Energy Transition Norway 2023

ENERGY
TRANSITION
NORWAY
2023
A national forecast to 2050
Commissioned by:
DNV Energy Transition Norway 2023
FOREWORD
The 2023 edition of the Energy Transition Norway 2050 term. Norway can maintain its significant market share in
reconfirms that Norway is not on track to meet Paris energy supply to Europe, but through a new export mix of
Agreement targets for reducing greenhouse gas emissions. electricity alongside hydrogen (initially blue and then
Despite cross-political support for 55% and 100% GHG green) and ammonia as energy carriers. Again, this cannot
reductions by 2030 and 2050, respectively, Norway be achieved without sufficient renewable power.
is heading for 27% less in 2030 and 80% in 2050.
The decarbonization effort in Norway and globally is an
When Norway ratified the Paris Agreement in 2016, enormous business opportunity for the Norwegian
nearly all its electricity was from hydropower. We also got industry. Huge opportunities lie ahead in industrializing
140 TWh of energy from fossil fuels. To replace that fossil floating wind farms, setting up a complete value chain for
consumption to reach climate targets, roughly 100 TWh of batteries for the energy system and transport, and in
additional renewables capacity for electricity and making hydrogen and ammonia. In addition, conventional industry
hydrogen and ammonia was needed. The electricity grid products need to be carbon-neutral going forward to
needs strengthening across Norway, and carbon capture comply with customers’ future requirements. If not, we’ll
and storage is part of the equation. We are far from lose market share.
achieving this and thus face an expected net electricity
deficit in 2028 lasting until 2032, that could see Norway Norway’s urgent need to build a significant amount of
paying European price levels or more for electricity. new renewable power requires an attractive financial
framework and streamlined concessions and permitting.
This report shows the need for 390 TWh renewable power Norsk Industri is worried that there are close to zero new
in 2050, nearly three times more than today, through applications for hydropower and onshore wind. This
converting existing fossil generation, building new suggests the political framework is unattractive. New
green industries, and enabling hydrogen production green industries as defined by the government require
for domestic use and export. Additional solar and hydro- financial frameworks comparable to those in the EU.
power are important, especially in the short term, but
make limited contributions. Onshore wind is affordable Time is of the essence. We have only six years left to
and may contribute 40–50 TWh. Offshore wind, especially meet 2030 ambitions. Our politicians need to take bold
floating offshore wind, will be the main contributor with decisions to get us back on track. We all have the
more than 100 TWh near 2050. responsibility to make a better tomorrow.
All renewables are weather-dependent, and we should

expect intense supply and demand dynamics at national,
regional, and local levels. Balancing the grid requires
hydropower plants, huge numbers of batteries, and
data-driven algorithms working in real time.
Nils Klippenberg
Europe depends on Norwegian gas to meet demand and
Chairman Electro and
stabilize the geopolitical situation. This demand is expected
Energy — Norsk Industri
to increase in the short term but decline steeply in the long
2
Contents
CONTENTS
Foreword 2
Highlights 4
1 Introduction 6
1.1 About this Outlook 6

1.2 Assumptions and policies 8
2 Energy demand 12
2.1 Transport 14
2.2 Buildings 18
2.3 Manufacturing 19
2.4 Non-energy 22
2.5 Energy demand carriers 22
3 Energy supply 24
3.1 Oil 26
3.2 Natural gas 28
3.3 Electricity 29
4 Energy trade 40
5 Emissions 46
6 Norwegian transition in an EU context 52
References 58
Project team 59
3
1 HIGHLIGHTS
Norway not on track for 2030 and 2050 Lack of new power production
emission targets places industrial development and
decarbonization at risk
− Implemented and planned actions are not creating
the dramatic change needed to reach the short-term − The existing electricity surplus in Norway will shortly
goals be consumed by increased electricity demand from
− Norway aims to cut emissions by 55% by 2030 and households, industry, the electrification of transport,
90-95% by 2050. We forecast 27% reduction by 2030 and electrification of several oil and gas installations
and 80% by 2050 compared with 1990 − Limited opportunities for adding new electricity
− The more urgent action is delayed, the narrower the generation short term will likely create an electricity
window for reaching the targets becomes, especially deficit by the late 2020s
the nearer-term ambitions for 2030 − The deficit is currently being managed by ‘default’
− Only transport and the oil and gas sector’s emissions demand reduction: new industrial growth is being
are falling close to the levels necessary to reach discouraged by uncertainty in future electricity
Norway’s 2050 target prices, an unclear regulatory framework, and a lack of
− By 2050, significant carbon capture (8 Mt) and carbon grid connections
removals (2 Mt) reduce Norway’s emission by half, − Offshore wind has the highest potential to add
helping to get closer to reach the target, but needs significant electricity to Norwegian power system in
further efforts the 2030s, but delays in concessions and auctions
− There is mounting pressure for high-income countries, place this potential at risk
such as those in Europe and rest of OECD, to reach − Grid expansion is needed to increase flexibility,
net zero well before 2050 to allow the world to reach remove bottlenecks and maximize the value of wind
the ambitions of the Paris Agreement power. The current pace of grid build-out is too slow
4
Highlights
Norwegian energy exports: short-term The energy transition creates several green
growth, steep decline in the long term industry opportunities for Norway
− European demand for natural gas is falling and will fall − The global energy transition will see a significant
much further than expected before the Ukraine war increase in renewable energy sources and other
as a consequence of European climate and energy decarbonization technologies, offering growth
security considerations opportunities for green industries
− Norway’s gas exports decline 35% and oil export 93% − Energy exports from Norway, especially renewable
to 2050 energy and low carbon hydrogen, will likely be
− A growing share of Norwegian energy exports will attractive at any time during the next 30 years, but the
be converted to electricity , hydrogen and its deriva- prime window of opportunity for green industrial
tives, but will only represent a fraction of today’s growth and building new value chains is the next
energy export revenues five years
− Norway has a unique opportunity to supply blue − Norway has a competitive edge in many decarboni-
hydrogen to Europe by the mid-2030s, switching to zation technologies, particularly floating offshore wind,
green hydrogen by the 2040s which will see steep growth globally towards 2050
− DNV forecasts 22 GW offshore wind in production by − Large-scale hydrogen value chains, initially blue but
2040 and 43 GW by 2050. Norwegian wind power turning increasingly green leveraging surplus power
generation increases to 210 TWh in 2050, of which generation, can generate significant export revenue
80% is offshore wind. Surplus wind power is likely to complementing electricity exports
be used to produce hydrogen for export, while most − Carbon capture and storage (CCS) will play a critical
of the electricity export will be based on hydropower role in reducing emissions, and Norway's expertise in
and offshore wind CCS can be leveraged for decarbonizing natural gas
and creating opportunities in hydrogen and ammonia
production. Storage of CO2 on the Norwegian
Continental Shelf (NCS) is a huge opportunity with
limited competition, especially close to Europe
− In maritime transport, Norway's leadership in LNG,
batteries, and hydrogen for short-sea shipping can
be expanded to develop low- and zero-carbon
solutions for global deep-sea shipping
5
1 INTRODUCTION
1.1 About this Outlook In linking our global forecast to Norway’s energy system,
we have had to make several adjustments. Not all global,
This Energy Transition Norway (ET Norway) report or even regional, energy dynamics are equally valid when
describes the energy future of Norway through to 2050. we apply them at country level.
The analysis, the most likely model framework behind it, the
methodology, the assumptions, and hence also the results Our analysis produces a single ‘best-estimate’ forecast
lean heavily on DNV’s global forecast, the Energy Transition of Norway's energy future, given expected economic,
Outlook 2023 (DNV, 2023a) and the Energy Transition policy and technology developments and associated
Outlook (ETO) model. This approach yields a consistent and costs, as well as some behavioural adjustments. The
energy-balanced result, as Norway is part of the global forecast also provides a basis for assessing whether
energy system, and the country’s energy supply and Norway is likely to meet its energy and climate-related
demand are affected by what happens elsewhere. Similarly, targets.
what happens in Norway can affect other countries.
6
Introduction CHAPTER 1
relevance to the energy transition; first and foremost the

unprecedented energy prices, but also GDP development,
EU and Norwegian policy interventions, and behav-
ioural changes.
Ourbest
Our bestestimate,
estimate, Long-term
Long-termdynamics,
dynamics,
Our best estimate, Long-term dynamics,
not
notthe
thefuture
futurewe
wewant
want Anot
Asingle
single forecast,
forecast,not
notscenarios
scenarios not
notshort-term
short-termimbalances
imbalances
the future we want In addition
A single to incorporating
forecast, not scenarios not the energy
short-term trade of oil, gas,
imbalances
and coal, we include import and export of electricity,

hydrogen, and ammonia. We have extended our model
to include the energy exchange between Norway and
Europe. This is an important dynamic in Norway’s
Continued
Continueddevelopment
development Mainpolicy
Main policytrends
trendsincluded;
included; Behavioural
Behavioural
Continued development Main policy changes:
energy
changes:
trends
system,
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and will prove changes: important
increasingly some in
proventechnology,
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cautionon
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assumptions made,
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stestimate,
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Long-term technology,
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uncertain
uncertainbreakthroughs
breakthroughs commitments,
commitments, e.g.
e.g.NDCs,
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etc. tocommitments,
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changing
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future
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uture
futurewe not scenarios
wewant
want not short-term
AAsingle
single imbalances
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not
notscenarios
scenarios uncertain
not breakthroughs
notshort-term
short-term imbalances
imbalances e.g.as fossil-fuel
NDCs, etc. exports decline for Norway
to a changing environment and
electricity and hydrogen export grows.
Interviews
Our modelling approach and the calibration of the
edicydevelopment
ed trends included;
development Behavioural
Mainpolicy
Main changes:
policytrends some
trendsincluded;
Behaviouralchanges:
changes:some
some modelling input values become increasingly sensitive
on untested assumptions made, e.g. linked
n technology,
en technology,not
ments,
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e.g. NDCs, etc.
caution
cautionon
onuntested
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assumptions
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linked when we model a country compared with a region or
ninbreakthroughs
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e.g.NDCs,
NDCs,etc.
etc. totoaachanging
changingenvironment
environment
globally. This is especially prevalent when we consider
exogenous or outside assumptions such as policies or
Our approach factors that are country-specific and have a significant
Our model simulates the interactions over time of the effect in forcing the model to select solutions that are
consumers of energy (transport, buildings, manufacturing, not necessarily the cheapest option or ‘most likely’. Such
and so on) and all sources of supply. It encompasses factors could be a changing geopolitical landscape,
supply and demand of energy globally, and the use and energy security, job creation or global and local climate
exchange of energy between and within 10 world regions. commitments. So, to better understand the most likely
development in the near- to medium-term, when these
To tailor the model for this project, we added Norway as issues have the biggest impact and are also easier to
a standalone region by splitting region Europe into two forecast, we have conducted interviews and discussions
regions: 'Norway' and 'Europe-without-Norway'. In this with politicians, advocacy groups, and business leaders
way, we derive separate forecast results for Norway to gain insights on how they view the medium-term
along with the other ten regions. future policy landscape unfolding. In addition to
external experts, we have held internal discussions with
The analysis covers the period 1990–2050, with changes colleagues in different parts of DNV. Much appreciation
unfolding on a multi-year scale that is fine-tuned in some to everyone for taking the time to respond and give
cases to reflect hourly dynamics. We continually update feedback on different topics.
our model’s structure and the input data. In this report,
we do not repeat all details on methodology and
assumptions from Energy Transition Outlook 2023 Our analysis produces a single
(DNV, 2023a), but refer to that report for further details.
‘best-estimate’ forecast of Norway's
We are also mindful that this analysis has been prepared energy future, given expected economic,
while Russia's war on Ukraine is an ongoing international
policy and technology developments
conflict and in the context of the unsettled economic
environment at the tail-end of the COVID-19 pandemic. and associated costs.
These factors add uncertainty to several parameters of
7
1.2 Assumptions and Technology development

DNV bases its forecast on the continued development of
policies proven technologies in terms of costs and technical
feasibility, not uncertain breakthroughs. However, during
Key input assumptions in the ETO model are linked to the period covered by this Outlook, the list of those that
parameters such as population, economic development, we currently consider ‘most promising’ could change due
technology development and policy. to shifts in levels of financial support or changed potential
for cost reduction. Other technologies may achieve a
Population breakthrough, such that they become cost-competitive.
We use the most recent research and results from the
Austria-based IIASA Wittgenstein Centre for Demography With technology learning curves, the cost of a technology
and Global Human Capital (WIC, 2023). These results typically decreases by a constant fraction with every
have been updated in 2023, and the data calibrated to doubling of installed capacity. This cost learning rate
most recent UN data projects a global population close (CLR) dynamic occurs because ongoing market deploy-
to the UN population estimates for 2050. Compared with ment brings greater experience, expertise, and industrial
previous ET Norway reports, lower fertility rates and efficiencies, as well as further R&D. Technology learning
limited immigration give Norway a slightly lower population is global, and it is the global capacity that is used in CLR
estimate of 6.1 million (mn) in 2050 from 5.4mn today. calculations.
Economic development
GDP per capita is a measure of the standard of living in a
country and is a major driver of energy consumption in
Core technology 'cost learning rates'
our model.
that we have used through to 2050 in our
DNV has this year decided to use the long-term economic
forecast include 16% for batteries, 16% for
development data from OECD (2021). At infrequent
intervals, extraordinary events cause a notably different wind, and 26% for solar PV but falling to
GDP and productivity changes. The 2020 COVID-19
17% later in the forecast period.
outbreak caused such a change, with negative growth
figures. Because our model is not suited for such short-run
changes, we have chosen to deviate from the OECD GDP
model and instead use economic growth figures from the
International Monetary Fund (IMF). The IMF data points CLRs cannot easily be established for technologies with
to a GDP change for Norway that is growing from the low low uptake and which are still in their early stages of
levels in 2020 by an average 1.6% per year until 2027, development. In such cases, calculations rely instead on
thereafter returning to the growth rates given by the insights from similar but more mature technologies.
OECD GDP model. Carbon capture and storage (CCS) — other than that used
in enhanced oil recovery — and next-generation electrolysis
For Norway, 2022 GDP was USD 429 billion (bn), or NOK are examples of this. Solar PV, batteries, and wind
3,800bn, while in 2050 it will be USD 667bn (NOK turbines are proven technologies with significant
5,900bn). This implies a compound annual growth rate grounds for establishing CLRs with more confidence.
(CAGR) of 1.6% per year. GDP per capita increases from Further down the experience spectrum are oil and gas
USD 78,900 to USD 109,100 per person in the same extraction technologies where unit production costs and
period. All numbers are stated in 2017 purchasing power accumulated production levels are high and easy to
parity terms denominated in 2022 USD and therefore establish. However, hydrocarbons face pressures from
must be converted to get real or nominal GDP. the structural decline in oil demand in tandem with rising
8
extraction costs and carbon prices. It is virtually impossible the core technology is almost all there is, and so the
to disentangle these two effects using costs and volumes highest CLR dominates. For other technologies, like
alone; we therefore use historical datasets to separately unconventional gas fracking, other cost components
estimate CLR and depletion effects. For all technologies, dominate.
it is necessary to separate out the cost of the core
technology (e.g. solar PV panels) from supporting Core technology CLRs that we have used through to 2050
technologies (e.g. solar PV control systems and in our forecast include 16% for batteries, 16% for wind,
installation kits). Typically, the latter have a lower CLR. and 26% for solar PV but falling to 17% later in the forecast
For example, PV core technologies and balance- period. Oil and gas development has a CLR of 10–20%,
of-supply (BOS) equipment have CLRs of 28% and 9%, but the annual cost reduction is minor because it can take
respectively. For some technologies, like batteries, decades for the cumulative installed capacity to double.
Population (MN) GDP/person (USD) GHG emissions (MN tonne CO2e)

