budget, a mandatory resource rent tax on Norwegian aquaculture and onshore wind power and an increase in the already existing resource rent tax on hydropower. The main argument behind the proposal is that the power producers and the aquaculture industry earn billions from the exploitation of common resources, and that society should get back more of the value created. Some of the proposals have been met with strong opposition from some communities, especially the aquaculture industry. To produce salmon, trout, and rainbow trout, a ground rent tax with an effective rate of 40 percent, and a bottom deduction of 4,000–5,000 tons, was proposed to ensure that only the largest companies pay the ground rent tax. The proposal is based on recommendations by the Aquaculture Tax Committee in NOU 2019:18, Taxation of Aquaculture Activities. The Committee found that the seafood industry, as the largest Norwegian export industry on the mainland, held licences for aquaculture of food fish with a market value of approximately NOK 200 billion in 2019. It is estimated that the industry has paid just under 7 billion NOK to the public sector, corresponding to approximately three percent of the value of the permits. Changes to the resource interest tax have already been proposed, and it remains to be seen what will be adopted in this context. In October, the Norwegian government presented the white paper Meld. St. 6 (2022–2023): Greener and More Active State Ownership: The State’s Direct Ownership of Companies. Societal development patterns and pressures, such as climate change, energy transition, international unrest, increasing inequality, and urbanization, affect the activities of the state-owned companies and how the ownership should be organized. With this white paper, the government seeks to demonstrate how state ownership may contribute to profitable and good services, and responsible corporate governance to respond to some of these challenges and contribute to accelerate the transition of the entire Norwegian business sector to become a low-emission society. The white paper lists the government-owned companies and explains why it has direct ownership interests in these and how the ownership is exercised, including the government’s principles for good corporate governance and expectations of the companies. In November, Norway’s strategy for promoting food self-sufficiency was released in development policy: Combining Forces against Hunger: A Policy to Improve Food Self-sufficiency. This strategy seeks to follow up on the ambitions set out in the Hurdal Platform, where the current government has made food safety and the fight against hunger a key priority in Norwegian development policy. This strategy’s four main goals are to: (i) increase local climate-resilient food production; (ii) increase local value creation and incomes for food producers; (iii) reduce malnutrition and undernutrition; and (iv) reduce the scale of hunger crises. During the autumn, the Norwegian Ministry of Finance presented its Prop. 1 LS (2022-2023) Proposition (Proposition and Proposed Resolution) for Fiscal Year 2023 Taxes, Duties and Customs 2023. In the document, it was proposed to increase taxes on quota-obliged and non-quota emissions of greenhouse gases to ambitious levels: the carbon dioxide tax was proposed to be increased from today’s NOK 590 per tons to NOK 2,000 per tons in 2030. This corresponds to an increase in the carbon dioxide tax of 15 percent every year until 2030, and a halving of today’s emissions. Together with participation in the EU’s quota system, taxes on greenhouse gas emissions are the most important instruments in Norwegian climate policy. It remains to be seen whether and how these goals will be implemented at a political and legal level in the coming years. There were no high-profile cases in the field of environmental law this year.