Norway

Norway’s economy has increasingly diversified; a large share is now accounted for by the service sector (ca 60%) and the industrial sector (ca 30%). Income disparity, measured by the Gini coefficient, is generally lower in Norway than in other European countries. The oil and gas sector’s contribution to the economy remains substantial, representing about 44% of total exports and 20% of total investments. However, the share of petroleum in gross domestic product (GDP) is shrinking, and environmental expenditure has reached about 1.2% of GDP for mainland Norway. Effective carbon rates, which measure explicit and implicit taxes on emissions, have increased over the years, though with sectoral variation.

Through its International Climate and Forest Initiative, the country has pledged up to NOK 3 billion a year to the global effort to mitigate climate change. However, Norway’s relatively high consumption of goods and services remains a sustainability challenge, as it leads to significant GHG emissions, with a large share of the emissions embodied in imported goods occurring in other countries. Consumption patterns also lead to other environmental impacts globally.

Awareness of the need to address consumption and production patterns is growing among societal actors. Transitioning to a circular economy is an important step to reduce emissions, the loss of biodiversity and the pollution load. In addition to having implemented EU regulations on circular economies, Norway has also developed national initiatives. First, the government has established an expert group to conduct a comprehensive assessment of policies and measures (regulatory, financial and informative) that effectively promote a circular economy in Norway. Its report is to be completed in 2025. Second, the government has invited actors from all parts of society to contribute to the development of a national ‘mission’ on the circular economy. Through a broad, mobilising and innovative approach, the mission is expected to identify concrete solutions to societal and structural challenges. Third, national regulations are already set in motion: climate and environmental requirements must be set for all public procurements, and trade regulations on second-hand products have been revised to facilitate circular business models and increased second-hand trade.

The food system

Norway’s food industry is among the country’s largest in terms of value creation. About 46% of the food consumed in Norway is domestically produced. Seafood dominates production and export, whereas processed foods and agricultural products are often imported. Though well positioned to reach the sustainable development goals, the Norwegian food system must be transformed in a more sustainable direction, addressing food consumption, production and waste, and engaging all involved in the food system.

National guidelines recommend consuming more whole grains, vegetables and fruit and less red meat. Plant-based eating has become more popular. People are becoming more conscious of the potential drawbacks of highly processed food, showing an increasing interest in unprocessed food. A recent campaign to increase fruit and vegetable production and consumption was initiated by stakeholders involved in the fruit and vegetable value chain.

Processed goods now employ less sugar and salt thanks to a consensus to pursue healthier consumption. Most items containing palm oil were phased out before 2020 as a result of pressure from consumers and non-governmental organisations, such as the Rain Forest Foundation Norway. Some grocery chains offer a digital overview of customers’ climate footprint based on their food consumption. The initiative REKO-ringen, a network for the direct sale of locally produced food, targets local producers.

Several projects have enhanced climate-smart agriculture primarily through networks of pilot farmers. The national programme for soil health is implemented through the regional environment programme and other agricultural and environmental measures, research, projects and schemes. The climate agreement between farmers’ associations and the government includes actions to reduce emissions and increase carbon uptake. The agreement states that by 2025 all dairy farms will have access to the climate calculator. The national aim is to provide methane inhibitor in all feed for ruminants by 2027. In 2022, funding for low-emission techniques for spreading livestock manure was given for about 25% of all agricultural land in Norway. This is equivalent to a threefold increase since 2016, and about a 9% increase from 2021.

National edible food waste levels have reduced by approximately 10% since the establishment of a voluntary agreement in 2017. The agreement covers both public and private stakeholders across the entire food supply chain. Several innovative measures have been implemented, such as QR code systems for inventory management and product control of fresh foods, and app-based sales of foods with a short shelf life. While there are many positive initiatives emerging, further efforts are needed for Norway to stay on track to meet the EU’s and the UN sustainable development goals’ reduction targets by 2030.

The energy system

Norway’s low-carbon transition is comparatively well advanced in the OECD area, mostly due to the country’s widespread use of renewables – primarily hydro and wind power.