GDP (USD BN) GHG emissions/person (t/person CO2e)
Norway 78 900 48.9

2022 5.4 429 9
Norway 109 100 10.4

2050 6.1 670 1.7
9
Policy FIGURE 1
A wide range of policy objectives — such as climate goals,
Policy factors included in our Outlook
air quality, health, job creation, energy security — will drive
policy changes, in turn driving change in the energy system.
In our global model, country-level data on expected

policy impacts are weighted and aggregated to produce
regional figures for inclusion in our calculations. For 1. Renewable 2. Energy storage 3. Zero-emission
power support support vehicle support
Norway, we incorporate existing and likely future policy
factors into our forecast.
It is not a given that energy or climate ambitions and

targets will be met at either national, regional, or global
levels. As such, our forecast does not assume that Norway
4. Hydrogen 5. CCS, DAC 6. Energy-efficiency
will achieve its national target of reducing greenhouse gas support support standards
emissions by 55% by 2030 compared with levels in 1990.
Targets and ambition levels may or may not be translated

into real policy. There are numerous examples of goals
and targets not being met in Norway. However, ambitious
targets are often followed by specific policy measures 7. Bans, phase-out 8. Carbon pricing 9. Fuel, energy, and
plans, mandates schemes carbon taxation
translating ambitions into reality influencing the
emissions trajectory.
From the main ETO report (DNV, 2023a) we have a

comprehensive list of policy factors influencing the
forecast. The same policy factors are incorporated in this 10. Air pollution 11. Plastic pollution 12. Methane
analysis with the following adjustments for Norway: intervention intervention intervention
Renewable power support

— Fixed and floating offshore wind projects will initially receive financial support to supply domestic energy
demand and to establish a domestic market. As costs decrease and the proportion of electricity exported to
Europe grows, offering higher profitability, financial support will gradually reduce. In addition to these sources of
income, we expect there to be mechanisms to redistribute profits from high-margin energy exports, such as
hydropower and green hydrogen exports, to further enhance the financial viability of offshore wind development.
Zero-emission vehicle support

— The support scheme for passenger EVs incorporate the new scheme from 1 Jan 2023, with slightly increasing costs
for EV purchases of vehicles above the 500,000 NOK price point as these are ineligible for the 25% VAT exemption.
— For EVs in the commercial vehicles segment, support schemes will continue as today then grow slowly from
the late 2020s until EVs account for 90% of new vehicle sales in 2040, when we expect maximum uptake of
electric drivetrains.
— We have included the government’s ambition on increased use of biofuel in transport. The fraction of biofuel
use for internal combustion engines increases from 13% in 2022 to 20% in 2030 and stays there until 2040,
then declines with shrinking use of internal combustion engine vehicles.
10
Hydrogen
— We expect some production projects to be subsidised to compensate for high hydrogen prices where carbon
dioxide (CO2) pricing still makes hydrogen uncompetitive. The level of support is expected to be USD 0.30/kgH2
for blue hydrogen and as high as USD 2.5/kgH2 for green hydrogen, until the early 2030s.
— We expect tax and grid charges for grid-connected electrolysers to be only 25% of the levels that apply to other
industrial consumers. This is the combined result of two factors. One is active government support. The other is
that some grid-connected electrolysers will be renewable electricity producers deciding, based on price,
between selling electricity to the grid or for hydrogen production; if they withhold selling, they do not need to
buy electricity.
— We expect the cost of natural gas for steam methane reformers to be lower than the industrial gas price, due to
the expectation that many reformers will be supplied directly to gas producers without going through the
transmission network and the market. We assume the gas price for methane reformers to be 25% of wholesale
price to retail price, on average.
Carbon capture and storage

— The Longship project with CCS from Brevik is included with phase-in by 2025/2026. Also included is CCS at
Klemetsrud with phase-in from 2027/2028.
— The CCS operations at the Sleipner and Snøhvit fields on the Norwegian Continental Shelf (NCS) are expected
to be phased out. The carbon captured at Sleipner is not expected to be replaced by an alternative operation.
However, we expect that CO2 will need to be removed at liquefied natural gas (LNG) liquefaction installations,
thus replacing CO2 captured at Snøhvit, where operations will be phased out in the late 2030s.
— All other CCS will be developed on a commercial basis, albeit taking increasing carbon prices into account.
Carbon price
— Carbon prices are reflected as costs for fossil fuels in the power and manufacturing sectors. In these areas,
Norway is part of the EU emissions trading scheme (ETS), and carbon prices equivalent to the rest of Europe
(reaching USD 250/tCO2 in 2050) are used.
— A Norwegian carbon price reaching 2,000 NOK/tCO2 by the 2030s is included in ‘energy sector own use’, such
as for oil and gas extraction.
— In other areas of the model (e.g. agriculture, household emissions) carbon price is not used directly, but taxation
of fuels, energy, and carbon is incorporated, causing additional costs.
Fuel tax
— Fossil-fuel tax increases at a quarter of the carbon-price growth rate for the road transport subsector.
Power capacity limitations

— For political reasons, Norway is unlikely to make large capacity additions for onshore wind, hydropower or solar
PV for export — even if profitable.
— For offshore wind (bottom-fixed and floating), we do not expect any similar power capacity limitations, and
capacity will be added when profitable, also for export.
— Norway is expected to add generating capacity to support increasing demand for domestic energy use. Since
hydropower and wind production vary annually, Norway will accept the need to add capacity to maintain a
surplus of 10% above average demand levels.
— For exporting electricity, we expect further interconnection capacity of 5 GW, and assume its gradual
introduction during the 2030s. Total interconnector capacity in 2050 is 4.2 GW to the UK and 14 GW to Europe.
— We do not expect hydrogen export to be limited by pipeline capacity, but it can be exported when needed
either through new pipelines or repurposed natural gas pipelines.
Agricultural (Other sector) practices reducing methane

— Reduction of methane emissions from livestock through feed supplement. Improved manure management
delivered to biogas production, increasing to 10% of utilization in 2030 and growing to 30% by 2050. Reduced
emissions from food waste and emissions from land use.
— All combined practices result in a reduction by 2030 of 14% from 2022 or a decline of 39% compared to 1990.
11
2 ENERGY DEMAND
Norway’s energy consumption depends on a supply/demand balance.
Historically, it has had sufficient energy resources to meet domestic
demand and export. Electricity has the largest share (44%) in the country’s
energy mix, and efficiency measures and decarbonization are expected
to drive this to 66% in 2050.
Historically, energy demand has grown in lockstep with The energy mix will change in the coming decades,
population growth and improvements in standards of driven by energy security and efforts to meet emission-
living. Norway’s population growth is slowing but will still reduction targets. In 2022, 47% of the mix was fossil-based;
reach 6.1 million people in 2050. Economic growth will by 2050, this will be halved. We expect electricity
average 1.6% from 2022 to 2050, when the economy will consumption to rise in the future and foresee electrifi-
be 55% bigger than today’s USD 429bn (NOK 3,800bn). cation across many end-uses, such as transport,
manufacturing, and petroleum industries. Additional
More people requiring more energy services for electricity demand will also come from new industries
transportation, heating, lighting and consumer goods and data centres and hydrogen production.
typically means increased energy demand. This was so
until around 2008, when demand growth began to level We see a slight increase in Norway’s energy demand
off due to impressive developments in energy efficiency (Figure 2.1) from 936 PJ in 2022 to 951 PJ in 2050.
achieved, for example, through advances in lighting and Despite the usual drivers such as population and GDP
heat-pump technologies. growth increasing energy demand, the marginal
12
Energy demand CHAPTER 2
increase can be attributed to efficiency gains enabled electricity, such gains are limited, but electrifying gas
by electrification. Energy demand is expected to and oil production will improve efficiencies. It is also
decrease in transport with a significant transition to worth highlighting the evolving and more challenging
electric vehicles (EVs), but will grow in the manufacturing power supply balance towards 2050. This is driven by
and buildings sectors. rapid growth of green industries where enhanced
efficiency and flexibility on the demand side will play key
Energy efficiency is a key driver of the transition over our roles in achieving a better power balance, relieving the
forecast period. It is important for the Norwegian power grid, and reducing the urgency of grid expansion.
system, especially going forward with high electricity
prices and a pressed energy supply in Europe. Energy Efficiencies come not only in energy supply but in how it
efficiency is also usually the most cost-effective way to is used. Electrifying end-use demand, seen already with
reduce emissions and should be at the top of the list uptake of electric passenger vehicles, yields further
when public authorities and companies consider efficiency gains. The biggest improvement is expected
emission mitigation. in road transport as EVs will continue to edge out
less-efficient internal combustion engine vehicles
For many countries, the main drivers of energy-efficiency (ICEVs). Other measures raising efficiency in demand
improvements include electrification of the energy sectors include appliance switching, increasing insulation
system and the rapidly growing share of renewables in through improved building standards, and uptake of
power generation, eliminating enormous heat losses. heat pumps for residential buildings and low-heat
Because hydropower supplies much of Norway's manufacturing processes.
13
2.1 Transport purchase and operational benefits. Over time, battery

cost-learning rates will render such policies superfluous —
Transport — including road, rail, aviation and maritime at least for passenger vehicles where we foresee a signifi-
— accounted for 27% of Norwegian final energy demand cant decline from today’s levels. Vehicle manufacturers are
in 2022, almost entirely in the form of oil as fuel (87%). We adapting their strategies to cope with the looming market
forecast that overall energy demand will decline almost dominance of battery EVs in the passenger segment,
28% from 250 petajoules (PJ) in 2022 to 181 PJ by 2050 driving uptake and further lowering cost. For most uses,
(Figure 2.2). EVs will soon become more cost effective than ICEVs; EVs
typically consume less than a third of the energy that ICEVs
Passenger and commercial vehicles combined are the do and cost much less to maintain.
largest sources of energy demand, constituting 61% of
total energy demand in 2022. With road transport set to To continue the substantial EV uptake, both the average
be largely electrified by 2050, its share in energy demand range of EVs and the density/number of charging stations
reduces to 41%. Overall, transport's transformation will need to increase and will grow in the future. In Norway,
include oil’s share in its fuel mix dropping to 29% in 2050 the average battery capacity per passenger vehicle is
as electricity and low-carbon fuels come to dominate. expected to increase from the current 61 kWh to approxi-
The other three demand sectors modelled do not mately 94 kWh in 25 years, resulting in extended vehicle
improve efficiency to the same degree. range and making EVs even more appealing (Figure 2.3).
Road However, EV uptake in the near term hinges on continued

