Norwegian owners warn greenhouse gas plan could increase costs, weaken competitiveness

The Norwegian Government has announced that it will introduce Norway-specific requirements for the greenhouse gas intensity of offshore vessels on the Norwegian continental shelf from 2029. The restrictions on greenhouse gas emissions will become progressively tighter in the decade after that.

Responding to the proposals, the Norwegian Shipowners’ Association has warned that they could weaken the competitive position of vessel owner in Norway.

Norwegian Shipowners’ Association chief executive Knut Arild Hareide said, “The government’s proposal weakens the competitiveness of the Norwegian offshore fleet and increases costs on the Norwegian shelf.

“The price tag for these requirements could be several billion Kroner, with uncertain climate benefits. This is bad business policy and bad climate policy.”

Mr Hareide said the Association and its members are concerned about the effects the greenhouse gas proposals could have on activity on the Norwegian continental shelf. They believe these potential effects have not been sufficiently investigated by the government.

“Increased costs for offshore vessels will directly impact the cost level on the Norwegian continental shelf. This will raise the threshold for new projects, especially at a time when many investments are already demanding. The consequence could be lower activity, fewer assignments and weakened value creation along the entire coast,” said Mr Hareide.

The Norwegian Government recently held a public consultation on the proposal. The consultation received more than 40 responses, with a strong preponderance of critical input. The opposition is broad and includes operating companies, shipping companies, employee organizations and international organizations.

“The government is introducing costly, uniquely Norwegian regulations despite great opposition from a united industry,” said Mr Hareide. “This is happening without support in the Storting, and in direct contradiction to clear signals that the framework conditions on the Norwegian shelf should remain fixed. This unpredictability is impossible for the business community on the Norwegian shelf to deal with.”

The Association says the requirements will entail significant costs for new fuel solutions, conversions and construction of new vessels. It says several proposed solutions ‘are still immature, expensive and associated with significant uncertainty related to safety, operations and infrastructure.’

“The Norwegian offshore fleet is already among the world’s most climate-efficient and technologically advanced, and has reduced emissions significantly through energy efficiency, hybrid propulsion, shore power and other new technology,” said Mr Haredei. “The industry has achieved this while maintaining its global competitiveness. Norwegian shipping companies have great ambitions for further emission cuts, but this cannot happen through uniquely Norwegian requirements that weaken the international competitiveness of the industry.”

An analysis by DNV suggests the proposal could cost Nkr6.7-10.2Bn. The EU is already revising climate regulations for shipping, and the industry expects these rules to be made applicable to the Norwegian continental shelf. At the same time, work is underway in the IMO to develop global climate measures for shipping.

“Shipping will face several different, and partly contradictory, national and international regulations that apply to the same vessels. For the Norwegian continental shelf, this will be an expensive and inefficient doubling of regulation that weakens the attractiveness and competitiveness of the Norwegian continental shelf,” Mr Hareide said.

The Association is also critical of the fact that biofuels will not, in practice, be able to be used to meet the requirements. It notes that biofuels are currently one of the few available measures that provide rapid emission reductions in the existing fleet. When such solutions do not pay off, the industry is pressured to switch to more expensive, less accessible, less efficient and more unsafe alternatives,” Mr Hareide concluded. “We believe that the authorities must give greater priority to measures that actually reduce emissions, while also safeguarding competitiveness.

“The Norwegian offshore fleet is already among the world’s most climate-efficient. If we are to continue to deliver emission reductions, we need predictable and technology-neutral framework conditions – not costly national requirements that move activity and emissions out of Norway.”