I’ve just returned to Norway after a month home in Canada. Before too much time wears on, I wanted to share with you a few thoughts on what I’ve been learning.
I’m curious about how climate policies are perceived to impact competitiveness. Before I dive into this, here is a very brief primer on competitiveness. Be forewarned, it is a rather nebulous concept with many competing definitions. The World Economic Forum defines competitiveness as ‘the constellation of institutions, policies, and other factors that determine the level of productivity of a country.’ Productivity is seen by many economists to be the secret sauce that drives economic growth. Improve your competitiveness, and you increase your ability to attract investment dollars and sell your goods and services. For the purposes of this blog post, I’m less interested in the most accurate definition of competitiveness. Rather, I’m keen to learn how people think climate policies will impact competitiveness.
This brings us back to my dissertation research. One way you can get at this curiosity of mine is by asking, do climate policies help or hinder the ability for a country to export its fossil fuels? In Canada, a case I know decently well, climate policies have been front and centre in the ability to get oil sands to market. Recall Keystone XL or any of the other pipeline debates. You had folks lining up on either side of the debate, enthusiastically sharing how climate policies would either enable or sink the odds of a pipeline being built by improving or eroding competitiveness.
How about in Norway? I’ve interviewed about three dozen people so far, with more to come. Most of my respondents want that to be true – that climate policies help give Norway’s oil and gas industry the edge over its competitors and help grow its share of the downstream market.
However, I can say with reasonable confidence that climate policies do not make a lick of difference in being able to market Norway’s oil and gas. Why? The major competitor for Norwegian gas is Russia – a country that three times in recent memory has shut the taps off to Europe: in 2006, 2009 and 2014/2015. Reliability of supply for Europeans trumps upstream climate concerns. Norway also has more options for its oil exports. Unlike Canada, which sells 99% of its exports to the United States – an effective monopsony – if a downstream buyer does not want to purchase Norway’s oil and gas, Norway can simply sell the fossil fuel to someone else who does not consider the climate implications of what they are purchasing. In this context, price and reliability are far more important for the purchasers of Norway’s oil and gas products than the emissions profile of these products.
Those I spoke with from the Norwegian oil and gas industry still maintain that the country’s climate policies give them a competitive edge. At the level of discourse, Norway clearly has a leg up on its competitors. What other oil-exporting nation can boast about a very high carbon tax (around US$70/tonne), nearly emission-free onshore power, or record levels of electric vehicles? These policies are also talking points that allow the country to wield significant soft power at international climate talks and other international venues.
But have these climate policies caused oil and gas companies to make a decision to reduce emissions, a decision that they would not have made otherwise? Is there additionality? That answer is much more complex. Oil and gas industry representatives that I speak with note how there is next to no venting or flaring of gas on offshore platforms. But this was as a result of gas conservation measures in place since the 1970s, well before climate change was on the world’s radar.
Industry reps also bring up the case of carbon capture and storage at the Snøhvit and Sleipner offshore platforms. Both of these platforms tap into fields that have such high levels of carbon dioxide that they do not meet quality standards needed to market that gas. So, the CO2 is captured and reinjected to stimulate more oil and gas extraction and avoid paying a carbon tax. When asked if these CCS projects would have gone ahead without a carbon tax, some industry respondents I spoke with indicated they likely would have. Marketing these projects as ‘cleaner’ in this case is peripheral to the oil and gas being marketable at all.
For Norway, there appears to be a large discrepancy between the weight ascribed to its climate policies by downstream markets (i.e., little to none) and by upstream producers and the Norwegian state (i.e., heaps). Norway and upstream producers maximize the publicity surrounding the country’s climate policies and laud their competitive edge over other more polluting oil and gas producers because they know that European purchasers of their fossil fuels give little if any thought into the upstream emissions. How competitiveness is perceived and marketed matters.
For me, as a political scientist, this is a fascinating observation. It speaks to the social construction of competitiveness. Competitiveness—a seemingly sterile economic term—is not an objective figure but a subjective concept that can be instrumentalized or activated to further the interests of a particular group, be it the state, the firm, or a social movement. Business and political elites then compete with other civil society actors to frame competitiveness around climate action. Comparing how certain frames take hold can provide valuable insights into how ambitious climate policy is advanced or resisted and the role of different actors in shaping climate policy outcomes.
Where does that get us? I’m not sure, yet. Australia is still to come this fall and it’s unclear how the competition will be framed by various antipodal players. I do know that in explaining how climate policy has developed in Norway, Canada, and Australia, I will be able to rally sufficient evidence to show that framing is one of the causal mechanisms used to catalyze and contain climate policy. To be certain, many other factors are present in these cases. To understand why certain frames hold and others don’t, I’ll need to look at power. Who has power and how is that power reproduced in various institutions? How do these institutions withstand or succumb to climate policy change? All these questions and more remain for me to muddle through.