The Norwegian Parliament has decided on a national goal policy support. Our forecast factors in a significant level of
that all new cars sold by 2025 should be zero-emission. We such support, even if costs will slightly increase owing to a
therefore anticipate ongoing policies aimed at reducing progressive decline of support that started with the new
emissions from road traffic to continue with significant scheme from 1 Jan 2023 for the most expensive EVs.
incentives to companies and individuals encouraging While new vehicle sales in 2023 are expected to be lower
switching from ICE vehicles (ICEV) to EVs through than in 2022, policies should focus not only on the
14
proportion of new vehicle sales being EVs, but also on significantly between now and 2030. By the mid-2030s,
replacing existing fossil-fuelled vehicles. ridesharing and automation will start to make an impact
and will slowly reduce the total number of vehicles to
EVs will account for 91% of new passenger vehicle sales in about 3.3 million by 2050, 16% below 2022 levels.
Norway in 2025, and 97% by 2030 (Figure 2.4). EV uptake
will be somewhat slower for commercial vehicles, which While the total number of vehicles will decline, their
includes everything from smaller trucks and utility utilization will be higher, so neither the related energy
vehicles to municipal buses and long-haul heavy road services required, nor the total number of kilometres
transport. Battery cost and driving range are the key travelled will necessarily reduce. Total kilometrage will
determinants in the competition between batteries and increase 20% by mid-century. A similar dynamic is
internal combustion engines, and hence on the electrifi- anticipated for commercial vehicles, but the number of
cation opportunities of various vehicle segments. We vehicles in this segment will rise 17% by 2050. However,
expect 18% of commercial vehicles to continue using a even with this vehicle growth and rising overall demand
mix of fossil- and bio-based fuels in 2050. We have also for vehicle-kilometres driven, Norway will not experience
increased biofuel use in transport in line with Govern- a similar growth in energy demand.
ment's ambition to reduce transport emissions, but not
completely fulfilling the goal of 30% by 2030. Biofuel’s
share in fuelling internal combustion engines increases
from 13% in 2022 to 20% in 2030. Norway is a world-leading country when
it comes to electrifying passenger-vehicle
Norway is a world-leading country when it comes to
electrifying passenger-vehicle transport, and we predict transport, and we predict a 50:50 split
a 50:50 split between EVs and passenger ICEVs on the
between EVs and passenger ICEVs on the
road by 2030. This ratio is not achieved for commercial
vehicles until late 2030s (Figure 2.5). Note also that we do road by 2030.
not see the total number of vehicles in Norway growing
15
Figure 2.6 shows road transport energy demand nearly 28% is for Norwegian domestic aviation, part of which is
halving from 152 PJ in 2022 to 75 PJ in 2050, mainly well-suited for electrification. The government plans to
because of the shift from internal combustion engines electrify domestic flights by 2040, meaning Norway
to electric drivetrains. The subsector’s energy demand could be a front-runner globally in the electrification of
for oil declines 89% while demand for energy from short-haul flights. Avinor anticipates the possibility of
electricity grows more than 10-fold. In 2050, 93% of cars commencing trials for electric aircraft of up to 19 seats on
will be electric, but electricity is only two-thirds of total scheduled services from 2027-2028, followed by continued
transport energy demand — which reveals both the testing for larger aircraft (50–90 seats) (Avinor, 2022).
efficiency of electricity and the corresponding inefficiency
of legacy fuels. That said, we forecast that sustainable aviation fuels
(SAF), particularly biofuel blends, will be the main
Aviation contributors to aviation emission reductions, especially
Air travel has substantially increased since the pandemic for international and long-haul flights. Which low-carbon
and is expected to return to pre-COVID levels by 2025 or zero-carbon solution, or mix of fuel solutions, will
with continued growth towards mid-century. The annual dominate is not yet known as the alternatives are
number of passenger flights (Figure 2.7) is projected to currently fairly evenly matched on cost and availability.
reach 44 million by 2050, 58% more than pre-pandemic By 2050, 48% (36 PJ) of Norwegian aviation’s fuel mix will
levels. still depend on oil, but the share of biofuels will increase
to 21% (16 PJ). Hydrogen and synthetic low-carbon fuels
Fuel use will not grow at the same pace. This is due to account for 20% (15 PJ) and electric aviation 11% (9 PJ),
energy-efficiency gains from higher load factors and as in Figure 2.7.
developments in engines and aerodynamics. Currently,
72% of the subsector’s energy demand in Norway is for Maritime
international aviation, which we expect to continue using Maritime transport is by far the most energy-efficient
traditional combustion engine technology. The remaining mode of transport in terms of energy per tonne-
16
kilometre. Almost 3% of world final energy demand, and energy efficiencies combined with massive fuel
including 7% of oil, is consumed by ships today, mainly decarbonization, which will involve switching from fuel oil
international cargo shipping. Norwegian energy demand to gas and ammonia and other low- and zero-carbon
from maritime activities is for national shipping and from fuels. Norway has been at the forefront of adopting
international shipping bunkering in Norwegian ports. In liquefied natural gas (LNG) and batteries for hybrid and
2022, the total demand was 38 PJ, 80% of it for domestic all-electric solutions. With short-sea shipping and local
use. There is a fast recovery from the pandemic, and this ferries utilizing a combination of electric propulsion and
demand will grow by 2030. By 2050, however, it will be a electric shore power, the energy demand for electricity
quarter (24%) less than in 2022. will increase. Initially though, gas and later low-carbon
fuels (ammonia, methanol) will be the main alternative
In 2023, the IMO updated its GHG strategy for global fuel sources for shipping (Figure 2.8).
shipping, aiming for:
Rail
— A reduction in carbon intensity of international The Norwegian rail subsector consists of all tracked
shipping by at least 40% by 2030 compared to 2008. transportation including urban rail transport, such as
— Uptake of zero or near-zero GHG emission technolo- subways and trams. Presently, 1% (2.6 PJ) of Norway’s
gies, fuels and/or energy sources to represent at least total transport energy demand is for rail, of which 77% is
5%, striving for 10%, of the energy used by 2030. based on electricity and 23% on oil. Towards 2050, rail
— GHG emissions from international shipping to reach will still account for 1% of total transport energy demand,
net zero by or around, i.e. close to, 2050. but electricity will rise to 85% of the fuel mix.
Globally, a lack of sufficient enforcement mechanisms

means that the maritime industry may fall short of these
strengthened ambitions. But Norway is on track to meet
the decarbonization goals through improved utilization
17
2.2 Buildings GDP per capita increases, per capita electricity use for
appliances and lighting also rises. Norway is at the high
In 2022, almost a third (30%) of Norway’s energy was end of this relationship, and high-income levels manifest
consumed by buildings, making it the largest energy themselves, for example, in home entertainment
demand sector. 78% of building energy demand is systems, second refrigerators, or keeping indoor and
supplied by electricity and the rest by biomass, direct outdoor lights on all night. However, recent high
heat and, to a lesser extent, oil. We foresee growth in electricity prices have sharpened focus on energy
buildings energy demand by 2050, driven by increasing savings, and with support from ENOVA for household
GDP per capita and floor area. This will be offset by efficiency improvements. We forecast that energy
increased efficiencies in appliances and heating. demand for appliances and lighting for both residential
We also see energy-efficiency improvements in the and commercial buildings will increase 40% between
structure of buildings, driven by stricter regulations. 2022 and 2050.
We estimate final energy demand for appliances and Space heating accounts for 50% of all the sector’s
lighting, cooking, space cooling, space heating, and energy demand and is the segment with the biggest
water heating. Space and water heating are the sector’s expectation of efficiency gains. Heat energy demand
largest energy uses, accounting for 50% and 21% of will remain stable over the next decades compared to
demand, respectively (Figure 2.9). 2022 (144 PJ), even while heating a growing number of
buildings. Measures enabling this transformation will
The residential appliances and lighting segment encom- include more insulation; mandatory energy perfor-
pass everything from reading lights, phone chargers mance certificates and connections to district heating
and computers, to refrigerators, washing machines, and systems; improved automation through digitalization;
dryers. Despite improvements in energy efficiency for and greater heating efficiency by phasing out oil-fired
these purposes, historical evidence suggests that as heating and widespread use of heat pumps.
18
2.3 Manufacturing Hydro Norse aluminium production

facility at Sundalsøra
The manufacturing sector in our analysis consists of the
extraction of raw materials and their conversion into
finished goods. However, fuel extraction — coal, oil,
natural gas, and biomass — and conversion, are
accounted for under 'Energy sector own use' (Chapter 3).
Manufacturing in our Outlook covers four subsectors:
Construction and mining — includes mining and

construction (e.g. roads, buildings, and infrastructure).
Base materials — includes production of non-metallic

minerals (including conversion into cement), chemicals,
and petrochemicals; non-ferrous materials, including
aluminium; wood and its products, including paper, pulp,
and print.
Iron and steel — includes the production of iron and steel.
Manufactured goods — includes production of general There is historical evidence that the industrial sector
consumer goods; food and tobacco; electronics, appli- evolves as the standard of living increases — as measured
ances, and machinery; textiles and leather; and vehicles by GDP per capita. As affluence per person rises, a region
and other transport equipment. transitions from being an agrarian (primary) economy
through to being an industrial (secondary) one, and
finally, to a service-based (tertiary) economy, whereupon
the industrial sector declines. In our analysis, we have
mapped the different sectors of the economy from
historical records and then extrapolated those trends into
the future. A detailed description of the global demand
and supply model of manufactured goods and associated
demand for energy can be found in ETO 2023 (DNV,
2023a). In Norway, the industrial sector and especially the
base material subsector is a large contributor to manufac-
turing sector GDP.
Norway’s manufacturing sector consumed 278 PJ in

2022, accounting for 30% of the country’s final energy
demand. Base materials account for more than two-thirds
(70%) of the total manufacturing energy demand (Figure
2.10) and are primarily characterized by production of
non-ferrous metals (e.g. aluminium and manganese), and
petrochemicals. Energy demand from construction and
mining continues to grow towards 2050, while iron and
steel decreases. We expect manufacturing energy
demand to grow to 322 PJ/yr by 2050.
19
Energy demand for the base materials subsector was 195

PJ in 2022. It is energy intensive because it converts raw
materials into feedstock for other industries. Energy
consumption in the base material sector is mainly from
industrial high-heat processes (65%) and operating
machines, motors, and appliances (35%), as in Figure 2.11.
Energy demand is expected to grow sharply towards
2030, after which growth eases to 240 PJ in 2050. This
overall growth of 23% from 2022 levels is driven largely
by increased electricity demand from expanding industrial
sectors such as battery manufacturing, aluminium, and
hydrogen production. Cement, plastics, and other
chemicals’ energy use will see an increase towards 2040,
before slowly declining towards 2050.
Most of the Norwegian iron and steel subsector’s

current energy demand is for heat, the rest being for
machinery, equipment, and iron ore reduction during
steel production (Figure 2.11). Currently 34 PJ (12% of
manufacturing energy demand), iron and steel’s
energy demand will be a third (32%) less in 2050 as coal
is phased out and electricity and hydrogen are used
more (Figure 2.12). Globally increasing shares of
recycled steel in steel production will also contribute
20
to decreasing the energy demand with reduced need Most Norwegian construction and mining current energy
for virgin iron ore. demand is for heat and MMA, with a small share for onsite
industrial vehicles (Figure 2.11).
Energy demand from the manufactured goods subsector
has steadily declined since 2000 and represents 10% Changes in Norwegian manufacturing’s energy mix
(26 PJ) of manufacturing demand. We expect this depend on technological innovation, resource availability,
subsector’s energy demand to remain steady until the and on policies and incentives. With 63% of the sector
mid-2040s then gradually increase to 30 PJ in 2050. already electrified, further electrification offers only
Electricity presently has the largest share in the subsector’s limited efficiency gains, so change between now and
energy mix, and we see this growing towards 2050 as, 2050 in sourcing energy is most likely in high-heat
together with hydrogen, it replaces natural gas. A large processes. From the 2030s, we expect decarbonized
share (61%) of final energy for manufactured goods is hydrogen to increasingly replace coal and natural gas as
used for heat. Another 38% is used to operate machines, the energy carrier for manufacturing processes. We
motors, and appliances (MMA). Driven by automation forecast growth from 0.3% of the energy mix in 2030 to
and digitalization, energy demand for MMA in the 4% in 2050 for hydrogen. Direct electrification will
subsector will grow towards 2050 (Figure 2.11). By then, continue to dominate the manufacturing energy mix, with
close to half of the subsector’s energy demand will derive an 82% share by 2050, driven by increasing adoption of
from MMA while efficiencies in heating keep energy electricity in activities such as battery manufacturing and
demand steady around 2022 levels. data centres, and by electrification of processes to
mitigate emissions. With the increasing share of electricity
Energy demand for construction and mining was 22 PJ in and high electricity prices, we have seen and foresee
2022, slightly increasing towards 2050. Towards 2050 industries struggling with high operational costs,
there is a noticeable shift away from oil, replaced by potentially affecting their competitiveness in global
increasing shares of electricity and hydrogen (Figure 2.12). markets, or even their continued viability.
21
2.4 Non-energy 2.5 Energy demand carriers

In 2022, 11% or 106 PJ of primary fossil-fuel consumption By combining energy demand for the sectors covered,
was used for non-energy purposes. This category we forecast Norway’s final energy demand by energy
represents the use of coal, oil, and natural gas as carrier (Figure 2.14). ‘Final’ here means energy delivered
industrial feedstock. Much of the energy in the form of to end-use sectors. It excludes energy losses and energy
natural gas goes to petrochemicals as the largest sector own use in power stations, oilfields, refineries,
consumer (65%) of feedstock, and the rest is oil used in pipelines, and so on.
construction and for producing non-metallic minerals
(Figure 2.12). Even for Norway, with one of the world’s most renewable
energy-based power systems, the ongoing transition will
Half of the sector’s natural gas consumption was used to further increase the share of electricity in final energy
produce plastics in 2022, with the rest going to making demand. In 2022, electricity represented 44% (412 PJ) of
fertilizers, paints, and other chemicals. To align with the the country’s final energy use. In 2050, it will account for
EU target of recycling 55% of all plastic packaging by 66% (625 PJ). Cheap renewables, technological advances,
2030, Norway’s rate of plastic recycling needs to improve, and policy are together driving steady electrification of
necessitating a more comprehensive management of the energy demand. Onshore wind, limited-scale solar PV, and
recycling value chain within the country. The rate of (eventually) offshore wind backed by policy, will support
plastic recycling will be boosted by more efficient (and growth in demand for electricity for domestic use, and for
potentially circular) chemical recycling methods supple- export, which will account for a rising share of the demand.
menting or replacing traditional mechanical recycling.
Plastics production will continue to increase to a peak in Electric systems have smaller energy losses than fossil-
2038 to meet growing demand, but then declines and biomass-fuelled systems. When technological
towards 2050. progress makes electricity available and viable for use in
ever-more subsectors and new applications, users will
increasingly make the switch. For Norway, the transition
to higher shares of electricity in the energy system is
driven by decarbonization ambitions in the transport
sector, and in gas and oil production as well as increased
renewable-based manufacturing processes. We foresee
electricity increasingly replacing coal, oil, and later gas in
the final energy demand mix. Replacing these sources as
energy carriers and feedstock will increase demand for
electricity, also amplified by new demand for electricity
for electrolysis-based hydrogen production. In combi-
nation, this will raise electricity’s share in the final energy
demand mix. The total demand and supply of Norwegian
energy resources is discussed in subsequent chapters.
Cheap renewables, technological advances,

and policy are together driving steady
electrification of energy demand.
22
Electric ferries in the Oslo fjord
23
3 ENERGY SUPPLY
In our Energy Transition Outlook to 2050, we forecast a future in which the
world's energy demand stops growing even as the global population
increases, and the economy continues to expand.
The global energy mix is also changing rapidly. For Norway, described in Chapter 4. The country also exports and
this creates challenges for continued fossil-energy export imports some electricity on a daily and seasonal basis.
but opens opportunities to supply low-carbon electricity Apart from exceptionally dry years, the annual balance
and hydrogen to Europe, mainly through existing has traditionally been a net export, which will change in
hydropower and the future expansion of offshore wind. the future with increased demand from the manufacturing
sector and electrification of the Norwegian Continental
Primary energy supply is the total amount of energy Shelf (NCS) supported by interconnection cables and
needed to meet energy demand. Figure 3.1 illustrates production capacity increasing in Europe. The flow to
Norway's historical and projected energy consumption and from Norway will thus impact the Norwegian grid
originating from diverse primary energy sources, consid- mix, which is shown in Figure 3.1 as including electricity
ering gross electricity and hydrogen trade. The figure production from, for instance, nuclear, as part of the
shows that the country's primary energy supply declined European grid mix.
by over 10% from 2018 to 2019, reaching 1,220 PJ, and we
anticipate it will remain relatively stable until mid-century.
In addition to its domestic consumption, Norway exports

