When it comes to elections across the world that South Africans should keep a close eye on, Norway would not be on the top list.
If the average South African were asked to list interesting bits of information about the Scandinavian country of just more than 5-million people, they probably wouldn’t think much past oil, mountain ranges and skiing. Its politics wouldn’t get a look-in, unlike a big country such as the US, whose internal policies have an effect beyond its borders.
It's unlikely that many people outside of Scandinavia would be able to name the Norwegian prime minister of the past eight years, or which parties emerged victorious in the parliamentary elections held on Monday. Conservative Prime Minister Erna Solberg lost after serving two terms and will most likely be replaced by Labour Party leader Jonas Gahr Støre, who was in the process of forming a coalition.
The result may not matter for SA but the issue that dominated the campaign is instructive and may go a long way to explaining why some countries remain competitive in the face of potentially ruinous change.
Norway has done well out of fossil fuels, with the biggest petroleum industry in Western world turning it into one of the richest places on earth on a per capita basis. The 5-million-odd Norwegians have the world's largest sovereign wealth fund, worth about $1.4-trillion. The next biggest one belongs to China, the world’s most populous nation at about 1.4-billion people.
Considering how much the country has benefited from oil, it may seem counterintuitive that the question of whether it should continue to explore for it should have been a dominant feature of the election debates. That got extra momentum with the release in August of the latest report by the Intergovernmental Panel on Climate Change (IPCC), with findings that were described by UN secretary-general António Guterres as “code red for humanity”.
Despite its abundant oil, Norway has hardly sat on its laurels and has been among world leaders in the transition to the use of cleaner energy.
It set itself a goal of becoming the first nation to end the sale of petrol and diesel cars by 2025, and with electric vehicles exempt from taxes imposed on those relying on fossil fuels, in 2020 they overtook the sale of those running on petrol, diesel and hybrid engines.
For SA’s automotive producers and policymakers, that’s a lesson about where the market is going. The sooner we adapt, the better; otherwise, an industry that exports more than 60% of what it produces could be in serious trouble. Norway’s wealth fund has been at the forefront of shunning polluting companies. In 2020, it sold out of Anglo American, which was probably instrumental in spurring the latter to spin off and separately list its thermal coal business.
What’s been more complicated has been about whether to continue exploring for oil and exporting it to other nations — contributing to climate change that way rather than through consumption. The problem is that the industry accounts for about half of the country’s revenue.
It’s a question that cut across the traditional left-right divides. On the left, the Labour Party, was seeking to form a coalition party with the Socialist Left, which favours an end to exploration, a similar stance with the Liberals, whom the Conservatives were counting on. The Greens, who didn’t do well, as expected, advocated an immediate end to oil and gas exploration and an end to all production after 2035.
The results ensured that such an outcome would not happen and Labour would be able to continue with its gradualist policy towards an industry that employs about 7% of the total workforce. Even for wealthy Norway, the issue brings up similar debates about jobs and a just transition for communities. With no suggestion that demand for oil will disappear overnight, the very fact that a serious discussion is being had about stopping supply might surprise outside observers.
For SA, the lesson is a simple one: change is inevitable and acting fast towards a transition isn’t, as minerals and energy minister Gwede Mantashe asserts, “economic suicide”. It’s the only viable survival strategy.
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