Renowned for their regional co-operation on energy, a sophisticated joint electricity market, and a profound and consistent commitment to renewable energy, the Nordic countries are now considering the future of their energy co-operation. The Nordic Council of Ministers has commissioned former Nokia executive Jorma Ollila to carry out a strategic review of the co-operation and identify which collaborative measures should be initiated over the next five to ten years to strengthen co-operation on energy policy.
By Páll Tómas Finnsson
Change in investment patterns in the energy sector
Ollila is to put forward 10-15 concrete proposals that could further boost Nordic energy co-operation. The conclusions will be drawn from a thorough review of current activities as well as input from research and energy sector stakeholders in the Nordic countries and Europe. Ollila, whose previous positions include CEO of Nokia and chairman of Royal Dutch Shell, will present his conclusions in early 2017.
“It’s become clearer than ever that the world needs to shift towards sustainable energy and phase out fossil fuels,” he says. “However, we must realise that this transition will take time and that the world will still be reliant on fossil fuels for many years to come. My task is to identify the ways in which Nordic energy co-operation can contribute to this long-term transition in the most efficient manner possible, both in the region and internationally.”
The project is part of an ongoing reform process of the Nordic Council of Ministers’ activities in selected key sectors, so far covering the labour market/labour relations and the health sector. Previously, the potential for Nordic co-operation on defence and security policy has been under scrutiny, and other sectors will be examined in future analyses.
The review is a timely exercise, as the growing focus on renewables and the outcome of the COP21 negotiations will lead to radical changes in the energy sector. UNEP’s Global Trends in Renewable Energy Investment 2016 report shows that investment in renewables attained a record level of USD 286 billion in 2015, while investment in fossil fuels was USD 130 billion. Also, for the first time, renewables accounted for more than half of the added power-generating capacity last year.
“These changes in investment patterns represent opportunities for the Nordic economies,” says Ollila. “The review will look into how future co-operation should be organised in order to contribute to decarbonisation of the world’s energy systems while maintaining economic growth in the region.”
Input from the entire Nordic and European energy sector
During the coming months, Ollila will interview leading experts and energy sector stakeholders in Europe, e.g. Nordic ministers and officials of the formal Nordic co-operation, energy stakeholders in the Baltic region, Commissioners and senior officials of the European Commission, executives of the International Energy Agency, and other prominent players in the industry. The research behind the Nordic Energy Technology Perspectives 2016, published by the International Energy Agency (IEA) and Nordic Energy Research, will serve as valuable input for the review process.
At the April 2016 session of the Nordic countries’ inter-parliamentary body, the Nordic Council, its Committee for Growth and Development in the Nordic Region presented 31 energy-related areas upon which the Council wishes to focus. The proposals address four main categories: electrification of transport; the transition towards renewable energy; energy efficiency in energy-intensive industry; and energy research.
“In my perspective, the floor for the strategic review is open. I will look at all aspects of Nordic energy co-operation,” Ollila says.
Although wholesale trading of electricity between the interconnected energy markets in Denmark, Sweden, Norway and Finland is considered to be the backbone of Nordic energy co-operation, Ollila emphasises that the entire region, even its most remote areas, will be addressed in the review.
“One important issue is power supply in remote territories that are not connected to the grid and that therefore rely heavily on fossil fuel for power production,” he explains. “Coming up with efficient energy solutions for these areas, notably energy storage, would benefit the climate and create export opportunities for Nordic companies.”
Policy development in a rapidly evolving global context
The EU is also trying to answer the need for a different approach to production and consumption of energy in the coming decades. Since 2015, it has been developing and implementing the so-called Energy Union, with the aim of ensuring security of supply, sustainability and competitiveness. One key focus is to create a fully integrated internal energy market, which in many ways would be similar to the joint Nordic electricity market, often highlighted as a unique example of successful regional co-operation on energy.
The Nordic review will take this European process into account, as well as other relevant frameworks for energy co-operation, such as the UN’s climate negotiations, the Baltic Energy Market Interconnection Plan, the Pentalateral Energy Forum and the Baake Declaration, which aims to promote further European energy market integration. Intensified regional co-operation will be fundamental for Europe’s efforts to create a more efficient energy market, especially with the increased influx of fluctuating renewable energy into the European energy systems.
“Nordic countries have comprehensive knowledge about balancing consumption and production of energy across borders,” says Ollila. “Revisiting the Nordic energy co-operation will enable the region to position itself in the European energy context and assess how this knowledge can best be used in the future.”
“It’s become clearer than ever that the world needs to shift towards sustainable energy and phase out fossil fuels”
former Nokia executive
Proportion of environmental taxes in total tax revenues
Former Nokia boss Jorma Ollila to boost Nordic co-operation on energy