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magazine / oct08
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October 2008 issue |
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FEATURE
The carbon cleansers (page 2)
2. THE ENERGY OF THE BOOM TOWN
Stavanger (pop: 120,000) is a cozy little harbour city draped around a narrow tongue of
sea on the southwest coast of Norway. Historically, it was a place where catches were landed
and boats constructed, and fishing and shipbuilding remain important industries today. Now,
though, the old town is enclosed by a semicircle of modern mid-rise office blocks in which
the multi-billion-dollar oil industry is based.
The offices of the Stavanger Chamber of Commerce and Industry occupy a stout old whitewashed
mansion known as Rosenkildehuset, which stands at the back of the harbour, facing the bustling
fish market. Inside, in a spacious second-floor office trimmed with nautical memorabilia
like a yacht club’s lounge, Jostein Soland, the Chamber’s managing director,
trades a wry smile with his colleague Frode Berge and tells me, “You have never been
closer to paradise.”
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Soland is bald-pated, and on this day, silver-suited, complementing lively, steel-blue Nordic
eyes that hint at a salty dog’s irony much of the time. In this case, however, he’s
more or less serious: Norway spent five straight years at the top of the United Nations’ index
of “most livable” countries before Iceland bumped it to second place in 2007,
and 5 of the 10 Norwegian municipalities with the highest standard of living in the country
are in the Stavanger region. Thus, by the best objective measures available, Stavanger ranks
as one of the most desirable places in the world to live. Perhaps most impressively, Stavanger
has maintained this status despite the intense pressures and economic distortions of fossil-fuel
wealth commonly known as “Dutch Disease” (in reference to the precipitous decline
of the Dutch manufacturing sector due to runaway inflation after natural gas was discovered
in Stavanger’s patch of the North Sea in the 1960s). And it has done so, Soland and
Berge argue, in large part because of the singular Norwegian approach to managing its fossil-fuelled
boom, which finds its apotheosis in the carbon tax of 1992. Not that everyone saw its wisdom
right away — least of all Berge himself, who was a senior official in the Ministry
of Trade and Industry in Oslo at the time.
“I remember there was a heck of a debate,” says Berge. “It was obviously
controversial. We were worried, especially in this part of the country. I was worried.” The
Norwegian economy was already struggling in the early 1990s, he explains. Oil prices were
low, and there was grave concern that a self-imposed tax penalty might cripple the lucrative
oil and gas industry. “It was a highly unpopular measure.”
The key to the passage of the tax was that its champion was Norway’s prime minister
at the time, Gro Harlem Brundtland, whose name was so intimately linked with the emerging
ecological consciousness of the day that the landmark 1987 report credited with popularizing
the term “sustainable development” — Our Common Future, a massively
influential United Nations document that provided the catalyst for the 1992 Earth Summit
and the Kyoto Protocol — remains commonly known to this day as “the Brundtland
Report.”
Under Brundtland’s tutelage, the Norwegian government crafted a piece of legislation
that would be a near-impossible sell in most other oil-producing nations even today. Norway’s
carbon tax is not a flat emissions tax; rather, it specifically targets the oil and gas industry
and its customers, exempting domestic industries more susceptible to global competition (emissions-intensive
aluminum production, for example). And it is emphatically not revenue-neutral. The ample
proceeds from the steep tax, which was introduced at about US$50 per tonne, pour directly
into the government’s general accounts. Partially as a result of this windfall, Norway
has been able to place all its direct revenues from the oil and gas industry — from
its share in StatoilHydro to offshore drilling licences — into a special pension fund
that is invested only outside the country to help level the impact of the oil boom. By the
end of 2007, the fund contained US$373 billion, or nearly US$80,000 for every living Norwegian.
Norway’s carbon tax recognizes that fossil fuels are distinct from other kinds of
resources. They are distinct not just in economic terms, which considers their extraction
a “resource rent” industry involving a non-renewable commodity, but also in terms
of their location and ecological qualities. Fossil-fuel wealth tends to accrue unevenly,
deepening social inequalities and disparities of political power. Even more important, fossil
fuels are irreplaceable, and their extraction and use alters the climate. This is not a business
like any other, and the Norwegian government aimed to tax it as such.
With Brundtland’s backing, the carbon tax passed, and the people of Norway adjusted
to it without any real calamity. The country has always had high taxes, so another few kroner
at the pump turned out to be no cause for alarm. Norwegians in the main accept that the price
of citizenship in one of the world’s most livable societies is one of its highest tax
rates.
| Comments on this article | Leave a comment | Does anybody believe the U.S. government would be smart enough to use the proceeds from a carbon tax to reduce the deficit or invest in the future? No - the politicians would see it as more money they could spend on pet projects and funnel to special interests.
Isn't it a shame that such a workable model of just plain old good sense had no resonance with Canadians in our last election.
Someone will eventually have to pay the environmental price for failed economic policies and consumer driven excesses. It's akin to painting ourselves into a corner...there will eventually be no wiggle room!
removing 2 oxygen molecules for every dug up carbon molecule....not smart, perhaps they should take some math and a course in formal logic
I think this article should be reprinted in every Canadian paper for all to read before this illtimed election
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