The green petrostate

It’s an unusually bright day in Bergen, Norway’s second-largest city, as monocle joins a bus of cheery government and business delegates up the North Sea coast. Our destination is the small island of Øygarden and Northern Lights, a carbon capture and storage (ccs) facility whose opening represents a great leap forward in the country’s aim to be a low-emissions society by 2050. Norway’s prime minister, Jonas Gahr Støre, has preached the necessity of cutting greenhouse gas emissions and protecting the natural environment, pitching his nation as a role model. And he’s right. In 2024, 98 per cent of Norway’s electricity grid came from renewable sources, mostly hydropower, while electric vehicles (EV’s) account for more than 94 per cent of new car registrations, compared to 12 per cent in the EU.

The problem is, depending on who you speak to, the Nordic country is either a green icon or a shameless petrostate. Though it is unarguably a green trailblazer, its decarbonisation is built on the profits of oil and gas extraction, 90 per cent of which is sold abroad, a figure that represents 62 per cent of the country’s total export value. This healthy earner has become a windfall in recent years as a result of both Russia’s full-scale invasion of Ukraine – after which Norway became the continent’s largest supplier of natural gas and second-largest supplier of oil – and worldwide inflation. By the end of 2022, petroleum revenue surged to €125bn, five times more than in 2021; in 2024, Norway’s sovereign wealth fund hit €1.7trn. “We are proud to supply critical energy to Europe during this challenging time,” says Terje Aasland, the country’s energy minister. But pride and guilt are two sides of the same coin in Norway’s oily history and given accusations that the country is profiteering from the world’s crises, the guilty side is growing. The International Energy Agency (iea) insists that further Norwegian drilling is incompatible with the Paris Agreement. So how will Oslo comply with a treaty – that it has enthusiastically agreed to – at the same time as investing a record €22bn in its oil industry? Its answer is twofold: a hefty €1.9bn investment in ccs and a bet on its untapped resource of rare-earth minerals.

Fifty minutes after departing Bergen, 12 giant metal tanks rise up on the horizon. “This is a great day,” says Aasland, beaming as he gestures towards Northern Lights. “This project proves that we can capture co2 and store it permanently and safely under the seabed.” Opened in 2024, Northern Lights is the world’s first commercial ccs facility. The idea behind the technology is to capture carbon emissions before they enter the Earth’s atmosphere, liquify them and then pump them into the ground, or, in Northern Lights’ case, a reservoir 2,300 metres below the seafloor and 100km off the Norwegian coast.

The country’s government is pitching ccs as a redemption story, one in which Norway’s fossil fuel extraction can benefit it and the world’s green transition. “Ever since we discovered oil, our continental shelf has been mapped in great detail,” says Torgeir Stordal, director general at the Offshore Directorate, the government’s petroleum regulator agency. “Not all reservoirs contain oil and gas; some just have water. That is where we can inject co2.” Norway has already pumped at least 25 million tonnes into the crust of the North Sea over three decades and now aims to build a full-scale commercial infrastructure, selling storage to European customers to help their countries offset rising carbon taxes. “I’m convinced that in some years we will have a commercial industry in the European market,” says Aasland.

The crowd at Northern Lights agree – but is this the whole truth?

The tone is less optimistic at the Ministry of Climate and Environment in central Oslo. monocle bustles through security alongside reporters, opposition politicians and environmentalists to witness the unveiling of the Green Book, the part of the annual state budget that outlines the country’s progress towards its climate targets. When climate and environment minister Tore O Sandvik takes the stage, a sense of disappointment quickly clouds the room. Norway has set ambitious goals to reduce emissions by 55 per cent by 2030 but, if current policies continue, that number is looking closer to 26 per cent. In comparison, neighbouring Sweden has already reduced its emissions by 35 per cent. And, if there’s anything worse to a Norwegian than failure, it’s losing to the Swedes.

