UN Climate Change Conference (COP24) participants in Katowice, Poland, have concluded the three-year international negotiations by agreeing on a joint rule book to implement the Paris agreement that will take effect in 2024. The agreements reached will apply equally both to developed and developing countries in assessing and reporting greenhouse gas emissions, global performance assessment to take place every five years starting from 2023.
After two weeks of talks between nearly 200 nations, the conference was extended beyond the schedule by two more days.
According to Minister of the Environment, Energy and Housing of Finland Kimmo Tiilikainen, the rules adopted are strong and clear for all parties. “Climate actions are now everyone’s responsibility”, noted the Finnish official. Ola Elvestuen, Norway's Minister for Climate and Environment stressed that implementation of the most complicated part of the Paris agreement – actual cut of emissions – still lies ahead. “We have the system, and the hard work starts now”, he said.
Evolvment of a balanced climate action plan is a matter of a particular importance for Norway, Europe’s largest exporter of oil and gas. The first step here might be working out a set of national economic development scenarios in the light of Paris Agreement goals with regard to various prices on oil, gas and carbon emission quotas – a proposal made by Climate Risk Commission appointed by the Norwegian government to assess climate risks, in a report submitted to Finance Minister Siv Jensen on December 12.
The commission formed in 2017 presented its vision of risks for national economy related to achieving GHG emission reduction targets and gradual decline of fossil fuels. Experts estimate that a complete fossils phase-out will cost Norway over $800 bln, the amount comparable to its current sovereign wealth fund.
Meanwhile, the country has already taken a number of significant steps towards environmental neutrality. For instance, transport emissions targets were reached three years ahead of schedule. Projects to create reference samples of energy-positive homes and zero-carbon transport sailing ships are now in their advanced stages. In the long term, by 2030, biofuel use in the aviation sector will increase to 30%, making it possible to cut emissions by approximately 17%.
At the same time, given the plans to boost gas and oil production through foreign investment, the country is in a critical need of a compromise sectoral solution. The government’s assessment is that up to 55% of hydrocarbon reserves have yet to be explored. Following the report made by the Climate Risk Commission, their value could drop more than four times to $233 bln should the country further neglect ambitious international climate policies with lower demand for oil products.
The way to tackle this problem lies in joint effort of government bodies and key players on the national market to produce mutually beneficial action plan. This cooperation is of a specific importance against the backdrop of the sector's adjustment to global market changes which is currently underway.
For instance, the Johan Sverdrup field, the largest discovery on the shelf in the past 30 years operated by the Norwegian major Equinor, will ensure annual reduction of carbon emissions by 460,000 tons by means of a new power-from-shore solution to supply the facility. The project implemented in partnership with Total and BP will become one of the most eco-friendly in the international market.
The field will become one of the main drivers for development of Norway's oil and gas industry as well as national economy in general. Experts estimate the field reserves at 1.7-3 bln boe, with its peak production capacity reaching 650,000 barrels per day and a lifespan of 50 years.
Further, since 2015, Norwegian-based companies including ConocoPhillips Skandinavia, AS, Aker BP, LUKOIL Overseas North Shelf, Total E&P Norge AS, DEA E&P Norge AS and others have been carrying out joint environment research within the framework of Barents Sea Metocean and Ice data Network (BaSMIN) and Barents Sea Exploration Collaboration (BaSEC). BaSMIN collects data on environmental impact of offshore facilities, allowing companies to better assess existing ecological risks and improve design of industrial sites for enhanced safety. In its turn, BaSEC accumulates best practices in Health, Safety and Environment (HSE) management.
The steps taken make it possible to effectively adjust production processes to special features of the Barents Sea using multifaceted international experience such as that of LUKOIL, which has operated in the country since 2013 applying the ‘zero discharge’ principle at all of its offshore facilities in the region of presence, meaning a complete ban on dumping and discharge of industrial and household waste into the marine environment. All waste is shipped to shore by tanker for final processing. The Helsinki Commission (HELCOM) has included experience in implementing this principle into the list of recommended practices for activities on the Barents Sea shelf.
Considering further extensive exploration plans on the Norwegian shelf, the government will have to take into account recommendations worked out by the expert commission, develop a set of economic development scenarios regarding different prices on conventional fuels as well as engage oil companies that are already adapting to global market changes into drafting a joint action plan to ensure socially responsible revision of the energy mix to the benefit of all parties. These are only the first steps that need to be taken in the near future to prepare for the next round of negotiations on the Paris agreement – defining the conceptual framework for carbon emissions trading market which is scheduled for 2019. COP24 is now over. The real work starts now.