Norway

Key facts

CHEMICAL INDUSTRY SNAPSHOT

An integrated industry

In 2020 Norway’s chemical, oil refining and pharmaceutical industry had sales of NOK 118 billion (€10,7 billion), of which NOK 102 billion were exports (84%). The sector employed 13,000 full-time equivalents, and generated NOK 29.4 billion (€2.7 billion) of added value. Official statistics treat chemicals, oil refining and pharma as a single industry.

Powered by oil and electricity

Traditionally, the Norwegian industrial economy has been centered around natural resources like fisheries, the forest, shipping, mining, and metallurgical industry. Abundant hydro-electric power has been the foundation of a thriving process industry of which the chemical industry forms an important part. The ascent of the petroleum sector has clearly benefitted chemical companies and strengthened mechanical engineering, maritime suppliers and ship building. 

Targeting exports

The chemical industry is highly export-oriented and thus exposed to global competition. Though the industry benefits from access to hydro power and is environmentally friendly, competitiveness is curbed by high wage costs and a fluctuating currency. The EU is by far industry’s most important export market (see above). Norway is fully integrated in the internal market through the EEA-agreement and adheres to all relevant rules and regulations, including REACH as well as competition legislation. 

Norway and Norwegian chemical industry are firm supporters of free and fair international trade as supported by the WTO. 

Between river and sea

Chemical plants are chiefly located along the coastline, close to hydroelectric power plants and deep, ice-free harbours. There are some local clusters of chemical and other process industries – sometimes in industrial parks or in clusters operating across regional borders. International companies have a strong ownership position within the chemical sector and other process industries in Norway.

From basic to biotech

Norwegian chemical production centers upon basic inorganics, fertilizers, petrochemicals, polymers, and some specialties and bio-refineries. The pharmaceutical industry is relatively small. 

Biotech start-ups are located around the universities, e.g., in Oslo, Trondheim and Tromsø. 

Universities are found in four of the 10 counties where numerous process industry companies are located. The University of Technology and Science in Mid-Norway has the closest links with the chemical sector. 

HOW ARE WE DOING?

Strengths

• Unique combination of indigenous energy resources: petroleum, hydropower, and other renewables (wind power and biomass) 
• 97% renewable electricity 
• An electricity surplus, historically yielding competitive power prices vis-à-vis continental Europe 
• High energy and resource efficiency – expertise in reducing GHG-emissions 
• Small environmental footprints 
• Well-educated labour force with appropriate industrial skills 
• Good cooperation between companies and unions 
• Lean organisations 
• High level of employment and standards of living 
• Political stability 
• NGOs and politicians back hydro-powered process industries 
• Socially sustainable production with strong focus on health and safety 
• Globally integrated and export intensive

Weaknesses

• High labour and living costs 
• Energy prices are high compared to non-European rivals (notably China) 
• Expensive feedstock 
• Ageing population 
• Location on the fringe of Europe 

OUR CONTRIBUTION TO A COMPETITIVE EUROPE

Neutral enabling policies

Norway does not have an explicit sectoral industrial policy strategy: government sets horizontal framework conditions (research, energy, education, infrastructure, environment). 

A climate change advantage

The government-appointed expert panel on green competition published as early as 2016, a broad set of policy recommendations including support to the development of process industries in Norway using renewable electricity. A tri-partite collaboration between industry, unions and the authorities has further strengthened this ambition and measures will be brought forward in the years to come. 

The government’s climate ambitions are aligned with EU. Participating in the EU ETS, the EU carbon price constitute the main climate-related instrument for chemical companies. Norwegian process industries receive free allowances and carbon cost compensations, believing that these instruments are key to guard against carbon leakage. For industry outside of ETS, there is a CO2 tax, securing av level playing field. 

Funding for pioneering technologies

Enova, an enterprise managed by the Norwegian State, supports pilot and demonstration installations and deployment of new climate technology. Environmental technology development and deployment are also supported, along with SME projects and energy efficiency projects. Norwegian enterprises also have access to Horizon Europe and the ETS Innovation Fund. 

Supporting knowledge and innovation

Norway has a broad range of national programmes supporting R&D in both private and public sector. From an industry perspective, the long-term R&D priorities are ocean space, energy, climate, sustainability, emerging technologies – including advanced production and materials –  and infrastructures. Industrial companies and academia co-operate in R&D initiatives through national research centres, such as the SFI and the FME programmes, a new national scheeme named Green Plattform and smaller R&D projects such as the industrial innovation projects (IPN). 

Generation capacity/Power exchange

A surge in roll-out of renewable generation over the last decade, coupled with efficiency improvements in Swedish nuclear plants, did raise the Nordic generation capacity surplus to 25 TWh. 

However, the latest developments within the European and Nordic markets brings into question how this will affect prices as well as generation capacity in the future. Prospects of increased hydrogen, batteries, ammonia, offshore wind production etc. adds to the challenges in assessing this. Nevertheless, the clear presumption is that industrial production in Norway, will continue to be close to 100% based on renewable energy for the foreseeable future, being in line with the Green Deal industrial objectives. 

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