Case Study: Norway

Merry Christmas!  

In my previous post I mentioned a lot of challenges for EVs. That’s not to say that they can’t be overcome, and one country that’s doing extremely well is Norway.

First, some facts and figures:

• 28% of all new cars sold in Norway during the first 7 months of 2016 were BEVs or PHEVs
• In Norway, in 2014, Tesla’s sales of their Model S EV were greater than Ford’s sales of any of their models.
• When the Tesla Model S was launched in Norway in 2013, drivers paid a premium to get them second-hand so they didn’t have to wait!
• In March 2014, Norway’s all time sales record of any car, was broken by an Electric Vehicle
• Norway has the highest number of EVs per capita in the world
• Norway was the first country in the world to have an EV as the most popular car sold

Self explanatory chart from Wikipedia- Nice Going Norway!

There’s even more good news – Norway has some of the lowest carbon electricity in the world with 98% of its electricity production coming from renewable sources. 

Great. Well done Norway!

But how have they achieved all this?

Incentives, incentives, incentives (Oh and a bit of infrastructure too!)

Let’s go through the incentives from start to finish:

To begin with, EV purchases are exempt from sales tax at 25%. You also don’t have to pay the registration tax which is an average of $12,500.

Now that you’ve got your EV, you’re exempt from pretty much all tolls. No paying road tolls or tunnel charges. If you want to take a ferry, you’ll have to pay as a passenger but your EV will travel free (whereas ICEVs have to pay a car carrying charge).

When you’re driving around you can use bus lanes to beat the traffic and when you get to your destination you can park for free. 

This experiment done by a Norwegian automotive journalism group showed that they were able to do a journey that would otherwise take 51 minutes, in 19 minutes using bus lanes in an EV

It’s also possible that you’ll need to charge up your EV whilst you’re parking, and you can do so, for free, at a number of charging points. Speaking of charging points, there are 2,030 of them but of course you may want one at home which would be subsidised.

As you can see, Norway is leading the charge with tax breaks and other ongoing incentives

In fact, the current drive to go electric (sorry for the multiple puns) has been so successful that the authorities have hit their target of 50,000 EVs by 2017 two years early. 

Just a few weeks ago, Norway registered their 10,000^th electric vehicle! The government has now announced that these ‘introductory’ incentives will be re-evaluated and in the future, as more EVs are registered (the aim is 400,000 by 2020) it will be necessary to remove some of the great incentives.

In fact, the current drive to go electric (sorry for the multiple puns) has been so successful that the authorities have hit their target of 50,000 EVs by 2017 two years early. Just a few weeks ago, Norway registered their 10,000^th electric vehicle! 

The government has now announced that these ‘introductory’ incentives will be re-evaluated and in the future, as more EVs are registered (the aim is 400,000 by 2020) it will be necessary to remove some of the great incentives.

This is all great, but where is the money coming from?

You might say that they were hoping that you’d never ask.

Norway is able to provide all these subsidies because it has a lot of income, in fact enough to give it the largest sovereign wealth fund in the world at 880 Billion USD. How come Norway has that much spare cash lying around?

OIL 👀

In fact, until 2006, the fund was known by its much more honest name of The Petroleum Fund of Norway. Today it’s known as the The Government Pension Fund Global but it’s still referred to as ‘The Oil Fund’.

Norway has got really lucky with the amount of fossil fuels its sitting on and is therefore able to extract. It’s Western Europe’s biggest oil producer and the third largest exporter of natural gas in the world.

Those sales give Norway the funds to ‘subsidise its green lifestyle’ as well as build up the oil fund (in fact, there’s been so much oil income that until this year, no withdrawals had been made.

This is the first year that Norway has had to tap into its Sovereign Wealth Fund. Is it sustainable for the future?

You might have noticed, there seem to be a few paradoxes here.

Norway, has earned money exporting fossil fuels and then uses the money to fund domestic fossil free initiatives. Martin Skancke a former government official and expert on the oil fund claimed in this interview that these green energy initiatives were commercially oriented investments and not simple subsidies but that’s not the issue here.

The process that I’ve just described may not sound like a problem but when you think about it, it becomes apparent that it’s not strictly true that all of Norway’s renewable energy is low-carbon.

Let’s think back for a moment… we agreed that shouldn’t consider an EV to be running on zero-carbon fuel if the electricity was produced in a manner that accounts for carbon emissions.  

The thing is, this is kind of the same.

If we consider Norway’s renewable energy projects as the EV, those low-emission power generation projects are only affordable as a result of Norway’s fossil fuel exports and therefore, the burning of fossil fuels.

So in other words, Norway utilises fossil fuel usage in other countries to facilitate clean energy usage at home.

Did somebody say carbon laundering?

Maybe I’m being too harsh on Norway though, there is always the argument that this slightly dubious short term strategy is necessary in order to facilitate a long term move towards green alternatives.