Apart from exceptionally dry years, the
substantial amounts of energy, mainly oil and gas, as
annual balance has traditionally been a
net export, which will change in the future
The domestic energy mix today is mostly electricity- and

oil-based, whereas natural gas is mainly used offshore. In
our forecast, we see fossil fuels being replaced by
renewables, mainly wind. By 2050, renewable primary-
energy supply will represent 76% of the domestic energy
mix, up from the 44% in 2022.
Thanks to the aggressive adoption of EVs in Norway, and

to a certain extent in the rest of Europe, primary oil use
will reduce 3.8% year on year in Norway. To counteract
this reduction in oil use in transport and other sectors
such as oil and gas production, primary energy from wind
will grow 9% year on year from 45 PJ in 2022 to 460 PJ in
2050.
24
Energy supply CHAPTER 3
25
3.1 Oil electric mobility. The decline in oil demand from com-
mercial vehicles will be slower. By 2050, the road
For the last 30 years, Norway’s domestic oil demand has subsector’s oil demand will have reduced by almost 89%
been on a bumpy ride. Demand declined marginally compared with 2022, a decline like that in Europe (-84%).
between 1990 and 2022, from 325 PJ to 311 PJ, with
spikes and troughs between. While historical highs saw Maritime will see an even faster reduction, declining to
numbers up to 396 PJ in 2007, demand was at an unprec- less than 6% of current oil demand by 2050, from 35 to
edented low-point of 276 in 2020 due to the COVID-19 2 PJ. The strong growth of alternative fuels for shipping,
pandemic. As Figure 3.2 shows, we forecast a 66% drop such as electricity, natural gas, and low- and zero-carbon
in domestic oil demand, relative to 2022, with a decrease fuels in combination with changes in maritime energy
to about 107 PJ towards mid-century. This decline is demand will drive the reduction. Aviation's dependence
similar to developments projected for Europe, where we on oil will be more protracted, we project its oil demand
forecast a reduction of 64% compared with 2022. On a will increase by 8% in the next two to three years before it
global scale, we forecast oil demand to decline 38% declines to 36 PJ in 2050, 40% less than in 2022. In
compared to the current consumption level by 2050. aviation, synthetic fuels, biofuels, and other low- and
zero-carbon fuels, rather than electrification, will drive
More than three-quarters (69%) of Norway’s oil demand decarbonization.
is used in transport; the rest is split between non-energy
use, particularly as petrochemical feedstock, and other The share of oil in energy demand for buildings will
energy use. The transport sector’s share of oil demand decline from 5% in 2022 to 1% in 2050, representing an
increased in recent decades from 63% in 1990 up to 69% absolute reduction from 14 to 3 PJ. The primary application
in 2022 when it started to decline. In 2022, about 57% of of oil in buildings, specifically for space and water
the transport sector’s 216 PJ of oil demand came from heating, is expected to transition toward electrification.
road vehicles. Going forward, passenger vehicles
segment will experience the most extensive conversion A very similar outcome is expected in manufacturing.
to electricity, boosted by Norway’s leading position in Here, the current 6% share will decline 9-fold to represent
26
about 0.8% of oil demand by 2050. The main driver here Production increases are expected over the next two to
is less oil use in industrial heat processes where it is three years, due in part to the capacity increases from the
replaced by electricity. Johan Sverdrup field and because of the supply shocks
associated with Russia’s invasion of Ukraine. The longer-
term picture, is, however, one of decline (Figure 3.3).
Towards mid-century, offshore oil production will
decrease as several oil fields are approaching their end-
of-life phase (e.g. Ekofisk, Statfjord, Gullfaks, Sleipner Vest,
Draugen). Increased global competition in a shrinking
market will place downward pressure on oil prices, and
relatively few new discoveries are expected to be devel-
oped. Reduced oil demand will make it less attractive for
the industry to expand production into challenging
environments, such as deep water and/or Arctic locations.
Globally, as oil fields are depleting faster than global

demand for oil declines, continued investment in new
capacity is expected. But incoming capacity additions in
Norway will not replace the capacity being shut down,
because no new oil fields will be developed after 2030.
That said, oil production in Norway in 2050 will be at
about 0.2 Mbpd (see Figure 3.3) which is still twice more
than domestic demand at about 0.1 Mbpd.
27
3.2 Natural gas But, despite this 60% reduction in own use, the natural
gas demand for hydrogen production will somewhat
On a global scale, we forecast that world natural gas counteract the demand reduction in Norway. By 2042,
demand will plateau to 2030, and then decline from 175 133 PJ/year of natural gas will be consumed to produce
EJ to 149 EJ by 2050, a 15% reduction. By mid-century hydrogen in Norway, representing a 39% share of total
globally, natural gas will overtake oil in primary energy demand for the gas.
consumption. In Europe, which receives almost all of
Norway’s gas export, consumption will gradually The second largest consumption of natural gas is as
decline to 61% of the 2022 level in 2050, aided by the petrochemical feedstock, representing 20% in 2022,
natural gas supply choke brought on by Russia’s invasion a share that is expected to grow to 33% by 2050
of Ukraine. (Figure 3.4). Almost no natural gas will be used for
power generation in 2050; the manufacturing and
Overall natural gas demand in Norway will only reduce buildings sectors will account for about 9% and 1%,
39% towards mid-century from 2022 levels, despite the respectively, which is somewhat contrary to the
reduced use in offshore oil and gas fields. At present, situation in Europe where natural gas is predominantly
the main natural gas use in Norway is linked to the used in buildings and power stations. This is explained
energy sector’s own consumption. Here, consumption by Norway’s unique hydropower-dominated power
has plateaued from 2010 at about 320 PJ. Natural gas system.
consumption will continue for a few more years before
declining steadily through to 2050, reaching 216 PJ. This On a global scale, gas production will remain stable
decline is linked to significant electrification of the NCS, and move to new locations around the world. In terms
mainly through shore power, but also through wind of absolute output, the three dominant players in 2020
turbines like Hywind Tampen, which replace gas were North East Eurasia, the Middle East and North
turbines on offshore installations. Africa, and North America. But the Ukraine war has led
28
to severe curtailment of North East Eurasian natural

gas supply, at least in the period up to 2030.
3.3 Electricity
Electricity demand
Figure 3.3 shows Norway’s natural gas production in In 2022, Norway’s annual electricity consumption per
2022 was about 134 Bn m3 and it is projected to be person was 25.8 MWh. This is one of the highest per
about the same until 2026 before it declines to 77 Bn m3 capita electricity consumptions in the world, thanks to
in 2050. Throughout this time span, Norway will maintain Norway’s electricity-intensive industries such as alumin-
an export share of around 95%. We forecast that ium production; high penetration of electricity use in
Norway’s LNG liquefaction capacity, currently at around heating of residential and commercial buildings and in
5 Mt per year, will remain the same. powering the oil and gas extraction industry; and the
country’s leading role in the electrification of road and
Electrification of oil and gas production on the NCS marine transportation. Ample supply of relatively cheap
started as early as 1996 with Troll East (A) connecting to electricity from hydropower plants have been the main
the mainland electricity grid. With ongoing electrification contributor to this development. This per capita
of the NCS, natural gas use, as part of oil and gas consumption is set to increase almost 2.5-fold to 2050,
extraction processes, will decrease by 80% as gas-fired with explosive growth in new demand categories.
onsite power production on offshore installations is
replaced by electricity from the mainland or from Total electricity demand in Norway, including net
offshore wind (Figure 3.5). It is expected that previous electricity imports (gross imports minus gross exports
single cable connections between mainland and in every year) is expected to increase from 145 TWh in
offshore units will become multi-user electricity grids 2022 to 373 TWh in 2050. Four sectors will spur this
on the NCS. Towards mid-century, we forecast a 54% growth: hydrogen production, transport, oil and gas
share of electricity in the supply of NCS energy needs production, and to a lesser extent, space cooling.
(Figure 3.5).
We will see the electrification of all transport segments,
but first and foremost road vehicles, with 15 TWh/yr
consumed by 2.5 million passenger and 640,000
commercial EVs in 2050. Electric short-haul flights will
consume 2.4 TWh in 2050. As hydrogen and e-fuels start
to replace gas in manufacturing and marine gas oil in
transport, respectively, from the late 2020s, electricity
consumption from electrolysis plants will grow signifi-
cantly, reaching 1.6 TWh/yr in 2040 and 136 TWh/yr in
2050. The energy sector’s own use related to oil and gas
production will continue to grow as both new and some
existing fields are electrified. Electricity consumption
within the sector is estimated to reach a plateau of 18
TWh in the mid-2030s then decline in line with reduced
activity towards 2050 while representing 54% of
segment energy demand.
Total electricity use in buildings will increase about 28%,

from 65 to 83 TWh from 2022 to 2050. Growth in
provision of heat (space, water, and cooking) is
expected to be only 21% due to more efficient heat
pumps, better insulation, and a warming climate.
29
Meanwhile, the appliances and lighting segment will In the future, we foresee an even more diverse produc-
grow by about 40%, in line with building expansion and tion mix. Grid-connected electricity will triple from 2022
increasingly tech-heavy lifestyles. Space heating to 2050 while hydropower generation grows by only 16%.
currently has the highest seasonal variations between The remainder of the gap will be closed mostly by wind.
winter and summer months, but this will start to even out Onshore wind has seen significant growth. However,
as less electricity is used for heating and more power is public and in some cases judicial opposition (Supreme
consumed by appliances. A more even distribution of Court of Norway, 2021) combined with what amounts to
load across the year will reduce the ratio of peak load to almost a halt in the issuance of new concessions will limit
the annual average. onshore wind growth in the short term.
Unsurprisingly, increasing global warming will bring From the 2030s, offshore wind, with policies favouring
higher summer temperatures, which results in higher floating more than fixed, will grow rapidly, driven by
electricity demand for space cooling in Norway. From 91 reduced costs, sustained government support, and
GWh consumed in 2022, space cooling electricity increasing opportunities for the trade of electricity. 2050
demand will grow to about 1.5 TWh in 2050. electricity generation will include 6% solar PV, <0.5% gas,
10% onshore wind and 42% offshore wind (mostly
Electricity supply exported). The remaining 39% will be hydropower-based.
Historically, Norway’s electricity supply has been domi- While stand-alone Li-ion battery storage including
nated by hydropower (Figure 3.7), and up to 2005, over vehicle-to-grid supplies only 2% of the electricity in 2050,
99% of domestic electricity was supplied by this source. it also plays an important part in balancing demand and
At that point, other technologies started to make inroads, supply in Norway in the future.
such that in 2022 non-hydro electricity generation was
14%, split as 8% from wind, 1.5% from gas, 0.3% from Electricity generation
biomass and 0.2% each from coal and solar PV. The rest Although it is possible to control how much power is
comes from imported electricity. generated from hydropower stations, their operations
30
are impacted by water levels in the reservoirs. For that provided by EVs through vehicle-to-grid systems. We
reason, we categorize hydropower as dispatchable assume that the battery capacity of EVs available for grid
generation with storage constraints. As Figure 3.7 shows, flexibility will gradually increase and reach 10% of the
hydropower generation fluctuates from year to year due battery capacity of all EVs in 2035 and remain at that level
to variations in rainfall. In our modelling, we use an thereafter. The electricity trade with the rest of Europe is
average year to forecast the future quantities of water based on the wholesale price differences between
inflow to the reservoirs, since it is impossible to predict Norway and the rest of Europe. The operations of storage
the variations due to natural factors. As average precipi- technologies are modelled by a heuristic algorithm that
tation is likely to increase (NVE, 2023), we include a slight aims to utilize the storage in the most suitable way to
increase in the average capacity factor of hydropower exploit price arbitrage opportunities.
power stations towards 2050.
The ETO's power market operates on an hourly scale and
Wind and solar PV are non-dispatchable because control finds the market equilibrium at each hour by adding up the
over how much electricity these technologies provide is potential supply and demand at different prices and calcu-
limited. We have used normalized deterministic profiles lating the price at which total supply equals total demand.
for their generation patterns. We account for the differ-
ences in onshore and offshore wind profiles, where The graphic overleaf summarizes the operation of our
offshore has higher capacity factors and a steadier model’s power-market module, and the dynamics of
profile. The generation profiles vary over years, repre- power supply and demand over the same typical winter
senting technological improvements and geographical week in 2028, 2038, and 2048. Our hourly model ignores
distribution of the wind turbines and solar panels. any grid constraints, meaning that within the model any
demand can be met by any generator in the country or
Our forecast also accounts for the impacts of cross- region, regardless of location. For Norway, we do not
border electricity trade and energy storage, namely distinguish between the bidding zones and treat the
pumped hydro storage, battery storage, and the storage whole country as a single market.
31
Norway’s hourly supply and demand

