The largest party in Norway’s parliament has delivered a significant blow to the country’s huge oil industry after withdrawing support for explorative drilling off the Lofoten islandsin the Arctic, which are considered a natural wonder. That means there’s now a solid majority in parliament to keep the area off limits for drilling.
The dramatic shift is a signal that the oil era that built the Scandinavian nation into one of the world’s most affluent is nearing an end. Oil companies led by state-controlled Equinor ASA, the biggest Norwegian producer, have said that gaining access to Lofoten is key if the country wants to maintain production as resources are being depleted. Estimates suggest that 1 billion to 3 billion barrels could be hiding off the archipelago, which is a natural wonder.
“The whole industry is surprised and disappointed,” said Karl Eirik Schjott-Pedersen, head of the Norwegian Oil and Gas Association. “It does not provide the predictability we depend on.”
But Labor’s decision was not a big surprise. Norwegians are starting to question their biggest export and source of wealth amid growing concerns over climate change. Even oil executives had already given up on gaining access to Lofoten, but now the next battle will likely shift to whether drilling should continue in the Barents Sea.
The move comes days after Norway’s government gave the go-ahead on Friday for its $1trillion (£760bn) oil fund – the world’s largest sovereign wealth fund – to invest in renewable energy projects not listed on stock markets.
Billions are expected to be spent on wind and solar power projects. It is the latest indication that wealth accumulated through fossil fuels is being redirected towards future profits in renewable energy. Greater numbers of industries and countries have begun fossil fuel divestment strategies, citing future risks to their business and economic models.
Last month Norway’s oil fund said it would no longer invest in 134 companies which explore for oil and gas, but would retain stakes in large oil firms including BP and Shell, which have renewable energy divisions.