In the same way that hydropower, oil and natural gas have been crucial prerequisites for the development of the welfare state and jobs, renewable energy should be the next chapter in the history of Norway as an energy nation.
Major green opportunities
If Norway is to take a more decisive role in the changes taking place in energy markets, we should in principle make it as profitable to invest in renewable energy as in fossil-based energy.
Members of the Norwegian Shipowners’ Association see commercial opportunities in Norway taking the lead in the development of new solutions on a large scale. Reduced emissions from long-distance transport and other industrial emissions are closely linked to the energy transition and growth in demand for renewable energy, as well as carbon capture and storage.
The significant and highly valuable utilization of Norwegian energy resources has been realized thanks to wise and predictable regulations and framework conditions from the Norwegian authorities. This is also crucial if climate goals are to be reached.
Offshore wind – a new Norwegian industrial adventure
Norway’s strong position in maritime and land-based industry gives us a unique starting point for taking a leading role in the development of floating offshore wind. This is an energy source with great potential for all countries in the world with abrupt continental shelves and deep oceans.
Offshore wind is no longer a vision for the future – offshore wind is an industry the members of the Norwegian Shipowners’ Association are already engaged in. There are significant deliveries from Norwegian industry and the shipping industry towards bottom-fixed offshore wind today. About 30 per cent of shipping companies state that they have turnover related to offshore wind, amounting to NOK 6.3 billion. This is expected to increase to seven billion in 2021.
In particular offshore service shipping companies see opportunities in the offshore wind market. Just over half of shipping companies in this segment have activity in offshore wind. Within five years, this share will increase to two out of three offshore service companies.
Norwegian-based offshore wind industry could potentially achieve turnover of nearly NOK 85 billion in 2050. It is positive that the government opened the areas Utsira North and Southern North Sea II for offshore wind power on 1 January 2021. This means that the industry can use the Norwegian Continental Shelf (NCS) as a test arena to develop new technology and green solutions.
Eight of ten consider the home market as critical
The Norwegian Shipowners’ Association believes it is high time that the Norwegian authorities establish an ambition for the Norwegian offshore wind industry and facilitate exploitation of the competitive advantage of the Norwegian maritime cluster. Eighty per cent of Norwegian Shipowners’ Association members believe that a domestic market for floating offshore wind is a prerequisite for being able to compete internationally.
We need proactive policies
Better access to projects is highlighted as the most important factor for further growth in the offshore wind market, in addition to stronger profitability and access to capital.
The fact that few mention «better access to competent labour» illustrates the unique position Norwegian shipping companies already have in this market. The high level of employee competence, together with the companies’ experience from the offshore industry, makes the maritime industry extremely well equipped for this new market. At the same time, Norwegian authorities need to promote development.
A framework must be established that ensures a broad diversity of players on the NCS, among other things through qualitative award criteria and not strictly through auctions, and that financial framework conditions must be provided that make it attractive to invest in offshore wind in Norway.
The authorities should quantify an objective for the establishment of commercial offshore wind production on the NCS and for Norwegian deliveries to the offshore wind market. The goal should be installation of three gigawatts of capacity on the NCS by 2030. We consider a target of a ten per cent share for Norwegian companies in the global offshore wind market by 2030 to be both realistic and ambitious.
For the maritime industry, establishing basic national framework conditions to promote offshore wind power development – and a new Norwegian industrial adventure – is a matter of urgency.
The EU’s offshore wind initiative is good news for Norway
More than half of income stems from the NCS
Norway is the world’s most advanced maritime offshore nation, with the world’s second largest fleet of offshore vessels. For many decades to come, oil and gas resources will create great value and income for society and contribute to securing jobs, value creation and welfare throughout the country.
Norwegian shipping companies had NOK 113 billion in total turnover from the petroleum sector in 2020. This constitutes a share of the total revenue for shipping companies of 52 per cent. Rig companies derive all their income from the petroleum sector.