The Norwegian power system will transform from being a net importer of power in the near term to become a net exporter,
with offshore wind capacity build-out, and supply and demand balanced through grid-connected electrolysers. We illustrate
this dramatic change by forecasting hourly demand for the same winter week in three different years (2028, 2038, 2048).
Norway electricity demand by segment; 2023-2050 Norway electricity supply by source; 2023-2050
2023 – 2050: Figure above shows the evolution of demand and supply in the Norwegian power system, cumulated daily and presented
annually. The peak demand and supply starts increasing considerably from 2035, with capacity build-out of offshore wind in the North Sea, in
conjunction with Norway’s ability to export this cheap power. From the 2040s, we forecast considerable amounts of grid-connected power
being used to produce hydrogen, again for export purposes.
Norway electricity demand by segment; week 2; 2028 Norway electricity supply by source; week 2; 2028
2028: Norway is a net electricity importer in every single hour of this week due to limited offshore wind capacity build-out, and high winter
heating demand, which peaks during mid-day. In the critical evening hours, there is considerable power import into Norway as the system
faces inflexible and sustained demand. Limited capacity and storage build-out hinders adequacy; and given the lower prices in the rest of
the European market compared to the marginal price of hydropower, adequacy is achieved through electricity imports.
32
2038: There is a complete reversal of the supply and demand situation found in 2028, and Norway is a net electricity exporter, even in
winter by 2038. The fixed and floating offshore wind capacity build-out ensures that there is spare power to be exported during 90% of the
hours in this week, due to the price advantage offshore wind has, given very low marginal costs. Floating offshore wind has also overtaken
onshore wind power generation because of higher capacity factors in the North Sea. Due to the possibility of export, curtailment of wind
power is quite minimal, even without the presence of significant storage capacity in the grid.
2048: Power supply and demand are completely transformed compared with 2028 and 2038 by 2048. Grid-connected electrolysers
overtake heating demand, even in winter, throughout the week. While Norway exports power during a similar number of hours as in 2038,
exports are reduced due to the sustained demand for power from electrolysers. The presence of both dedicated grid-connected storage
and vehicle-to-grid power are critical, as they provide power during mid-day, peak-demand hours, and hence maintain supply adequacy.
During windy periods, when wind power prices are low, the same storage is charged with cheap offshore wind electricity, thus ensuring
minimal curtailment.
33
Capacity developments Figure 3.8 shows our estimates for the installed renewable
Power systems with considerable shares of variable energy capacity in the future. Government support is
renewable electricity sources (VRES) such as wind and assumed to close a fraction of the gap between the cost
solar face the ‘capture price’ problem. That is, since these of these technologies and the cheapest competing
technologies have near-zero marginal running costs, conventional technology, hydropower. In 2049, we
electricity prices tend towards zero during hours when foresee offshore wind capacity, both grid-connected and
electricity production from wind and solar are significant off-grid, overtaking hydropower capacity in Norway. We
and plentiful. As more and more solar and wind enter the forecast a higher uptake of floating offshore wind (FOW)
power system, the number of hours where electricity compared with fixed offshore wind, despite the lower
prices are zero tend to increase. This implies that the levelized cost of the latter. The main reason is additional
electricity prices these sources can capture, or demand governmental support as well as no major limitations to
tends to be low, thus leading to developers being ocean space, where fixed offshore wind will have to
uninterested in investing in these sources when revenue co-exist with other economic activities such as fishing.
prospects diminish.
Our hourly comparative analysis of Norwegian and
But we do not foresee this being a showstopper for Norway. European power systems indicates that up to 50% of
The reason for this is that hydropower and pumped hydro, annual output from Norwegian FOW can be exported to
which have higher and stable variable costs, will counteract Europe. Most of the rest is used to produce electrolysis-
the variability of wind and solar and set the price in combi- based green hydrogen, also for export purposes.
nation with the European electricity market. In 2050,
hydropower will still have a non-trivial share of both hourly There are certain overlaps in the cost of new develop-
and yearly generation in Norway. Additionally, the ability to ments, as well as many geographical and political factors,
export wind power to other regions and gain revenue also resulting in the technology built not always being the
offsets the declining ‘capture price’ problem. lowest cost option. Hence, we get a distribution based on
34
TABLE 3.1
Installed capacity and the annual average capacity factor of power stations
Installed capacity (GW) by the end of year Capacity factor
2022 2030 2040 2050 2022 2030 2040 2050
Hydropower 34.1 35.9 38.7 38.8 45% 46% 44% 46%

Onshore wind 5.5 5.5 9.9 14.3 29% 30% 32% 33%
Floating offshore wind 0.01 1.1 10.1 25.2 50% 50% 51% 53%
Fixed offshore wind 0.0 0.5 6.8 12.2 49% 49% 52%
Solar PV 0.4 2.7 6.6 10.8 15% 15% 19% 20%
Solar+storage 0.0 0.3 1.5 3.7 15% 18% 19%
Thermal 1.0 1.1 0.9 1.7 28%-43% 5%-53% 8%-38% 2%-35%
Onshore wind onshore off-grid capacity for
0.05 0.05 0.1 0.1
hydrogen production
Fixed offshore wind off-grid capacity for

0.00 0.00 3.3 4.0
hydrogen production
Floating offshore wind off-grid capacity for

0.00 0.00 1.4 2.0
hydrogen production
price and those other factors. Figure 3.9 illustrates factor of the installed capacity. In addition to grid-
historical and future annual power capacity additions by connected capacity, we include off-grid capacity
power station type estimated using this logic. Capacity dedicated for hydrogen production. To support a grid
additions in the near future include new capacity under with variable renewable capacity, we forecast 1.4 GW of
construction. pumped hydro storage and 36.5 GW of stand-alone
Li-ion battery storage in the Norwegian electricity grid
After these power stations come online, investments will in 2050.
slow down in the mid-2020s. The 2030s will be the last
decade with significant hydropower additions. With Hydropower
almost full exploitation of hydropower with flexibility and With more than 1,769 plants (Energifaktanorge, 2023),
ramping up/down capability already by 2023, the hydropower is the backbone of the Norwegian electricity
capacity additions in the future will be of smaller plants or system. Unlike hydropower capacity in relatively flat
upgrades in their power capacity capable of generating countries with limited dams, the Norwegian hydropower
output over short periods, but not more energy per year. system is supported by a very strong reservoir storage
capacity, with a total of 87 TWh across the country
From the mid-2020s, solar PV additions take place, (Energifaktanorge, 2023). This capacity acts as a buffer
motivated by electricity deficits during mid-day peaks and against fluctuations in demand, as well as irregularities in
the desire for local energy security. After 2040, we foresee the water flow to the reservoirs. It also has the potential to
the majority of new capacity to be in wind power, domi- act as a battery for electricity systems in Europe. Over the
nated by a large share of FOW, to the point where Norway last 30 years, the average capacity factor of Norwegian
will boast 9% of all installed FOW capacity in the world. hydropower plants has been between 42% and 58% with
a mean value of 49%. This year-to-year irregularity
Table 3.1 shows developments within installed capacity resulted in some years closing with a net import of
through to mid-century and the average annual capacity electricity, but average generation capacity has been
35
above average domestic demand, allowing Norway to be of hydropower and wind. With new interconnections to
a net electricity exporter over the years. the UK, Germany, and the rest of Scandinavia, Norwegian
hydropower will expand its balancing role in the larger
Hydropower will continue to play a central role in Norway’s European power system.
electricity system. However, the existing 34 GW installed
capacity will expand only slightly before 2050, to reach 39 Wind
GW. Although the technical potential for Norwegian Norway’s wind industry has grown steadily since the first
hydropower is estimated to be around 46 GW installations in 1993. At the end of 2022, the total installed
(NVE, 2011; Cleveland & Morris, 2013), we predict capacity was more than 5.5 GW, almost all in the form of
capacity additions to halt well before that owing to onshore projects, with less than 100 MW of floating
factors related to preservation of habitats, licences, offshore wind projects. However, most onshore wind
regulation, cost, and competition. With an increase in turbines are on the southwest, west, and north shores.
annual rainfall as a result of climate change, annual Favourable wind conditions exceeding 1,000 W/m² wind
generation is expected to reach 150 TWh in the 2040s. speed density in some locations, proximity to the grid,
and large areas with relatively sparse population makes
With increased variability on the supply side of the the Norwegian west coast advantageous for wind
electricity system with a growing share of wind, hydro- developments.
power will need to respond to fluctuations not only in
demand, but also in generation. Adoption of new However, future onshore installations are likely to be
technologies allowing hydropower plants to ramp up and delayed and/or scaled down by public concerns like
down more rapidly will be instrumental in the integration noise, impact on birds, recreation, and a desire to
36
preserve untouched landscapes and wilderness. Unlike

many countries with significant fossil shares in their power
With increased variability on the supply side
mixes and where wind investments are regarded as
essential for decarbonizing and lowering the cost of of the electricity system with a growing share
electricity generation, the Norwegian wind industry
of wind, hydropower will need to respond to
enjoys less public support. The public is also wary of
arguments for building excess wind capacity for export to fluctuations not only in demand, but also in
the European continent, ‘incorrectly’ fearing it may cause
generation.
domestic electricity prices to increase.
Given that mitigating climate change also preserves

natural habitats, we predict that growth in Norway’s wind By 2030, the global volumetric learning effect would
capacity will be mostly offshore, constituting 81% of 210 halve the LCOE of FOW and reduce the LCOE of fixed
TWh wind-based generation in 2050. This is despite the offshore wind by a third (33%) (Figure 3.10). The always
headwinds and challenges the global offshore wind higher non-turbine and installation costs of FOW imply
industry has faced in the last 12 months in many mature that even in 2050, the LCOE of FOW will be about 27%
economies such as the US, the UK, and other European higher than that of fixed offshore wind. However, the fact
countries (DNV, 2023a). that the North Sea deepens very quickly off Norway’s
west coast will limit the share of bottom-fixed offshore
As seen in Figure 3.10, the increase in levelized cost of turbines, along with re-prioritization of shallow ocean
energy (LCOE) for wind power also impacted the industry floor space. So, the drastic cost reductions to be
in Norway, with LCOE increases in 2022 and 2023 after expected in offshore wind are one of the major drivers of
almost a decade of continuous reductions. But some the uptake of wind power in Norway. Regardless, the
reasons for the cost increases are indeed temporary, such success of offshore wind also hinges upon it sharing the
as supply-chain snarls and labour shortages and are due ocean space with other domains and uses, such as
a course-correction by 2030. fisheries, aquaculture, shipping, and recreation going
into the future (DNV, 2022).
Another major driver of the uptake of wind in Norway

is the increase in domestic electricity demand, as
presented earlier in Figure 3.6. Due to the limited
growth possibilities of hydropower, wind is in a prime
position to fill the gap between increasing demand and
available supply.
Electrification of offshore oil and gas production will be

an additional driver for offshore wind. With the electricity
consumed by offshore platforms increasing to cover up
to 54% of their energy demand in the coming 30 years,
FOW turbines located near the platforms will be a natural
choice for supplying the required power.
Finally, new interconnections to the UK and Germany,

combined with the higher flexibility needs in Europe, will
mean that revenues for Norwegian FOW operators from
exports will exceed revenues from the domestic market.
37
Solar PV Despite this usefulness, stand-alone solar PV will always

We predict installed capacity to increase 36-fold from 420 be installed more than solar+storage. But in the decade
MW in 2022 to 15 GW in 2050, as seen in Figure 3.11. We leading to 2040, the gap between the two will widen.
include two categories for solar: solar PV panels connected Even more stand-alone solar PV capacity will be
to grid from utility-scale or rooftop arrays, and solar+stor- installed as rooftop solar becomes more ubiquitous
age where storage is integrated as part of the installation, while solar+storage plants lose out on cost competitive-
producing in effect a powerplant with dispatchable power. ness. However, we reiterate that utility-scale solar PV will
remain marginal, with the main use of solar PV panels
Even though solar co-located with storage is initially being in rooftop installations as supplementary power.
more expensive, the ability to capture a higher electricity The main disadvantage of solar PV is low solar irradiation
price when solar PV is not operating will eventually lead in Norway.
to almost a third of the solar PV capacity including
storage capacity as integral by mid-century. Hydrogen
Hydrogen is usually produced either through the
Despite the low-capacity factors reported for solar+ electrolytic breakdown of water into hydrogen and
storage in Table 3.1, the combination has its uses. While oxygen or via steam methane reforming (SMR) natural
capacity factors are useful in determining how much a gas. SMR is currently the preferred option due to the
generation of technology is used over a year, they do not existing SMR infrastructure.
give any insight as to when this generation provides the
capacity. In the case of solar+storage, it can provide However, we forecast the SMR advantage to decrease
stored electricity in periods of high demand, especially in with higher carbon prices and ongoing process
the bridging period of the late 2020s and early 2030s, improvements for electrolysis-based hydrogen
when the Norwegian power system is transitioning to a production combined with lower electricity prices
wind-dominated system. from VRES capacity.
38
Hydrogen supplied via electrolysis is seen as one of many With increasingly abundant VRES, electrolysis will start
flexibility options to take advantage of low power prices gaining traction from the 2040s, and by mid-century will
when production from VRES is plentiful, and demand is supply 95% of hydrogen as an energy carrier, and 80% of
lacking, as also shown in our hourly power demand supply the total hydrogen production.
infographic. However, there are many other markets for
such cheap electricity; for example, for demand response, We see hydrogen as a likely zero-emission energy carrier
pumped hydro, battery-electric vehicles (storage), and for heat applications in manufacturing (Figure 3.13). By
utility-scale batteries. Therefore, it will be some time mid-century, 13.5 PJ of hydrogen will be used for indus-
before abundant VRES results in a steep increase in trial heat provision in manufacturing, a 7% share. Most of
electrolysis-based hydrogen production in Norway. the hydrogen will be used in the manufacturing of
For this reason, SMR coupled with CCS will be the main aluminium and other base materials, followed by iron and
production route for hydrogen for energy in the 2030s. steel production and the construction industry.
The European demand for low-carbon hydrogen coupled
with existing natural gas pipeline infrastructure which may For the transport sector, hydrogen can serve as an
be repurposed for transporting hydrogen, will incentivize energy-storage medium competing with battery
blue hydrogen production in Norway. storage in zero-emissions usage, and as a replacement
for oil and gas. Long-haul, heavy road transport that
cannot rely as easily as passenger vehicles on batteries
for main energy storage, will turn to fuel-cell solutions,
Hydrogen supplied via electrolysis is seen despite these being only half as energy efficient as
batteries and more complex and costly. Hydrogen use
as one of many flexibility options to take in Norway for road transport will pick up from 2040
advantage of low power prices. onwards but only reach 3 PJ by 2050, representing 4%
of road transport energy demand.
Within maritime transport, covered thoroughly in DNV’s

