Energy policy, economy and society

The role of the Norwegian Continental Shelf in the future energy system depends on the national and international business regulations, societal acceptance and license to operate. 

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Bioenergy production and biomass valorization

The targets of this work package are to:

  • Address the competitiveness of the NCS in national and international contexts.
  • Contribute to sound climate mitigation policies.
  • Understand and explain the risk and uncertainty of investments related to WP1-WP5.

Research questions:

  1. Does the Norwegian tax and subsidy system ensure the right balance between investment in profitable projects and allowing the petroleum sector as a vehicle for green industries vs avoiding stranded assets and expensive pilot projects? 
  2. What are the viable measures to curb emissions on the Norwegian Continental Shelf, e.g., production taxes and electrification? 
  3. What are the effects of increasing risk premiums, political scrutiny and competition in the petroleum sector and how to improve handling and communication of uncertainty in businesses and policymaking?

Four projects have been defined:

Many observers expect that climate policies and alternative energy sources will put down-wards pressure on the demand for fossil fuels in the coming decades. This may have important consequences for the oil sector and the oil market as we know them. First, the appetite for investments in hydrocarbon exploration and production may decline. This may result in higher risk premiums in the financial markets to finance such investments and fiercer competition from other oil producing countries to attract the remaining investments.

A central challenge for governments as well as for the oil and gas sector is to balance invest-ing in profitable projects and avoiding stranded assets. The difficulty of the tradeoffs involved is highlighted by the recent “revenge of geopolitics”, a renewed interest in energy security, and the emergency of the climate crisis. A question is how to best design robust policies to deal with the risks involved. An important backstop against unprofitable projects in the Norwegian regime is the discretionary licensing system.

The oil and gas sector may be a vehicle of transition towards new technologies. For example, there may be important complementarities between oil and gas and new technologies, such as CCS and Hydrogen. Cash flow from oil and gas may also be important to fund potentially risky new energy investments.

This project will employ and develop risk principles and methods for evaluating the quality of subsurface solutions, including the use of multi-criteria decision-making approaches and prioritization of measures. The increasing scrutiny facing oil producers in politics, in the legal system and in financial markets contribute to a less predictable business climate. How to communicate risk and uncertainty to financial markets, policy makers and the wider society will be an important part of this sub-project.

Key People

Professor i samfunnsøkonomi
EOJ 244
UiS Business School
Department of Economics and Finance
Atle Blomgren
Senior Researcher
Professor i risikostyring
Faculty of Science and Technology
Department of Safety, Economics and Planning