“We are a little delayed,” says Sandvik. “But we will reach our climate commitments together with the European Union.” The government’s rather unambitious plan lies in the EU’s Emissions Trading System, which enforces a punitive carbon cap on polluters and lets them purchase allowances from each other to balance the score. But there is a problem: the future prices and quantity of these allowances are unknown, making the strategy a gamble. Despite accounting for at least a quarter of Norway’s emissions, Sandvik is adamant that phasing out oil and gas extraction is off the table. “Europe needs all the oil and gas they can get from Norway in this situation,” he says. Terje Aasland defends this position by stressing that Norwegian oil is greener than that produced by other countries. “Thanks to strict climate policies, Norway produces oil and gas with much lower emissions,” he says. Indeed, Norway was among the first countries to introduce a carbon tax in the 1990s, and the first in the world to build fully electrified oil platforms. But whether its product is the lesser of two evils, its own forecasts highlight the need for entrepreneurial alternatives to fossil fuels. And it might already have such alternatives right under its nose.

It is a misty morning in Ulefoss, a settlement of 2,600 in Norway’s rural Telemark region. The town’s unassuming face belies a potential jackpot deep below the ground. In June, a company called Rare Earths Norway (ren) confirmed that the volcanic Fensfeltet region contains Europe’s largest deposit of rare earth minerals. These precious gems (among them neodymium, praseodymium and 15 others) are essential to green technologies such as EV batteries and wind turbines. “We are completely dependent on these minerals to achieve the green transition,” says trade and industry minister Cecilie Myrseth. With no rare earths industry of its own, Europe relies on China for 90 per cent of its supply, leaving it vulnerable to geopolitical tensions heightened by the election of Donald Trump, who has promised to raise tariffs on Chinese imports while exhorting America’s European allies to do the same. Fensfeltet is estimated to contain 8.8 million tonnes of rare earth minerals, a number that dwarves the 18,000 tonnes imported to the EU in 2022. And with this figure expected to increase sixfold by 2030, it’s no wonder many in Norway are excited about rare earth minerals’ potential to steer the country away from fossil-fuel extraction.

One might imagine, therefore, that ren is swimming in government subsidies but when Myrseth and Aasland sit down to a roundtable with stakeholders, the tone is as murky as the weather. “Where is the willingness to invest?” asks regional geologist Sven Dahlgren. “If things stay lukewarm, we won’t get anywhere.” For decades, Dahlgren mapped Fensfeltet almost single-handedly on local county funding. Since 2016, ren has conducted its work on just €14.8m of mostly private input. This modest budget means that geologist Gaute Magnushommen still manages ren’s thousands of drill samples at a defunct school. “We need impatient people,” Myrseth tells monocle, before addressing the government’s slow pace. “But we also have to do things properly.” ren did recently receive €5m in state funding for a pilot mine but there is no mention of Fensfeltet in the Green Book, and no government plan to help ren secure financial support from the EU.

Instead, the government has prioritised its deep-sea mining ambitions, which would involve extracting minerals such as cobalt, nickel and rare earths from the ocean floor. Scientists and environmentalists argue that the practice could devastate ocean ecosystems; many countries have called for a ban. Ignoring international sentiment, Norway raced ahead with plans for commercial deep-sea mining in January and the 2024 state budget earmarked €12m to accelerate things. “We have only opened our oceans for mapping and exploration, not mining,” says Aasland.

Critics fear that Norway will prioritise profit over sustainability. In Ulefoss, there is a sense that deep-sea mining is pillaging resources from a land-based industry that will be more environmentally friendly and is in greater need of state backing. “We probably have up to 10 times more rare earths at Fensfeltet than what has been estimated offshore, where the total area is 6,000 times bigger,” says ren’s ceo, Alf Reistad. At one telling moment in the meeting, Myrseth, who is responsible for the land industries, turns to Aasland, overseer of Norway’s deep-sea mining and oil. “I guess there is a bit more resistance on your side,” she says.

“There is nothing but resistance,” says Aasland, groaning.

The scene is symbolic of Norway’s struggle to become the green leader it claims it wants to be. Pressing ahead with more oil and gas drilling and a dubious offshore mineral industry, it has also adopted a timid posture towards greener ventures, while looking to ccs as a silver bullet, even though some have suggested it encourages carbon emissions rather than abating them. The debate strikes at the heart of Norway’s environmental identity crisis, and promises sleepless nights ahead for its avowedly green political leaders. — L