Energy Transition Outlook (2023a) and in our Maritime
companion report (DNV, 2023c), we expect significant
uptake by 2050 of low- and zero-carbon fuel alternatives
derived from hydrogen (e.g. ammonia and synthetic fuels).
They will be partly implemented in hybrid configurations
combining diesel and gas-fuelled propulsion options, and
will provide slightly more than 55% of the maritime fuel mix
by mid-century. We predict ammonia and synthetic
fuels combined will provide 16 PJ/yr of Norway’s
maritime sector energy demand (Figure 3.13) by then.
Norwegian aviation is well-suited for battery-electric

flights on its short-haul network connecting coastal cities.
However, for long-haul and international flights, synthetic
fuels and pure hydrogen will play roles in decarbonizing
aviation. After 2030, when infrastructure has developed
and costs have declined, we see synthetic fuels and
hydrogen starting to replace regular jet fuel and by 2050,
20% (15 PJ) of aviation energy demand is covered by
these energy carriers.
39
4 ENERGY TRADE
Norway will continue to be a significant net exporter of energy but at
progressively lower levels over the next 30 years. This contrasts with the
short-term pressure on Norway to increase exports to Europe as it weans
itself off Russian fossil fuels.
Although new fields will boost oil and gas exports in the and gas exports was USD 55bn (490bn NOK)/year on
immediate future, the production boost will not be average over the last 10 years (SSB, 2023) but grew to an
enough to exceed the export peak of 2001. The long- astounding USD 214bn (1900bn NOK) in 2022 (Norsk
term trend of oil and gas exports will show a steady Petroleum, 2023). Using constant prices, a combined
decline from the middle of this decade (Figure 4.1). 68% reduction in oil and gas energy export revenue by
2050 will translate into USD 17.5bn (155bn NOK) in
By 2050, oil exports will be 7% of 2022 level, and gas annual revenue by then. This figure is one third of the
exports 35% lower than in 2022. Electricity and hydrogen export revenue generated by oil and gas in an average
exports will be marginal for a few years, but with year, and 8% compared with the record year of 2022.
increasing demand from Europe and power capacity However, there will be an increasing amount of electricity,
increases, hydrogen and electricity exports will grow. hydrogen, and ammonia export going forward. 30 TWh/
However, volumes will remain comparatively minor, year in net electricity exports by 2050 translate to an
and electricity and hydrogen revenues will be unable additional income of USD 2bn (19bn NOK)/year. Hydrogen
to compensate for the lost revenue from oil and gas export of about 3.5 MtH2/yr could yield an additional
exports in the long term. The value of Norwegian oil USD 7bn (61bn NOK)/year revenue in 2050 assuming a
40
Energy trade CHAPTER 4
hydrogen price of 2 USD/kgH2. In other words, on the hydrogen or ammonia with these new decarbonized
present trajectory, total energy exports in 2050 will run energy sources then being exported using existing
some USD 28bn (NOK 250bn)/yr below average annual infrastructure with some retrofitting.
export revenue over the past decade.
Electricity exports
Oil and gas exports Norway’s total net transfer capacity to other countries is
Norway’s production meets about 2% of global oil 8.9 GW. Of this, 3.7 GW goes to Sweden, 1.6 GW to
demand. As the competitiveness of Norwegian oil Denmark, 0.7 GW to the Netherlands and 0.1 GW to
weakens relative to other cheaper sources in a world Finland (ENTSO-E, 2023). As shown in Figure 4.2, the
with declining oil demand, its share of the global oil NordLink subsea cable to Germany (1.4 GW) and the
market will gradually reduce to around 1% by 2050. As a North Sea Link to the UK (1.4 GW) came online in 2021
result, total oil exports (including oil products) will fall to and are now operating. To facilitate neighbouring
1 Mbpd (75 million Sm³oe/yr) in 2030, 0.32 Mbpd countries in growing the renewables share of energy
(24 million Sm³oe/yr) in 2040 and 0.08 Mbpd (6 million consumption, in the mid-2030s we foresee an increase
Sm³oe/yr) in 2050. in Norway’s cross-border capacity to Sweden and
Denmark by another 1 GW and 1.3 GW, respectively.
The outlook for gas is less bleak, since natural gas will Interconnectors between Norway and UK (2.8 GW) as
maintain a strong market position in the European well as Germany (1.5 GW) and Netherlands (1.8GW) is
energy system, although lower than we forecast a year expected. Finally, we assume a 650 MW cable from
ago and even lower than the year before. The lower Northern Norway to Finland to be built by 2040.
forecast is a direct consequence of Russia’s invasion of
Ukraine and the associated decision of Europe to move Today, Norway’s electricity grid is divided into five
away from fossil fuels, especially natural gas. The bidding zones. The actual cross-border electricity trade
continent’s demand for gas has likely peaked this year is very dependent on the supply and demand conditions
and will not return to historical levels. Norway supplies in these bidding zones and the markets they trade with.
close to 25% of Europe’s gas demand (Norsk Petroleum,
2023). In parallel with the declining gas demand in
Europe towards mid-century, Norway’s gas exports
(including NGLs) will start to decline within this decade.
In 2050, Norwegian gas exports will be 69 billion m³/yr,
35% less than in 2022.
Total LNG export from Norway is around 6 billion m3/yr

in a normal situation. But with the 2020 fire at Melkøya
and the restored facility’s start-up in June 2022, only
3.7 bn m3 of gas was exported last year, 35% to France,
62% to other European countries, and only 3% to
countries outside of Europe (BP, 2023). We forecast LNG
export to stay at existing levels as gas demand outside
Europe will be increasingly uncertain. But over time it
will decline in line with reduced demand from Europe.
However, it could be that LNG export capacity will grow
in the future as gas export via pipelines is also declining
due to lower European demand: the main form of export
will, however, remain by pipeline to Europe. It could also
be, as discussed below, that natural gas is converted to
41
Our model simplifies this structure by representing The main reason for this decline is a change from
Norway and the rest of Europe as two electricity markets exporting electricity to producing hydrogen and
without any grid constraints within each market. This exporting the gas. Additional wind capacity in Europe
simplified model still operates at hourly intervals and will make it more profitable to produce hydrogen
calculates the trade between Norway and the rest of instead of exporting electricity. The increase in export
Europe, based on the price differentials in each market. of electricity is only partially linked to an increase in net
By using this approach, we can replicate historical trade transfer capacity, because Norway’s ability to export
volumes reasonably well. electricity during the summer months — the time of year
hitherto associated with most exports — does not
In the last 20 years, Norway’s average annual net electricity expand as fast as capacity additions. The real change
export has been around 10 TWh. But going forward, this happens in the winter months. In the past, Norway has
situation is going change. In the short-term, between been a net importer in winter months. But, with ample
2025 to 2035, net imports of electricity will rise by up to generation capacity, especially from new wind invest-
5 TWh/yr. An increase in electricity demand combined ments, from the mid-2030s Norway will become a net
with limited capacity additions are the reasons for this. electricity exporter, also during winter months.
But, the new capacity additions from offshore wind Figure 4.3 demonstrates how electricity trade of Norway
improve the balance such that Norway is again a net changes in a winter month from 2028 to 2038. In 2028, for
exporter increasing the annual export to 63 TWh/yr by the majority of the winter month (60% of the hours)
2040. This high annual exports do not continue Norway imports electricity, and in the hours that it does
onwards, though. With grid-connected electrolysers export, most of the exports are comprised of hydropower.
providing a sustained demand for power, electricity On the contrary, the imports in 2038 are very minimal,
exports decline to 29 TWh/yr by 2050. Nevertheless, with Norway exporting electricity to Europe for about
we expect Norway to remain a net exporter of electricity 90% of the hours. Among the exports, more than 50% is
from 2035 onwards. offshore wind, and the clear majority, FOW.
42
Wind turbines in Møre og Romsdal
We have assumed that new offshore wind capacity will

not only be driven by domestic demand and revenue,
but also by increasing European electricity demand and
opportunities for high export revenue. We see this
happening in a self-reinforcing process, where year-
round export opportunity triggers new floating offshore
wind investments, and the availability of this new
capacity allows much of the floating offshore wind’s
annual generation to be exported. Most of the remaining
capacity will be used to produce electrolysis-based
hydrogen or to recharge long-term storage.
One important reason for the increase in annual net

electricity imports between 2028 and 2032 is bigger
fluctuations in future electricity prices. Our analysis
shows that electricity prices initially will increase and face
bigger fluctuations. As both capacity and export/import
volumes increase, not only will average electricity prices
43
decline, but price fluctuations within the year will also hydrogen) with exports starting in the early 2030s. By
reduce. The price stability is linked to increased flexibility 2040, we expect an export volume over 1 Mt and growing
resources in the power system, brought by new inter- to exceed 3 Mt hydrogen by 2050. By then 80% of the
connections, availability of EV batteries through vehicle- produced hydrogen will be based on electrolysis
to-grid systems, new utility-scale storage capacities, and powered by renewable energy, predominantly wind.
better demand response afforded by widespread
adoption of smart grids. One limitation not accounted for Already installed and future pipelines to the UK and
is the impact of grid constraints, which are not reflected mainland Europe will enable hydrogen transport from
in our model’s design. As each specific bidding zone will Norway to Europe. Blue hydrogen from natural gas
be constrained by its local supply and demand, as well as coupled with CCS could provide a steady flow of
its interconnection capacity, the actual variation in price hydrogen using Norway's natural gas resources and
may be higher than that predicted by our model. CCS knowledge effectively, supplemented by green
hydrogen from renewable energy sources such as
Hydrogen exports offshore wind or Norway’s grid electricity. The export-
In the present decade, hydrogen as an energy carrier based based short- to medium-term focus is on blue
will remain too expensive to be widely used and the hydrogen accounting for 56% of Norway’s hydrogen
demand will instead be created through policy support production by 2035. Another 20% will still come from
and incentives from governments (e.g. in Europe). In the unabated natural gas-based hydrogen production.
2030s, the average price of hydrogen will reduce by half However, by mid-century this ratio changes: over 70% of
compared with the early 2020s and its role in industrial Norway’s hydrogen will be grid-based, 14% in total from
heating will become more widespread, though global natural gas with CCS, 13% from dedicated wind, and 2%
use of hydrogen as an energy carrier will remain smaller from unabated natural gas.
than its non-energy use. The 2040s will be the decade of
demand diversification as more hard-to-electrify Big uptake markets in Europe. such as Germany,
sectors will be forced to use hydrogen or its derivatives strongly prefer hydrogen from renewable sources over
to decarbonize, for example, through the uptake of that produced from natural gas (even if coupled with
ammonia and e-fuels as maritime and aviation fuels. CCS). However, the current turmoil in gas markets has
led to a reluctant acceptance of the bridging role of
Europe, with its strong hydrogen support policies, will blue hydrogen.
lead global hydrogen uptake with 13% hydrogen and its
derivatives in its 2050 final energy mix. Europe is one of While we forecast significant amounts of hydrogen to be
three leading world regions that together will account exported to Europe via pipelines, low-carbon ammonia
for 75% of the global hydrogen demand for energy is going to be traded on keel from Norway. In the late
purposes, a figure that also reflects regions’ shares in 2040s, low-carbon ammonia exports from Norway will
international maritime and aviation energy consumption reach about 0.8 Mt per year, to be shipped mainly to
in line with the size of their economies. European ports.
Norway is in a very good position to support this transition

in Europe. Today, Norway uses predominantly natural gas
and coal as sources for hydrogen production for use as
Blue hydrogen from natural gas coupled
industrial feedstock. By mid-century, Norway’s domestic
hydrogen demand more than doubles, but its hydrogen with CCS could provide a steady flow of
production will grow by a factor of 10. This opens possi-
hydrogen using Norway’s natural gas
bilities for hydrogen export to Europe, as the region’s
demand will exceed its supply. Initially the production of resources and CCS knowledge effectively
hydrogen will be from natural gas using CCS (blue
44
Energy trade
By 2050, Norway’s oil export will be 7% of today’s level. Natural gas exports will be
at 69bn m3 in 2050, 35% below today's levels. A small but growing share of exports
will be in the form of electricity, hydrogen and its derivatives. Such production will
increasingly be larger than domestic demand, and Norway will export 29 TWh/yr
of electricity, 3.5 Mt/yr hydrogen and 0.8 Mt/yr ammonia in 2050.
Oil and gas pipelines

Maritime export
Power cables
Units: GM 3/yr Units: MtNH3/yr
9 10
8 9
7 8
6 7
6
5
5
4
4
3
3
2 2
1 1
0 0
2000 2010 2020 2030 2040 2050
LNG Hydrogen and derivatives
Crude oil exports
Units: Million barrels/yr

1 400
1 200
1 000
800
600
400
200
0
2000 2010 2020 2030 2040 2050
Crude oil exports (includes oil exports by pipeline and shipping)
Pipeline gas trade to Europe Power trade
Units: GM 3/yr Units: MtH2/yr Units: TWh/yr