Norway has been a part of the EU emissions trading system since 2008. This has given incentives to various industries to reduce emissions. The purchase and use of electric cars have also been subsidised and facilitated, combined with high taxes on the purchase and use of fossil fuel cars. This has contributed to Norway having the highest number of electric vehicles per capita in the world.

The use of fossil oil in homes and commercial buildings has been forbidden by law since 2020. New regulations phasing out the use of fossil gas for heating buildings and the use of fossil fuels in construction are also expected to be passed soon.

Accelerated decarbonisation is expected. Increased electrification reduces energy use for transport, as electric vehicles are more energy efficient than fossil fuel vehicles. The same applies in agriculture, aquaculture and construction, where a gradual electrification of the machinery fleet is expected. Within households and services, more energy-efficient buildings, heating equipment and electrical appliances lead to expected lower energy use towards 2030.

One national energy target is to replace some of the natural gas used for offshore electricity production with renewable electricity. For instance, Hywind Tampen, the world’s first floating wind farm built specifically to power offshore petroleum installations, was opened in 2023. Further electrification of petroleum installations is planned in the near future. The Norwegian Water Resources and Energy Directorate is also financing projects to assess hydropower’s impact on nature.

By law, a certain share of all fuel sold to road traffic must be biofuel. From 2023, turnover requirements for biofuels in fuels used for navigation and non-road mobile machines were introduced, and a requirement for biofuel in aviation was introduced in 2020. According to the current target in Norway’s national transport plan, by 2025 new passenger cars and vans should be zero-emission vehicles and new city buses should be zero-emission vehicles or use biogas.

The country is energy self-sufficient with a surplus of renewable electricity in normal years. Crude oil and natural gas amounted to 62% of the total value of Norway’s goods exports in 2023.

Norway has a relatively high energy consumption per capita, above the OECD average. The high energy consumption per capita is mainly due to high energy consumption in the industrial sector, as well as households’ heating needs and emissions embedded in construction materials and furniture. Recent analysis estimating the GHG emissions from Norwegian consumption shows that imported goods significantly contribute to these emissions.

The mobility system

The proportion of new car sales in Norway comprising zero-emission vehicles is on track to reach the national target of 100% in 2025. The share of zero-emission vehicles in the heavy-duty vehicle segment is also increasing, though progress is significantly slower. This is due to financial barriers (price / total cost of ownership), the lack of charging infrastructure and slower technological development.

While zero-emission technology is an effective way of cutting direct GHG emissions, indirect emissions resulting from vehicle and infrastructure production, land-use change and induced transport from urban sprawl remain largely unaddressed challenges. Although 40% of total investments in Norway’s quinquennial national transport plan are allocated to maintaining existing transport infrastructure, most of the remaining investments are allocated to new road infrastructure. This is likely to further cement car- and road-transport dependencies, intensifying environmental challenges, such as nature and biodiversity loss, local air pollution, and noise and light pollution, regardless of energy source.

A key measure in Norway’s climate mitigation strategy is the use of biofuels through biofuel mandates that cover road traffic, non-road machinery, domestic shipping and aviation. Almost all (99%) of the biofuel is imported, and animal fats and used cooking oil are the most-used feedstocks. Norway is estimated to consume 3% of the global production of biofuels based on waste and residues. A major barrier to the climate mitigation strategy is that biofuels from truly sustainable sources are scarce and costly. A mitigation strategy that rests on increased shares of biofuels is thus exposed to possible future volatility in terms of prices and availability, in addition to contributing to increased pressure on global land-use change. Despite increased consumer fuel prices, biofuel dependency has limited effect on transforming behavioural and technological change.

While the need to address transport volumes and incentivise modal shifts is increasingly being recognised, policy measures remain sparse. Key barriers to sustainable transformation lie in governance and transport planning structures. A mobility system that distributes loads efficiently to minimise environmental impacts requires coordinated governance across modes. So far, the Norwegian transport sector remains organised in silos, with individual state agencies overseeing subsectors. This tends to incite competition between modes and hinders coordination. National transport planning is based on traditional ‘predict-and-provide’ methods. Such methods further hamper the operationalisation of transport demand management and modal shift because planning tools are incapable of producing the required data, making it more difficult for institutions to design appropriate policies. Processes to address these barriers require acceleration to reach set emission reduction targets.