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
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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
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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!
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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?
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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?
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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?
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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