Environmental Concerns

The fossil fuel industry faced strong pressures from authorities and groups seeking to address CO2, one of the major causes of climate change. Petroleum and gas combustion were leading sources of CO2 – a greenhouse gas (GHG) that was driving global warming. While the dangers of GHGs had been well known since the early 1990s, efforts to limit their production had been halting for the next few decades. In the 2010s, however, intergovernmental action along with new technologies were furthering efforts to limit the production of CO2.

International efforts to curb GHGs started with the Earth Summit in 1992, which resulted in the United Nations Framework Convention on Climate Change (UNFCC). A subsequent international conference held in Kyoto in 1997 led to a series of protocols (not approved until 2005) that sought to establish limits for GHGs as well as establish mechanisms to finance technologies to limit the release of GHGs. However, the United States never ratified the protocols and many countries made only half-hearted efforts to implement the agreement.

For its part, the EU made more coordinated efforts to try to curb GHGs, including an ambitious cap and trade system that collapsed during the 2007-09 financial crisis. In subsequent action, the EU adopted a target of 20% renewable energy by 2020, though GHG levels continued to increase on the continent.

While governmental efforts to curb GHGs were proving to have limited effect, in the decades since Rio, various companies had introduced new technologies that showed promise in addressing the issue. The primary emphasis of these technologies was on substituting alternative energy sources for carbon-rich fossil fuels. Renewable technologies such as wind farms, solar collectors, and hydro projects had been deployed to reduce the importance of fossil fuels in powering the electrical grid. Other technologies like electric vehicles and battery storage of electricity were being developed to further exploit cleaner energy sources and uses.

In December 2015, the nations of the world met in Paris to try once again to establish limits to GHG emissions. The resulting agreement was a legally binding international treaty, adopted by 196 parties to limit global warming to well below 2 and preferably to 1.5 degrees Celsius, compared to pre-industrial levels. The Paris Accord website noted,

"The Paris Agreement is a landmark in the multilateral climate change process because, for the first time, a binding agreement brings all nations into a common cause to undertake ambitious efforts to combat climate change and adapt to its effects.^[1]

In signing the international treaty, the nations agreed to substantially reduce global greenhouse gas emissions to limit global temperature increases, review their commitments every five years, and provide financing to developing countries to mitigate climate change, strengthen resilience, and enhance abilities that would help to adapt to climate impacts. Although there were no penalties for countries that fell behind on the Paris Accord goals, countries continued to work together and report on their progress.

With ambitious goals in mind, many governments began to implement strong incentives for renewable energy. The subsidies, whether for renewable energy sources, electric cars, or cleaner heavy industries, were designed to accelerate the movement away from petroleum products. In many jurisdictions, the new technologies did not even need subsidies to be cost-effective as technologies such as solar and wind were reaching “grid parity,” meaning they were producing electricity at a cost equivalent to or below that of traditional sources. Not all of the incentives moved industry entirely away from fossil fuels, as many utilities were transitioning from coal or oil to natural gas to generate heat and electricity since natural gas produced fewer emissions than coal or oil.

Norway and Climate Change

Most Norwegians were of two minds when it came to limiting GHGs. They recognized the positive effects of the oil and gas revenues from the Norwegian Continental Shelf. At the same time, most Norwegians were strong supporters of efforts to mitigate climate change, and environmental awareness was high in the country.

Norway had been blessed with natural resources that the country’s government had been eager to protect. Norway’s many rivers and rugged geography made it possible for over 91.5 % of the country’s energy to come from hydroelectric facilities. Around 17% of the mainland and 65% of the Barents Sea were protected by national parks, reserves, or other conservation designations. The country had an official ocean policy to promote the conservation and sustainable use of marine ecosystems.

Norway had been an early mover in international forums on climate change. As early as 1989, Prime Minister Gro Harlem Brundtland led Norway to become the first in the world to set a concrete national CO2 stabilization target, aiming for the 1989 level by 2000. In a speech in 1991, she set a special CO2 tax, the first in the world. In a 1991 speech at an industrial conference, Brundtland expressed the urgency of the problem:

We cannot postpone dealing with global warming. We have enough scientific evidence about causes and probable effects to know that the costs of not acting will be very high and that a further delay of action will increase these costs even more.^[2] 

The Norwegian people had followed suit; a 2020 report found that a clear majority of Norwegians thought that they have a responsibility to cut greenhouse gas emissions. Norwegians had the highest percentage of electric car ownership of any country in the world. Businesses within Norway also responded. Even Statoil had been working to reduce its carbon footprint and make its oil and gas operations more efficient and cleaner.^[2]

Anders Bjartnes, editor of the website Energi og Klima, described Statoil’s dilemma in an in-depth strategic analysis. He pointed out that Statoil acknowledged the need to take drastic measures against climate change while persisting in a strategy aimed at expanding its oil and gas production globally. Bjartnes argued that the company could not forever embrace these opposing views, “where verbal concerns go in one direction while strategy and cash go in the opposite direction.”^[3]