140 10 70
9
120 60
8
100 7 50
80 6 40
5
60 4 30
40 3 20
2
20 10
1
0 0 0
2000 2010 2020 2030 2040 2050 2000 2010 2020 2030 2040 2050
Natural gas Hydrogen Net electricity export Net electricity import
Oil and gas pipelines, power connectors and ship location are simplified
45
5 EMISSIONS
The energy sector is the dominant source of anthropogenic greenhouse
gas (GHG) emissions globally and in Norway. CO2 is the main contributor to
these emissions and comes largely from the combustion of fossil fuels.
In this chapter, we describe how we estimate Norway’s industrial processes. A large quantity of these come from
emissions by source and sector to develop a full account using fossil fuels as feedstock in the steel and petro-
of them. We begin with the estimated energy-related chemical industries. Non-energy emissions also arise
CO2 emissions derived from our forecast, then list the from the calcination process in cement production and
remaining GHGs and their origins. Since our modelling from other process-based emissions from anodes.
focuses mainly on the energy system, we make assump-
tions on the decarbonization possibilities for other, Other GHGs in Norway’s footprint are methane, nitrous
non-energy related anthropogenic GHG emissions. We oxide, and industrial f-gases (fluorinated gases, i.e.
conclude with a discussion on developments relating to HFCs, PFCs and SF6), all with much more aggressive
the capture and storage of some of these emissions. global warming potential than CO2. Tonne-wise, these
emissions are small compared with CO2, but converted
Emissions by source to CO2 equivalents, they contributed 17% of total GHG
Norway’s energy-related CO2 emissions have risen emissions in 2022 and will account for 40% in 2050.
steadily for three decades, and a decline has only been
observed in the last seven years. In addition to those Norway's forecast GHG emissions trajectory to 2050 is
arising from fossil-fuel combustion, a large share of sobering. In 2022, emissions were slightly less than in
Norwegian CO2 emissions are non-energy related from 1990 and we predict their decline to reach 27% by 2030
46
Emissions CHAPTER 5
and 80% by 2050, when 10.4 million tCO2e will be emitted other major source in the ‘Other’ category is methane
(Figure 5.1). This falls well short of the ambitions for a from landfills. We expect progress in reducing emissions
decline of at least 55% by 2030 and 90–95% by 2050. from agriculture and animal management by 2030 and
2050, but these are tied to activity level and thus relatively
Declining emissions are linked mainly to electrification of difficult to reduce through technical means. We have
road transport and the associated reduction in oil included some progress as described in the Norwegian
consumption. Other factors are a general decline in oil Government’s ‘Green book’ (2023), resulting in 14%
and gas production; using clean grid-connected electricity reduction from 2022 levels to 2030. However, we do
instead of natural-gas turbines to power oil and gas not assume Norwegian agriculture and animal activity
production; and changes in heat-intensive manufacturing levels will decline. Some activities, such as mechanical
processes. As our ETO model does not include non-CO2 machinery in the agricultural sector, will have CO2
GHGs, we have used current emission levels to forecast emission reductions comparable to those in the
trends for each sub-source, or have tied the emission commercial vehicle segment.
source to an activity we model. For instance, methane
emissions from oil and gas activities are tied to activity In 2022, transport emitted 29% (14 MtCO2e) of total
levels and calibrated to historical levels in oil and gas emissions, the largest sectoral share. These will fall
exploration, which are included in the model. significantly towards 2050 but are not on track to fulfil
Norway’s 2030 ambition of reducing transport emissions
Emissions by sector by 55% compared with 1990 levels. The road transport
From a sectoral perspective, all emissions have been subsector emitted 8.7 MtCO2e in 2022. By 2030, this will
associated with the main sectors described in our ETO decline to 5.4 MtCO2e, 26% less than in 1990, and 37%
model. Carbon dioxide emissions dominate all sectors lower than in 2022. The main driver of this reduction is
except the ‘Other’ category, which in this context is electrification, especially in passenger vehicles, where
mainly agriculture. Agricultural emissions are largely emissions decline 54% from 1990 levels by 2030. The
methane from enteric fermentation and manure. The government’s ambition to increase biofuel use to help
47
decarbonize road transport will also contribute. Between Manufacturing currently emits 12.3 MtCO2e, a quarter of
now and 2050, road transport emissions will decline 92% Norway’s total GHG emissions. Just over half of manu-
to represent 7% (0.7 MtCO2e) of Norwegian emissions. facturing emissions are from process-related CO2
emissions in heavy industry, and the rest comes from
Aviation, rail, and maritime combustion emissions have combustion of fossil fuels. By 2030, emissions will have
been declining since 2000 and are currently 38% of declined by only a sixth (17%) due to expected growth in
Norwegian transport emissions. However, these industrial output. By 2050, however, emissions of 4.6
subsectors’ emissions will not decline as fast as those MtCO2e will be nearly two-thirds (63%) less than 2022
from road transport. Helped by synthetic fuels, biofuels, levels. This is due mainly to fuel switching to cleaner
and hybrid electric solutions, overall GHG emissions sources (electricity and hydrogen) in industrial heat, and
from these transport segments are expected to fall 70% to greater use of carbon capture and storage (CCS) of
between 1990 to 2050, when they will be 1.2 MtCO2e. emissions from waste streams.
The second largest sectoral emissions is the 13.5 MtCO2e Buildings energy use in Norway is largely linked to
(28% of total emissions) from ‘energy sector own use’, electric heating. Some fossil fuels are still used for space
mainly for energy extraction and production. Most (62%) and water heating in commercial buildings. The remaining
of this is CO2 from gas turbines generating electricity on emissions are methane from burning biomass for heating.
the Norwegian Continental Shelf (NCS). As the NCS Currently, the buildings sector represents only 1% (around
continues to electrify more production, as efficiencies 500 ktCO2e) of Norwegian emissions. Even with an
increase, and as installations without electrification reach expected increase in building mass and floor space, these
end of life, emissions will decline by 30% between 2022 emissions will decline further due to building standards
and 2030. By 2050, emissions from 'energy sector own efficiencies, fuel switching, and the further introduction
use' will have reduced 84% to 2.1 MtCO2 since 2022 due of heat pump systems, making electric heating even
to declining activities on the NCS and an electrification more prevalent. By 2050, emissions will have further
rate of just over 54% of the energy used. declined by 33% to 340 ktCO2e per year.
The developments we are aware of today

and have modelled are not happening at
sufficient scale to make a significant contri-
bution to the emissions reduction required
to achieve Norway’s climate ambitions.
48
Emissions CHAPTER 5
The Johan Sverdrup field. Image ©Equinor/Lizette Bertelsen, Jonny Engelsvoll
Carbon capture and storage activities. However, there is a likelihood of the CCS
Carbon capture and storage (CCS) is currently almost activity at Melkøya being replaced by other activities
solely applied in processes related to oil and gas where the capture of CO2 is necessary for gas shipped
extraction, where there is a viable business case or need on keel.
to follow technical specifications. We forecast that in the
future, large point sources, mainly in manufacturing, Our modelling also includes 400 ktCO2/yr carbon
will increase carbon capture from their waste streams. capture at Brevik cement plant and 400 ktCO2/yr from
Collectively, however, the developments we are aware the Klemetsrud waste-to-energy plant, with both
of today and have modelled are not happening at capture streams anticipated to come online gradually
sufficient scale to make a significant contribution to the from 2025 to 2028.
emissions reduction required to achieve Norway’s
climate ambitions. The Norwegian government approved state funding of
NOK 16.1 billion as part of the Longship CCS initiative in
Today, there are two CCS processes in Norway, both 2020 (Government.no, 2020). Such a significant invest-
related to oil and gas activities. At the Sleipner field ment incentivizes increased CCS activity, which we
some 850 ktCO2/yr is removed from gas and injected include in our model, along with a significant increase in
into an offshore sandstone reservoir (GCCSI, 2023). At CO2 price. The effect is an increase of emissions
the Melkøya LNG facility, an additional 700 ktCO2/yr is captured, starting in the late 2020s and slowly adding
captured and transported back to the Snøhvit field and CCS capacity in new sectors to be capturing a total of
stored in offshore reservoirs to prevent dry ice forma- 8.4 MtCO2/yr by 2050 (Figure 5.3). A large share of the
tion in the liquefaction process. The Sleipner field is captured CO2 will be from blue hydrogen production —
expected to close by 2030 (Equinor, 2020) and Snøhvit 6.6 GtCO2/yr by 2040. Capture will then decline towards
by the late 2030s (Offshore, 2006). We do not anticipate 2050 as green hydrogen production grows and outcom-
the capture from Sleipner being replaced by other petes blue hydrogen.
49
Direct air capture (DAC) – direct capture and sequestration Energy transition indicators
of CO2 from the atmosphere – is still an emerging technol- Norway’s energy system is unique compared with those
ogy. It shows promise for further decarbonization but is of other countries. It has abundant natural energy
currently only in pilot state and will need to prove it works resources and a relatively small population; a large
in large-scale installations. In our forecast, DAC will only energy export; and a power sector already among the
make a meaningful difference by 2040. It is nevertheless a most decarbonized globally. Figure 5.4 presents
much-needed technology to limit global warming to 1.5°C Norway’s development against three main energy-
and could be very meaningful for individual companies to transition indicators: electrification, energy-intensity
offset their existing emissions. Several initiatives attracting improvements and carbon intensity in comparison to
investor interest will likely lead to early uptake of DAC in other regions. Norway’s share of electricity in final energy
Norway and capture reaches 1.9 MtCO2/yr by 2050, 1% of demand will reach 66% in 2050, far higher than in any of
global DAC capacity. the regions in our global forecast. Energy intensity is
reduced to 1.8 MJ/USD in mid-century, slightly more
Combining CCS on point sources with DAC, we expect than in the rest of Europe, where it is expected to reach
a total capture of 10.3 MtCO2 /yr in 2050, leaving 10.4 1.5 MJ/USD. Carbon intensity significantly declines
MtCO2 uncaptured. Remaining CO2 emissions stem between 2030 and 2050, reaching a final value of 6.2
from sectors such as transport, where emissions are gCO2/MJ (81% reduction). This level is much lower than
difficult to capture, as well as from other point sources in Europe, where we see an intensity of 10.6 g gCO2/MJ,
where capture remain expensive and complicated. 78% less than 2022 levels. The main reason for these
Remaining non-CO2 emissions in 2050 (4.6 MtCO2e) differences is that emissions in Europe stem mainly from
are found mainly in the agricultural sector (82%) and transport and buildings. These are sectors that Norway
will be increasingly difficult to avoid or remove without has electrified significantly, giving Norway an advantage
considerable disruption to food production. when considering carbon intensity.
50
Emissions CHAPTER 5
Melkøya LNG Facility, Hammerfest
51
6 NORWEGIAN TRANSITION IN AN EU CONTEXT

