Report: Race to Electrification – Norway in a Pole Position

The report “Race to Electrification – Norway in a Pole Position” studies electrification within different sectors with potential to decrease carbon emissions substantially. The report analyses how European consumers will be affected by electrification, its benefits and costs. To measure which countries have come furthest when it comes to electrification, Sweco’s experts have introduced a new measure called “E-day”. This is the day of the year by which in theory, the amount of energy equivalent to the amount of electricity that a country can generate in a year, has been used.

Electrification is one of our best tools to mitigate climate change. By using fossil free electricity to power our transports, industries and buildings instead of coal, gas and oil we can decrease carbon emissions substantially. Right now, electrification is happening all over the world. However, some countries have come further in the process. The leader when it comes to electrification is Norway.

Almost all of Norway’s power generation (98 percent), comes from renewable hydroelectric power. Norway also has a high share of electric vehicles and by 2025 electric vehicles will likely stand for 100 percent of sales of new vehicles. In 2015 Norway commissioned the world’s first electric ferry and fishing boat. By 2020, Norway will also have the world’s first electric containership ready for operation, and they have set a goal to electrify all domestic air travel by 2040. Finally, Norway accounts for around 30 percent of global battery-powered ship fleet.

It is clear that Norway has come very far when it comes to electrification. But what will it take for the country to become fully electrical? And what challenges will Norway face along the way?

What is electrification?

Becoming fully electrified (‘electrification’) is the process of converting a machine, process, system or sector to use electricity where it did not do so before. Examples include going from a petrol- or diesel-driven passenger vehicle to an electric vehicle, and connecting an oil platform previously powered by fossil fuel generators to an electric cable connected to the onshore power system.

The term ‘electrification’ can be quite ambiguous in the sense that it does not specify the source from which the electricity is being produced. We therefore need to talk about beneficial electrification, rather than electrification per se. In this text, electrification refers to a conversion that replaces fossil fuel use with electricity in a way that reduces overall emissions. Becoming fully electrical means, in other words, to phase out fossil fuels in all sectors where it is possible and meaningful.

The benefits of electrification

The main benefit of electrification is that it reduces carbon emissions by replacing fossil fuels. According to the IPCC electrification of transport and industry is a central element in achieving the pathway compatible with the 1.5 °C-target.

Electrification can also be a sound economical choice, since it often produces greater efficiencies then the alternatives. This can reduce energy demand and costs, although in many cases electrification may require greater initial investments since the new green value chain and technology are not as mature as conventional alternatives. This is changing rapidly, however, as more and more businesses are investing in new and more efficient production lines.

In addition to reducing climate gas emissions, electrification will also produce less noise and localised air pollution, which is positive for citizen wellbeing. As a result, it also provides urban development opportunities in areas previously dominated by noise and pollution, making these areas attractive for new residential areas and businesses.

What do we need to electrify?

To understand what we need to electrify, we need to take a closer look at all of the processes in our society that uses fossil fuels and identify where it is possible (and meaningful) to electrify them. In Norway we can see that three sectors stand for 90 percent of carbon emissions – transportation, industry and buildings.

Transport

The transport sector comprises road transport, inland air transport, inland shipping and rail transport, and accounts for 29 percent of total carbon emissions in Norway. Within this sector, road transport is the greatest source of emissions in Norway (68 percent), while passenger cars and light vehicles account for approximately 36 percent of transport-related carbon emissions.

In an electrification scenario, the use of batteries will be essential for shorter journeys, while a combination of hydrogen fuel cells will be necessary for longer journeys for heavier vessels and vehicles. But heavy road transport, shipping and aviation are notoriously difficult to decarbonise through electrification or other means.

