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EXPLAINED: Norway’s divisive decision to connect a gas plant to the power grid

Norway's government has approved a plan to connect the Hammerfest liquified natural gas plant to the power grid to cut greenhouse gasses. However, the move has been met with strong opposition. 

Pictured is a file photo of Equinor's LNG facility on Melkøya.
Norway has given teh green light to power Melkøya from the national grid. File photo: Equinor's liquified natural gas facility on Melkøya. PHOTO / NINA LARSON (Photo by NINA LARSON / AFP)

The Norwegian government has given the green light to plans to connect the Hammerfest liquified natural gas plant on the island of Melkøya in northern Norway to the local energy grid. 

The measure could cut up to two percent of Norway’s total annual emissions, according to plant operator Equinor. The plan involves shutting down a gas plant that powers the facility and replacing it with energy from the grid. 

Electricity supplied from the grid would be much cleaner than energy from the gas plant because the vast majority of Norway’s power needs are met by renewable sources. 

“This is an important day for building industry and creating jobs in northern Norway, and for the climate,” Norway’s Prime Minister Jonas Gahr Støre told a news conference held in front of the plant in Arctic Norway.

The planned power switch will take place in 2030. Equinor and its partners will invest 13.2 billion kroner to electrify Melkøya. The facility at Melkøya can deliver 6.5 billion cubic metres (bcm) of gas per year, enough to power about 6.5 million homes. By electrifying and upgrading the plant, it could remain in operation until 2040. 

Plans to electrify Melkøya have been met with heavy opposition. Norway’s parliament had previously asked the government to explore other options, such as carbon capture storage at the plant. This would involve capturing emissions and storing them permanently under the ground at the site.    

To prevent Melkøya from using all the energy in the region, the government has planned a large-scale expansion of the power grid in Finnmark. 

Several wind projects in the region have also received licences to meet the power demands of the electrification. However, issuing licences for new projects to expand energy capacity in the north typically conflicts with the interest of reindeer herders. 

“The problem is that many of the wind power projects for which a licence has been applied for are located in areas with reindeer herding. So it will be full of conflict and not entirely easy to carry out,” Olav Botnen at Volt Power Analytics told Norwegian financial newspaper Dagens Næringsliv (DN). 

Norway’s government has been in several disputes with reindeer herders over the development of energy projects. In 2021, the Norwegian government lost in the Supreme Court after it was ruled that the Fosen wind farms in central Norway encroached on the rights of indigenous Sami reindeer herders

The court ruled that the wind farms, which disrupted reindeer herding, violated the International Covenant on Civil and Political Rights. It said that traditional Sami reindeer herding is a protected cultural practice. Despite the ruling, the Norwegian government has not announced plans to remove the wind turbines deemed illegal. 

The Sami Parliament has condemned the government’s decision to electrify Melkøya.  

“It is completely unacceptable that the government announces the electrification of Melkøya in this way. Such a decision shows that the government is setting aside all promises about consideration for Sami rights holders. The promise of strengthened dialogue with the Sami Parliament also seems to be empty words,” Sami Parliament president Silje Karine Muotka said. 

Locally, the plan could also push up energy prices for households. This is because energy analysts predict it will be difficult to develop enough power to electrify the plant. 

This means supply could struggle to keep pace with demand. Northern Norway, generally, sees the lowest energy prices in the country as it produces far more power than it needs. 

There are also concerns that other green energy projects may find it hard to get off the ground as priority will be given to meeting Melkøya’s energy needs. 

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POLITICS

What’s been added to Norway’s revised national budget?

Norway's government has tweaked its revised budget to get support from the Socialist Left Party for a parliamentary majority. From cheaper dental bills to increased child support, here's what you need to know.

What's been added to Norway's revised national budget?

Norway will tap its oil fund for 1.2 billion kroner in extra funding, in addition to the public spending announced when the revised budget for 2024 was unveiled earlier in the spring.

The country’s minority government, comprised of the Labour Party and Centre Party, has turned to the Socialist Left Party to secure a majority for its budgets.
During the negotiations to secure support, new policies are typically put forward by the Socialist Left Party.

The budget was agreed on Monday and will pass through parliament before summer recess.

“It has been crucial for us that the revised national budget should give people throughout Norway a better everyday economy, ensure safety and predictability for people and business,” fiscal spokesperson Ole André Myhrvold from the Center Party said.

Families will see child benefits increased for all children over six. This support will increase 256 kroner a month or 3,072 kroner per year. Once the budget has gone through parliament, payments will be increased from September 1st.

Younger people will also benefit from cheaper dental bills. The cost of dentistry will be heavily subsidised, 75 percent for 25-and-26-year-olds.

More student accommodation would also be built. Student organisations have warned recently that too many pupils at universities have been forced into the private rental market.

The country’s state housing bank would also receive more money, tenants’ rights would be strengthened, and housing support would be increased. The parties have said that a housing package will help get more people onto the property ladder.

READ ALSO: Everything you need to know about the Norwegian State Housing Bank

Significant investment will be made in offshore wind. The parties have promised to invest at least 35 billion kroner in offshore wind. The money will be used to finance and develop 5-10 TWh of energy. The oil industry will have taxes increased to pay for the investment in wind farms.

Several opposition parties have praised the budget for increasing child support. However, the main opposition party, The Conservative Party, was critical of the use of oil money.

“Despite the fact that the government and Socialist Left Party have turned the revised national budget into a completely new state budget, there are no proposals to give Norway more to live on after oil,” the Conservative’s fiscal policy spokesperson Tina Bru has said.

“The use of oil money is increasing, and taxes are still at a record high level. This is not a budget for the future,” she added.

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