Norway Raises Carbon Tax on Oil Industry to Fund Low-Carbon Transition

Norway is demonstrating how its income from oil can be used to fund the transition away from oil.

The world’s third-largest oil exporter charges a carbon tax on companies that drill offshore, and as of January 1, it plans to double it. Companies will be charged $72 for each ton of carbon they emit.

In its draft 2013 budget, it also proposes carbon taxes on the fishing industry of $8.84 per ton.

The proceeds will be used to fund a wide range of initiatives:

  • Climate and Energy Fund focuses on reducing greenhouse gas emissions and increasing industrial efficiency by developing and implementing new technologies. $1.6 billion will be added to the Fund in 2013, bringing the total to $6.1 billion, and more will be added each year. 
  • Increased funding for the Norwegian Climate and Forest Initiative, which combats deforestation in developing countries – $525 million more in 2013.

    The program has been achieving considerable emissions  reductions in Brazil and better forest management in Indonesia, Ethiopia, Guyana and Tanzania, among others, they say.

    The initiative also helps developing nations mitigate and adapt to climate change through investments in clean energy and food security – $350 million more in 2013. 

  • Buy over $100 million worth of carbon offsets to offset the country’s emissions
  • Expand public transport and facilitate the transition to electric cars – almost $2 billion.

    Norway charges a CO2 and NOX tax on the purchase of cars, which has already led to significant reductions in the average CO2 emissions of new cars.
    There’s also an annual tax on the weight of a vehicle.

  • Building energy efficiency requirements will be raised to Passive House standards in 2015 and to near-net-zero by 2020.

Norway is the world’s third richest nation per capita, largely because of oil and gas exports. Employees in the industry earn an average of $180,000 a year.

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