NORWAY, NEW ENERGY: CHASING WINDMILLS

UNCLAS OSLO 000342 SIPDIS SENSITIVE EUR/NB (MMCDOWELL),EEB, OES/EGC, PLEASE PASS TO DEPARTMENT OF ENERGY (EROSSI) AND DEPARTMENT OF COMMERCE (JDERSTINE) E.O. 12958: N/A TAGS: ECON ENRG EPET PGOV SENV NO SUBJECT: NORWAY, NEW ENERGY: CHASING WINDMILLS ¶1. (SBU) Summary. On May 11, the Embassy co-hosted the seminar "New Energy Opportunities: Reality or Smoke and Mirrors?" Event partners were the Norwegian Venture Capital Association and Norway's largest bank, DnB NOR. The seminar gathered senior GON officials, including the Deputy Petroleum Minister, and high-level private sector leaders. Ambassador Whitney delivered a keynote address, outlining USG initiatives and the private sector's key role in developing new energy projects. The event revealed uncertainty around new energy investments, placed USG new energy policy in a positive light, discussed the impact of the global financial crisis, questioned biofuel use and revealed doubts about GON commitment to carbon capture and storage (CCS) programs. Following the event, Ambassador Whitney gave two interviews to widely read business newspapers outlining USG policy. Capping the day, he hosted a networking reception at his residence. End Summary. An Energetic Mix: Something Old, Something New -------------- - ¶2. (SBU) For seminar purposes, new energy had two accepted definitions. The first was new forms of energy--basically all renewables, including wind, solar, hydro and biofuels. The second definition encompassed new ways of harvesting and processing "old energy," namely oil and gas. Norwegian participants stressed strong support of USG new energy initiatives. A leading Norwegian CCS technology entrepreneur, lining-up major projects in the US, lauded the USG's funding framework. He stated that meeting certain project milestones for USG-funded projects brought certainty and encouraged innovation. Alternatively, he critiqued the GON approach as being unpredictable and overtly political-oriented. On the Sunny Side of the Street: Obama Administration -------------- -------------- ¶3. (SBU) GON attendees praised the Embassy for bringing together GON officials and Norwegian private sector players. The GON sent representatives from the Petroleum, Environment and Trade Ministries, in addition to their investment agency, Innovation Norway. Several GON representatives thanked the USG for bringing different actors together--allowing a unique Norwegian forum for sharing private and public viewpoints. Break the Piggy Bank...Now! -------------- ¶4. (SBU) The seminar included a session analyzing financing opportunities, with a panel consisting of cutting edge new energy entrepreneurs and public/private financiers. Panelists noted that new energy investments have been curtailed because of the credit crunch. While capital has not dried up, it is slowing. Future growth areas included energy efficiency, offshore wind power, solar and CCS. Despite market uncertainty, the panel believed this was the ideal investment opportunity for long-term investors. Biofuel: Fueling More Problems than Answers? -------------- ¶5. (SBU) Panelists viewed biofuel investments with some unease. Many speakers questioned whether biofuels could maintain long-term political support, crucial in making biofuels a realistic new energy source. Concerns were voiced that biofuels took important agricultural products off markets: necessary foodstuffs would be made unavailable in developing countries which frequently face starvation fears. CCS: Moonlanding, or a Spacey Idea? -------------- ¶6. (SBU) A panel focusing on whether new energy projects were fads focused on the role of CCS in Norway. The ruling GON left-of-center coalition has made CCS a national priority, with PM Stoltenberg calling CCS Norway's "moonlanding." The Mongstad project, a large-scale CCS facility, is a jewel in the GON's crown. Panelists questioned why the GON simply invests in a project which may use dubious technologies, rather than spread out investments among competing initiatives and letting the best project win. The latter approach, found in the US, was strongly backed by private sector participants. Is GON Putting Money Where Its Mouth Is? -------------- ¶7. (SBU) Comment: The seminar furthered USG interests, creating a unique forum where participants freely discussed current USG and GON new energy programs. The private sector actors were candid, challenging GON policy in its singular investment of CCS and suggesting that the GON provides only lip service to new energy. Despite new energy as a seeming priority in Norway, GON subsidies are practically non-existent. To the extent GON funding exists, critics charge that kroner are directed to GON-owned companies such as Statkraft or StatoilHydro, the world's ninth largest energy company. While the GON has publicly stated new energy is indeed an important focus, private sector participants suggested that there is no real financial buy-in. In contrast, speakers repeatedly lauded the U.S. WHITNEY