Offshore service companies reported 87 per cent petroleum-related revenues in 2020. Deep sea shipping companies report that a quarter of their revenues are related to deliveries to oil and gas companies and the offshore supplier industry, while the corresponding figure for short sea shipping companies is only seven per cent.
Corona relief measures not effective enough
The oil price fall in 2014 took a heavy toll on offshore shipping and rig companies. Just before the corona pandemic hit, there was higher activity and cautious optimism among these companies.
Now, the offshore segments still face a demanding situation, with high layup figures, low rates, and a short time horizon on contracts. The situation is not sustainable, and the offshore segments may continue to be characterized by further restructuring and refinancing in 2021.
Eight out of ten believe that the pandemic will lead to operational challenges in 2021, while none of the respondents believe that they will be unaffected. As of January 2021, 144 offshore vessels are in layup. At the same time, 76 per cent of offshore service shipping companies and 62 per cent of rig companies believe that the policy package has been of little or no help.
On the other hand, several of the member shipping companies say that the corona measures in the petroleum tax regime are expected to take effect over the next two years.
Continued stability is important
We believe that the Norwegian oil and gas industry must be further developed within the framework of a stricter climate policy. The power of expertise and development in the petroleum industry is also needed to develop new energy industries on the NCS, including offshore wind, hydrogen and carbon capture and storage. In order to ensure adaptability, it is crucial to have sufficient competence and capacity in the maritime supplier industry on the NCS.
Predictability and stability are identified by shipping companies as clearly the most important factors in ensuring an attractive Norwegian Continental Shelf. Favourable framework conditions for the energy industry are crucial. Therefore, a steady and stable pace must be maintained when it comes to allocating new areas for petroleum activity, both in terms of licensing rounds and allocation in predefined areas. A broad diversity of players also ensures healthy competition.
Ocean minerals – new resources for a green future
To realize the green shift, significant amounts of metallic minerals will be needed. Norway is well positioned to take part in this development due to our large continental shelf, extensive experience with resource management, and high-tech environments in the oil and gas and maritime sectors.
The importance of developing technology that enables sustainable and responsible operations will be crucial to developing this industry.
It is essential to have good framework conditions for realizing extraction of minerals from the seabed on the NCS. There is uncertainty surrounding where the most interesting resources are located, their makeup and volume.
Therefore, mapping is important to obtain sufficient knowledge as a basis for a resource assessment, including identifying the most interesting commercial deposits. The authorities must follow up the concession process and ensure attractive and predictable framework conditions.
The Norwegian Shipowners’ Association encourages the authorities to:
- Maintain predictability in the allocation of new areas for petroleum activity, both in terms of licensing rounds and allocation in predefined areas (APA)
- Review the competitive situation on the NCS with a view to facilitating greater player diversity and healthy competition
- Implement an energy policy that helps to provide access to renewable energy on competitive terms
- Appoint a fast-working committee to propose framework conditions that make it as profitable to invest in renewable energy as in fossil energy
- Establish infrastructure for transport and storage of CO2
- Establish a national goal to develop Norway as an energy nation, and introduce a goal of three gigawatts of installed offshore wind capacity on the NCS by 2030
- Establish a framework and licensing system that facilitates the rapid and efficient development of a leading domestic market for offshore wind
- Establish a national sector agreement between businesses on land and at sea, together with the authorities, policy instruments, research communities and other parts of the cluster
- Ensure that Norway works towards an international ban on non-carbon neutral fuels from 2050
- Ensure that public funding through Enova, Innovation Norway and the export financing schemes stimulates fleet renewal
- Engage in active dialogue with the EU to secure Norwegian interests in the follow-up of the recently launched strategy for offshore renewable energy in Europe
- Follow up the ongoing concession process for mineral activities on the Norwegian Continental Shelf. Ensure attractive and predictable framework conditions, including tax rules, that are important for the development of seabed minerals on the NCS