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Project: Building New Power Plants in a CO2 Constrained World: A Case Study from Norway on Gas-Fired Power Plants, Carbon Sequestration, and Politics

Research Team: Guillaume Quiviger and Howard Herzog

Sponsor: US Department of Energy Award Number DE-FG02-99ER62748

Year: 2001

On March 9, 2000, Norwegian Prime Minister Kjell Magne Bondevik’s minority government resigned over a disagreement with the opposition about a controversial proposal to build two gas-fired power plants.  A majority in the Stortinget, the Norwegian parliament, favored immediate construction of the power plants.  Bondevik and his coalition government wanted to hold off construction until new environmentally friendly technologies were available, specifically including technologies for carbon sequestration.

Norway’s primary energy production is dominated by oil and gas with most of its production going to export.  Electricity production in Norway is exclusively from hydropower, but future expansion of the Norwegian hydro capacity is constrained.  Low electricity prices   from sources with very low environmental impacts contributed to Norway having the highest electricity consumption per capita in the world, with demand on the rise at about 2% per year.  Consequently electricity demand is expected to outstrip the domestic supply in the near future.

Through the Kyoto Protocol, Norway has pledged to limit its greenhouse gas emissions to no more than one per cent of the 1990 level during the budget period of 2008-2012.  However, its projected emissions are expected to be 19% above its Kyoto targets.  In the past, Norway has successfully implemented an offshore carbon tax to reduce the GHG emissions of the oil sector.  This made carbon sequestration a viable option to reduce GHG emissions in the North Sea, where Statoil has been depositing one million tonnes of CO2 a year since 1996.  The challenge for Norway is now to find a way to meet its domestic electricity demand without incurring extra burdens for reducing CO2 emissions.

Gas-fired power plants have been proposed as an appropriate way to quickly increase the domestic power supply given Norway’s huge national gas reserves, gas’ relatively low impact on the local and regional environment, and the limited growth possibilities for hydropower.  Recently, two controversial proposals to build gas-fired power plants in Norway have been debated.  The first project, Naturkraft, features two combined cycle gas turbines (CCGT). The second project, Hydrokraft, involves the construction of a single CCGT power plant with carbon sequestration to limit GHG emissions.  The controversy surrounding the proposed construction of gas-fired power plants in Norway has raised three fundamental issues:

• Should GHG emissions be viewed from a national perspective, or is a regional perspective more appropriate?  This can be generalized as “where flexibility”.

• Should state-of-the-art technology be adopted now, with cost considerations being secondary or should the adoption of available, but more expensive, be postponed?  This can be generalized as “when flexibility”.

• What cost are people willing to pay to reduce greenhouse gas emissions?

The lessons we learn from this case study are important, in that most countries trying to seriously reduce their greenhouse gas emissions will have to face very similar issues.

Quiviger, G. and H. Herzog, "A Case Study from Norway on Gas-Fired Power Plants," Carbon Sequestration, and Politics," presented at the First National Conference on Carbon Sequestration, Washington, DC, May 14-17 (2001). <PDF>

Quiviger, G., "Building New Power Plants in a CO2 Constrained World: A Case Study from Norway on Gas-Fired Power Plants, Carbon Sequestration, and Politics," M.I.T. Masters Thesis, (2001). <PDF>