To decrease emission levels quickly and significantly, the Norwegian government has set ambitious goals for transport. These goals are formulated in the National Transportation Plan 2018-2029. As part of the plan, all new ferries will use low- or zero-emission technology and all new passenger vehicles and small vans will be zero-emission vehicles by 2025. All new city buses will be zero-emission or biogas-fueled by 2025. By 2030 distribution of all goods in the largest cities will produce close to zero emissions. Public institutions will almost exclusively use biofuels or low- or zero-emission technology for owned and leased vehicles, and by 2050 all transportation modes will be close to zero-emission/climate neutral.

To achieve this, as well as full electrification, massive investments are needed in charging infrastructure at ports, in cities and along main transport hubs, and at airports. This infrastructure will also need energy storage solutions such as batteries to ease the power grid in areas with low capacity. Ports will function as energy hubs in supplying electricity, hydrogen and biogas to ships.

Industry

The industry sector comprises a wide range of industries, responsible for around 60 percent of Norway’s total carbon emissions. Industrial segments include upstream and downstream oil and gas extraction and production, metal production, and the chemical and construction industries. Other industries include cement production and food production.

The Norwegian industry sector (excluding the oil and gas extraction and production segment) has reduced its greenhouse gas emissions by nearly 40 percent since 1990 while increasing production by some 37 percent. Despite this incredible performance, further emission reductions need to be made in coming years. Electrification of different industries is an essential solution for reducing emissions, but some segments of the industry sector (such as cement, steel and plastic production) remain extremely difficult to electrify due to process-related emissions generated in the specific industrial processes that are currently used.

Building

The buildings sector is referred to as the ’40 percent sector’ on the global level, as it typically uses 40 percent of all energy consumed, accounts for 40 percent of greenhouse gas emissions and uses 40 percent of the world’s materials. The sector includes residential properties, public and municipal buildings, and commercial, retail and other buildings. In Norway, emissions from buildings during the operational phase are quite low, as Norway relies mainly on hydropower for electricity production and uses a lot of electricity and very little fossil fuel to fuel the buildings.

Buildings can play a key role in the electrification of Norway, without involving additional electrification in this sector. For heat production, for example, direct electric heating can be substituted by water-based heating using heat pumps. This will reduce buildings’ electricity demand and free up electricity for other uses, in sectors that depend entirely on electricity for decarbonisation.

The buildings sector is comprised of households and other buildings such as offices, hospitals, schools, factories, etc. The buildings sector in Norway uses around 65 TWh of electricity, 1 TWh of natural gas, 4 TWh of oil and 4 TWh of other sources, mainly biofuels. The sector accounts for only 2 percent of Norway’s CO2 emissions, a stark contrast to the global buildings sector. In other words, buildings sector emissions are not a major issue in Norway. However, the buildings sector can indirectly help decarbonise the economy by reducing its electricity need, thereby releasing electricity required in other sectors where increased electricity need is anticipated (e.g. transport and industry). Norwegian households use the second most electricity in the world per capita, after the Gulf State of Kuwait. According to Statistic Norway’s most recent household survey, electricity is the main source of heating in 73 percent of Norwegian households.

Conclusions

Norway is in a pole position to become the first fully electrical country in the world, electrifying its transport, industry and buildings sectors. Although this will involve initial costs, the positive implications of energy efficiency improvements, reduced noise and air pollution, and lower operational costs are likely to outweigh the initial investments. Norwegian companies may also gain a competitive advantage in the green economy, with opportunities to further increase exports of climate-friendly metals, technology, transport services, fuels, batteries and a skilled workforce.

With electricity representing 22 percent of EU energy use, there is substantial potential for electrification in many European countries. Norway leads the way in the electrification of many sectors, and other countries may take advantage of the resulting technological breakthroughs and leapfrog Norway in the electrification game. Some of Norway’s advantages, however, indicate that the country will maintain its pole position in further electrification. A large share of renewables in the power sector, good conditions for using new renewable energy sources, and a strong power grid are advantages that are likely to continue playing to Norway’s advantage, and are features that other countries should try to replicate or identify alternative pathways for in order to achieve a more decarbonised energy system.