Climate Risk Report Warns of Falling Norwegian Offshore Values

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By Mikael Holter (Bloomberg) — A key climate report commissioned by the Norwegian government warned that climate change could hurt the value of its remaining oil resources and even make pumping oil more dangerous due to extreme weather.

“Norway is well placed to manage climate risk, but the implications of major climate change are potentially severe and challenging to envisage,” the commission said. “An ambitious and effective climate policy is the most important step the Norwegian authorities can take in response to such risk.”

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The government should set up scenarios for oil, gas and carbon-emission prices and frequently update them, including one that’s in line with the goals of the Paris agreement, according to the commission, which was led by Martin Skancke, an economist and former top bureaucrat at the Finance Ministry. In the mandate it gave to the commission, the government explicitly stated it wasn’t asking for recommendations on how to reduce emissions, change tax policy for the oil industry or shift the strategy of the country’s massive sovereign wealth fund. Norway is western Europe’s biggest oil and gas producer. Its politicians, organizations and citizens are increasingly debating the moral and financial implications of exploring for more oil, especially in the Arctic.

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Norway’s $1 trillion sovereign wealth fund last year asked the government for permission to sell its oil and gas stocks, though it described the proposal as a measure to reduce financial risk exposure and said it was unrelated to climate risk.