Norway faces a difficult conundrum in balancing its role as a secure
supplier of oil and gas to Europe, building a strategic position in energy
transition opportunities — while managing inherent transition risks for its
oil and gas resources — and meeting its own decarbonization ambitions
under joint European commitments. Where the EU has stepped up its
transition efforts, emissions cuts, and race for leadership in cleantech,
Norway’s progress is far behind its announced ambitions.
The energy transition in Norway is closely linked to EU are the backbone of efforts to achieve European energy
climate goals, energy transition policies, and energy- and climate objectives such as implementing REPowerEU
related dilemmas, and heavily impacted by international and aiming for a renewable share in electricity generation
factors including the war in Ukraine and global supply- to grow to 69% (592 GW solar PV and 510 GW wind) in
chain problems. EU demand, regulation, and policies are 2030 (DG-Energy, 2023).
driving energy discussion and policy in Norway. With
much of the key legislation of the Fit for 55 package Many proposed measures and changes to EU directives
adopted in 2023, the EU deems itself on track towards its are relevant to the European Economic Area (EEA), of
goals to reduce EU emissions by at least 55% by 2030 and which Norway is a member. These include measures to
reach climate neutrality by 2050. Norway has reconfirmed green industrial and energy sectors, an example being
its aim to cut emissions at least 55% by 2030 (compared the Renewable Energy Directive raising from 32% to
to 1990 levels) and 90–95% by 2050, but our forecast 42.5% (while striving for 45%) the EU target for renewable
shows these goals are unachievable with current trends energy’s share of the energy consumption in 2030; the
and policies. The Climate Progress Report 2023 (ESA, updated Energy Efficiency Directive; a reform and
2023) concludes that Norway expects “a significant gap extension of the EU Emissions Trading System (EU ETS);
towards its current targets” and should add measures to and the introduction of a Carbon Border Adjustment
contribute to the Europe-wide effort. Mechanism (CBAM) on certain industry and energy
imports into the EU. Clean transport investments are
EU transition legislation forging ahead incentivized by the ReFuelEU Aviation initiative and
Norway shares the EU ambition for Europe to be the FuelEU Maritime regulation aiming to reduce these
world’s first climate-neutral region. With the Fit for 55 transport subsectors’ environmental footprint by
legislative proposals from 2021, the EU hopes to put itself promoting the uptake of sustainable fuels. Updated CO2
on a path for 55% less emission by 2030. Most pillars of standards for cars and vans introduce progressive
the Fit for 55 package are in place, with several adopted EU-wide emissions reduction targets in road transport.
into law in 2023. Their urgency was heightened by the The Alternative Fuels Infrastructure Regulation should
war in Ukraine leading to energy supply and price crises. ensure access to sufficient infrastructure for recharging
The crises prompted temporary measures and accelerated or refuelling road vehicles and ships with alternative fuels.
the package’s legislative changes and energy policy
reforms. One example is the REPowerEU plan (May 2022) Uncertain future demand for Norwegian oil and gas
boosting efforts to save, diversify, and increase European Norway stepped up its role as a secure supplier to
renewable energy production and consumption, thereby alleviate the EU’s gas and oil shortage following
increasing energy security. Renewable power and grids Russia’s invasion of Ukraine in 2022 and Russia cutting
52
Norwegian transition in an EU context CHAPTER 6
24 April 2023, Norwegian Prime Minister Jonas Gahr Støre meets Ursula von der Leyen, President of the European Commission,
to sign the EU/Norway Green Alliance. Copyright: European Union, 2023.
53
gas exports to EU countries. Gas production was In addition, expected electricity demand from the oil
boosted 8% in 2022 and Norway became the biggest and gas sector might also tie up grid capacity. Norway’s
supplier to the EU. The Norwegian share of EU pipeline 2021 Climate Action Plan foresees an increase in the
natural gas imports increased from 38% in Q1 2022 to Norwegian carbon tax for emissions from the energy
46% in Q1 2023, and its share of EU oil imports sector’s own use from around 760 NOK today to 2,000
increased from 10% in Q1 2022 to 13% in Q1 2023 NOK in 2030. With the oil and gas industry accounting
(Eurostat, 2023). for around a quarter of Norway’s total GHG emissions,
the carbon tax might provide higher incentives for
However, long-term developments in the EU, aided by electrification of petroleum activities. Statnett assumes
the aforementioned deepening of existing and new EU a doubling of the power consumption, which is similar to
legislation, point toward oil and gas becoming less our forecast, from the petroleum sector by 2030. This
attractive to EU markets sooner than previously might divert grid companies’ capacities from other
anticipated. Legislative efforts to meet clean energy much-needed network reinforcements.
goals, wean itself off Russian supplies, and reduce
import dependencies, are likely to speed up the EU’s In contrast to the perspective of dwindling demand for
phase-down and eventual phase-out of oil and gas, in Norwegian oil and gas, there might be demand for
turn creating uncertainty around future demand and decarbonized Norwegian gas in the form of blue
therefore Norwegian exports. DNV’s main ETO forecasts hydrogen produced from natural gas using steam
international and European oil demand to be, respectively, reforming and carbon capture and storage (CCS).
38% and 62% lower than 2022 levels in 2050. EU Norway’s Equinor and German power company RWE
demand for natural gas is projected to fall 66% by 2050. signed a memorandum of understanding (MOU) to
This demand decrease is similarly reflected in our ETO jointly develop large-scale energy value chains. The aim
for Norway, which sees oil production fall 12% by 2030 is to replace coal-fired power plants in Germany with
and 88% by 2050, and gas production decline 6% by hydrogen-ready gas-fired power plants, and to build
2030 and 42% by 2050. production capacities for low-carbon hydrogen in
Norway. This MOU also includes export of low-carbon
Lopsided investments tilt in favour of fossil fuels hydrogen via pipeline from Norway to Germany, and
Norwegian investment in oil and natural gas extraction the joint development of offshore wind farms. This
is expected to increase 23% in 2022/23 following opportunity is reflected in our ETO numbers: more than
average growth rates fluctuating around 3% year-on-year three million tonnes of hydrogen is piped from Norway
over the last five years. In absolute terms, oil and gas to the EU in 2050.
extraction and pipeline investment constitutes 70% of
total industry investment in Norway and is eight times Discussing future Norwegian oil and gas production is
higher than the investment in electricity production and challenging due to conflicting trends, such as the likely
transmission and distribution networks in 2023. Invest- dwindling of long-term fossil-fuel demand, potential
ment in energy generation, on the other hand, has been future opportunities related to CCS, and long-term
decreasing year-on-year since 2020 (see Statistics effects and opportunity costs of today’s investment
Norway, 2023 for all relevant investment data). decisions for adjacent energy and industry sectors. The
Climate Committee was clear on the need for planning
Though predominantly capital-intensive, the Norwegian with an eye to resource scarcity and fossil-fuel risks, on
oil and gas industry engages a crucial part of the labour the latter recommending the preparation of “a strategy
force, which is consequently unavailable for electrifying for the final phase of Norwegian petroleum activities…”
industrial energy use and the build-out of the renewable and “not granting any further licenses for development
power, transmission, and distribution sectors. and operation (PDO) or installation and operation (PIO)
until such a strategy has been completed” (Klimautvalget
2050, 2023).
54
Electricity sector — too little of everything, too slow return to pre-2022/23 levels in the medium term, due to (i)
Norway’s electricity is almost completely produced from increasing CO2 prices, (ii) increasing interconnectivity with
renewable energy sources, especially hydropower. Yet continental Europe, and (iii) the growth in intermittent
on the back of decarbonization requirements and further power generation, further boosted by more ambitious EU
electrification of energy demand through new electricity- renewables targets combined with limited national
intensive industries, there is a need for massive expansion. capacity build-out. Only after 2035 could the wholesale
However, the development of renewable energy sources electricity price reach pre-crisis levels, driven by lower
in Norway is stagnating due to several domestic issues, renewables costs, new power generation, and further
which are also likely to affect Norway’s ability to export power sector decarbonization on the European continent.
electricity into the EU in the medium term. At the same
time, Norwegian power prices will continue to be In February 2023, the Energy Commission presented its
affected by developments in the EU. report (NOU 2023:3) More of everything — faster on the
long-term development of the Norwegian power system.
Similar to Statnett (Statnett, 2022) and to conclusions in
this ET Norway report, the Energy Commission warns that
Increasing renewable electricity capacity is a Norway could face a power deficit as early as 2028 as a
key enabler in both the EU and Norway for net export of ~15 TWh in 2020 becomes a net import of 5
TWh by 2030, according to the ETO.1 This shift is driven
combatting high electricity prices. by growing power demand, mainly from energy-intensive
industries, the oil and gas sector, and from road transport
electrification. Statnett (Statnett, 2023) has revised its
deficit projections from 2022 and expects the power
Up until recent years, Norway had an electricity surplus
surplus to continue until 2028, pushed back from 2027
with abundant stored hydropower guaranteeing relatively
due to slower growth in power demand. However, the
low power prices and low power price volatility compared
consensus still seems to be that the power balance will
to other European countries. However, both price levels
deteriorate significantly in the coming years. A weaker
and volatility have increased over the last couple of years in
power balance means that Norway has fewer hours of
line with European electricity prices. The build-out of
power export during the year and more hours of importing
interconnections with European countries and the
power, resulting in further convergence of Norwegian
increase in intermittent power generation in Norway and
power prices towards higher continental prices.
the Nordics both contribute to higher and more volatile
prices in Norway. In addition, the war in Ukraine and the
Increasing renewable electricity capacity is a key enabler
corresponding surge in commodity prices aggravated
in both the EU and Norway for combatting high electricity
these trends over the past two years, driven mainly by
prices, matching increasing power demand, and achieving
costlier gas-fired generation. The EU’s more ambitious
climate goals. The Norwegian expert committee on
decarbonization goal and the updated EU ETS will likely
electricity prices recently concluded that a lasting
result in an upward price trend in the EU and in Norway
Norwegian power surplus is the most important measure
compared with the pre-crisis price path. The EU ETS
to ensure low and competitive prices long term
Carbon Permits price went from around 20 EUR/tCO2
(Strømprisutvalget, 2023). However, almost no new
before 2021 to just above 100 EUR/tCO2 in the spring of
power generation is being developed in Norway. A key
2023. Current price levels are at 80 EUR/tCO2 and are
question is therefore whether development of new
expected to increase to around 150 EUR/tCO2 by 2030
power generation is sufficiently fast to achieve politically
(DNV, 2023a). Norwegian electricity prices are unlikely to
agreed targets and the necessary transition speed.
1. While Statnett estimates a 2 TWh deficit in 2027, NVE believes that the balance will barely be positive with 2 TWh. NVE and Statnett agree that the power balance will deteriorate
significantly in the coming years.
55
NVE numbers show that, since 2020, almost no new gas activities could divert more scarce resources from
licences for renewable energy capacities, including grid reinforcements needed for more renewable energy
hydropower and wind power, have been granted; hence and rising electricity demand.
almost no new power generation is under development
(Fornybar Norge, 2023). Several challenges for renewable A standstill in the power sector could dampen new
electricity in Norway need resolving to ensure sufficient energy-intensive demand and ultimately affect industrial
development of future energy capacity. development and jobs. The 2022 surge of electricity
prices in Norway led to a more permanent dip in electricity
Conflict resolution is a major challenge for further demand than initially expected, and to the postponement
onshore wind development. After the share of onshore of several electrification projects in the petroleum
wind in Norway’s electricity system grew tenfold in the sector (Statnett, 2022; Statnett, 2023). Future industrial
last decade, local opposition increased based on the development in Norway can be negatively impacted by
perceived impact on landscapes and ecology. Popular high electricity prices and a stagnating power sector.
support for onshore wind farms has halved between 2018 Recognizing that more renewable power is needed to
and 2021, according to CICERO's Population Surveys on match increasing demand, bring down electricity prices,
Climate (CICERO, 2022).2 Conflicts of interest between and deliver on Norway’s climate goals, the Energy
renewable energy developers, municipalities, reindeer Commission calls for “more of everything, faster”. Given
husbandry, tourism, and nature preservation interests are the challenges outlined, Norway’s expansion of renewable
difficult to align. electricity capacity over the past few years has, in our
view, been too little, too slow.
Offshore wind is expected to generate less conflict of
interest, but it is not yet commercially viable in Norway. Pick up the pace to leverage opportunities
The expansion of offshore wind will be dependent on the Energy sector electrification has been progressing
available mechanisms supporting its expansion. In our steadily, especially in road transport and manufacturing.
forecast we have included initial support for the first Road transport emissions have decreased since 2022
build-outs. Support is declining towards 2040, with the and are expected to decline steadily until 2050. The
lowering cost of wind technology. In addition to these ETO for Norway also expects the Norwegian power
sources of income, we expect there to be mechanisms to deficit to vanish after 2033 and power prices to decrease
redistribute profits from high-margin energy exports, significantly thereafter, provided that investment in new
such as hydropower and green hydrogen exports, to renewables capacity picks up in the second half of the
further enhance the financial viability of offshore wind 2020s and the 2030s. In addition, Norwegian investments
development. in CCS are pulling weight in an international setting.
The Northern Lights project is seen as a CCS reference
As in most European countries, the necessary build-out project open to CO2 imports from EU countries. Large-
of the transmission and distribution grids is challenging scale renewable energy and CCS development are key
in Norway. Grid companies have a reactive strategy, prerequisites for Norway to seize the opportunity to
making investments based on requests and thereby export much-needed low-carbon hydrogen, ammonia,
impacting concession lead times. Moreover, municipalities, and e-fuels into the EU.
interest groups, and the public have the right to raise
concerns regarding any energy or grid development, As the EU is accelerating towards its goal of climate
with their views being accounted for in the licensing neutrality in 2050, more needs to be done in Norway to
decision. With Norwegian grid operators already facing keep up, realize its own ambitious climate goals, and to
skills and equipment shortages, electrification of oil and seize opportunities arising from the EU energy transition.
2. The proportion who answered "yes" to the statement that "Norway should increase wind power production on land" fell from 65% to 33% from 2018 to 2021. In 2022, the
proportion rose slightly to 39% positive answers, against 35% negative answers.
56
Windmills at Fosen
57
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long-offset control system. https://www.offshore-mag.com/subsea/
article/16754525/snhvit-development-employs-subseatobeach-lon- Strømprisutvalget (2023) Balansekunst, Avgitt til Klima- og miljøde-
goffset-control-system partementet 12. oktober 2023. https://www.regjeringen.no/no/
aktuelt/rapporten-fra-straumprisutvalet-levert-til-olje-og-energimin-
SSB – Statistisk sentralbyrå (2023) Statistikkbanken. https://www.ssb. isteren/id2999734/
no/statbank
Supreme Court of Norway (2021) Licenses for wind power develop-
Statistics Norway (2023) Investments in oil and gas, manufacturing, mining ment on Fosen ruled invalid as the construction violates Sami reindeer
and electricity supply. https://www.ssb.no/en/statbank/table/07155 herders right to enjoy their own culture. https://www.domstol.no/en/
supremecourt/rulings/2021/supreme-court-civil-cases/hr-2021-1975-s/
Statnett (2023) Kortsiktig Markedsanalyse 2023-28, September 2023.
https://www.statnett.no/globalassets/for-aktorer-i-kraftsystemet/ WIC – Wittgenstein Center (2023) Population and Human Capital
planer-og-analyser/kma/kortsiktig-markedsanalyse-kma-2023-2028.pdf Projections (WIC3.002 (Beta), https://doi.org/10.5281/zenodo.7921989
THE PROJECT TEAM
This report has been prepared by DNV as a cross- Core modelling- and research team and contributing
disciplinary exercise between the Group Technology authors: Jørgen Bjørndalen, Ingeborg Hutcheson
and Research unit and our business areas. Fiskvik, Mahnaz Hadizadeh, Thomas Horschig, Kjetil
Ingeberg, Anne Louise Koefoed, Erica McConnell, Henna
Core contributors from DNV: Narula, Eduard Romanenko, Karolina Alexandra Ryszka,
Sujeetha Selvakkumaran, Adrien Zambon, Roel Jouke
Project responsible: Sverre Alvik Zwart, Kjersti Aarrestad
Project manager: Mats Rinaldo (mats.rinaldo@dnv.com) Editor: Mark Irvine
Modelling responsible: Onur Özgün Communications: Anne Vandbakk
Published by DNV AS. Design Minnesota Agency Historical data

Print Aksell. Paper Silk 130/250 g. Images Cover image: This work is partially based on the World Energy Balances database
developed by the International Energy Agency, © OECD/IEA 2023
Shutterstock, p. 3, p. 9, p. 27, p. 43: Pexels, p. 6, p. 13, p. but the resulting work has been prepared by DNV and does not
17, p. 19, p. 20p. 22, p. 23, p. 25, p. 36, p. 51, p. 57: necessarily reflect the views of the International Energy Agency.
Shutterstock, p. 53: Unsplash, p. 49: Getty Images. For energy-related charts, historical (up to and including 2022)
numerical data is mainly based on IEA data from World Energy
Balances © OECD/ IEA 2023, www.iea.org/statistics, License:
www.iea. org/t&c; as modified by DNV.
59
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Energy Transition Norway 2023

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ENERGY

A national forecast to 2050

All renewables are weather-dependent, and we should

1.1 About this Outlook 6

6 Norwegian transition in an EU context 52

relevance to the energy transition; first and foremost the

and coal, we include import and export of electricity,

1.2 Assumptions and Technology development

Population (MN) GDP/person (USD) GHG emissions (MN tonne CO2e)

Norway 78 900 48.9

Norway 109 100 10.4

In our global model, country-level data on expected

It is not a given that energy or climate ambitions and

Targets and ambition levels may or may not be translated

From the main ETO report (DNV, 2023a) we have a

Renewable power support

Zero-emission vehicle support

Carbon capture and storage

Power capacity limitations

Agricultural (Other sector) practices reducing methane

2.1 Transport purchase and operational benefits. Over time, battery

Road However, EV uptake in the near term hinges on continued

Globally, a lack of sufficient enforcement mechanisms

2.3 Manufacturing Hydro Norse aluminium production

Construction and mining — includes mining and

Base materials — includes production of non-metallic

Iron and steel — includes the production of iron and steel.

Norway’s manufacturing sector consumed 278 PJ in

Energy demand for the base materials subsector was 195

Most of the Norwegian iron and steel subsector’s

2.4 Non-energy 2.5 Energy demand carriers

Cheap renewables, technological advances,

Electric ferries in the Oslo fjord

In addition to its domestic consumption, Norway exports

The domestic energy mix today is mostly electricity- and

Thanks to the aggressive adoption of EVs in Norway, and

Globally, as oil fields are depleting faster than global

to severe curtailment of North East Eurasian natural

Total electricity use in buildings will increase about 28%,

Norway’s hourly supply and demand

Installed capacity (GW) by the end of year Capacity factor

2022 2030 2040 2050 2022 2030 2040 2050

Hydropower 34.1 35.9 38.7 38.8 45% 46% 44% 46%

Fixed offshore wind off-grid capacity for

Floating offshore wind off-grid capacity for

preserve untouched landscapes and wilderness. Unlike

Given that mitigating climate change also preserves

Another major driver of the uptake of wind in Norway

Electrification of offshore oil and gas production will be

Finally, new interconnections to the UK and Germany,

Solar PV Despite this usefulness, stand-alone solar PV will always

Within maritime transport, covered thoroughly in DNV’s

Norwegian aviation is well-suited for battery-electric

Total LNG export from Norway is around 6 billion m3/yr

Wind turbines in Møre og Romsdal

We have assumed that new offshore wind capacity will

One important reason for the increase in annual net

Norway is in a very good position to support this transition

Oil and gas pipelines

Crude oil exports

Units: Million barrels/yr

Pipeline gas trade to Europe Power trade

Units: GM 3/yr Units: MtH2/yr Units: TWh/yr

The developments we are aware of today