Marius Holm, CEO of ZERO, met with SciTech Europa Quarterly in Norway to discuss sustainable development in the North.
ZERO operates as an independent environmental foundation which works to enforce zero emission solutions, whilst ensuring that the transition to a more sustainable environment strikes a balance between being the adequate solution, and timely. Their work operates on several levels, including as both an intermediary between parties invested in climate concerns, and assisting in solutions during the start-up phase. Marius Holm, CEO of ZERO, spoke to SciTech Europa Quarterly at January’s Arctic Frontiers event in Tromsø, Norway.
From a climate perspective, what would you say are the biggest challenges in terms of sustainable development?
Climate change is happening not only faster, but much more dramatically in the Arctic compared to everywhere else. If the global temperature, on the average, increased by two to three degrees, you may see a rise of four to six degrees in the Arctic. These changes are dramatic — it will change the physical environment of the region (which in itself is a massive negative impact), but it will also cause potential dramatic economic shifts.
One of my biggest worries is that fisheries are being dramatically changed by climate change, and while the fish may not disappear, they may go elsewhere, severely reducing fish stocks in the North. Consequently, this may change the lower levels of the food chain, which in turn will affect the higher ones.
A session I am taking part in today at the Arctic Frontiers event has posed the question of whether there we will see gradual shifts or disruption, and I don’t think that gradual shift are on the menu. Either we succeed in creating a disruptive shift in the economy, and indeed the energy markets, globally, via zero emission technologies, or we will see disruptive climate change impacts in the Arctic.
The physical environment will be facing disruptive change in the Arctic if we fail, and so it is in the interests of the Arctic community to fight for rapid change in the energy markets.
In Norway there is relatively climate-efficient oil and gas production, which will produce as much as possible as long as there is demand; but that is not how the market works. The market works in a way so that when oil and gas consumption are gradually reduced, due to renewable energy, energy efficiency, or climate policy in general as zero emission solutions are increasingly implemented, then the first to be discarded is the one which is most expensive. When the moniker shifts negatively, and demand is decreased, then the most expensive oil will no longer be profitable.
Anthony Hobley, of the Carbon Tracker Initiative, discusses the carbon bubble, where investment in hard to get oil and gas reserves far from the market is reduced. Those resources are dependent upon high prices, and so if demand goes down and prices go down, they will become unprofitable.
It is a massive risk for the Norwegian community because the country’s tax system sees the government takes both the lion’s share of the profits from natural resource exploitation, but also most of the risk as it is quite substantial amounts of the taxpayer’s money that is being invested.
This also attracts labour, knowledge, and capacity; the economy is attracted to fossil fuels, and so that increases the risk for the Norwegian economy. From the climate perspective, what the Arctic community should do is use its position to be a part of the disruptive change in the energy markets by pinpointing areas where the Arctic has something to bring to the table.
In Arctic Norway, we have fisheries, shipping, and ocean-based tourism. We have vast wind resources here, too – the best in Europe – which produces at a 50% capacity factor, which is way above the average in Europe. And while there are some conflicts around wind, there is more than enough wind power to fuel the Arctic economy in order to transform the maritime industry. As a result, this sector could be fuelled by batteries and hydrogen, for example, which is something we are researching and trialling in short distance vessels such as ferries. These are being converted to battery power supplies on a massive scale, and they are also developing hydrogen because of its long range capabilities.
What we need is the community, and all communities around the coast, to be part of the solution to prepare charging and fuelling infrastructure. This is a national task, and national governments need to be part of this, but the Arctic community should welcome it, rather than focusing on more oil and gas.
Do you think that there is potential for the heavier shipping industry to move into batteries?
It is possible, depending on the vessel. Long haul open ocean freight is complicated and, as a result, will happen in the much longer term. All sorts of vessels which operate from harbours on short and medium distance routes, such as cruise and fishing vessels and short sea cargo, are technically able to be converted to hydrogen and thus becomes zero emission. However, converting mass container vessels such as those which travel between China and America will take much longer.
Given that much of the pollution appearing in the Arctic climate is mostly derived from Asian, North American and European emitters, it is crucial that this is tackled. How would you like to see that being better addressed?
There is sometimes the argument that the focus on climate change can take precedence over the myriad other issues in the minds of environmental decision makers, but the Norwegian government initiated and supported a vision on plastic pollution in the oceans – this was discussed at the third UN Environmental Assembly (UNEA 3) in Nairobi, Kenya. Things are happening, and so perhaps the best thing the Arctic nations could do with this is to use venues like this — the Arctic Frontiers — to shine a light back onto these issues.
One of the best ways that we can create change is to be an active part of the global community and to invest and fund projects. Norway is funding renewable energy investments in the poorest countries in the world, where commercial companies find it too risky, for instance, and maybe that is something that needs to be explored by others, too.
What more would you like to see being done from a policy perspective?
The global framework, and its agreements, are extremely important, but they are not the engine for change; rather, they are a result of change, and can be used to catalyse further developments. This policy framework is a part of a virtuous circle where one thing strengthens the next, but the engine for positive change is governments at a regional, national, or EU level.
One of the most important things happening right now is the fact that solar, wind, and batteries, are becoming cheaper and zero emission technologies are becoming more wide spread. Those are the three key technologies required to get rid of fossil fuels, and that is a result of politicians voicing that a market for these are needed.
Germany played a key role here with regard to solar; Denmark started things with wind; and Norway has been instrumental in creating a market for electric vehicles. The easiest way to create change is through doing those kind of things.
All countries that are part of this should try to co-operate as much as they can whilst trying to establish strong agreements. The driver for change is national policy, and especially those which combine technology with market development, because when the market forces take over the political incentive is much stronger.
Do you think Europe does enough to not lose the advantage in those new technologies?
Europe kick started zero emission technologies in the renewable energy sector by subsidising solar and wind, and because we have the EU Emissions Trading System (EU ETS), and we put a lot of renewable energy into this, the demand for emission permits are reduced, as well as the prices for emissions. As the ETS is tightened, more renewables will be needed to replace coal.
Europe, however, has failed in one fundamental area: transport; I’m sure that European carmakers will be able to follow, but they are not leading. France, and to some extent the Netherlands, have renewed electric vehicles incentives, but the market is still very small. Apart from Norway – which is the largest European market – the growth in zero emission electric vehicles is happening in the USA and China.
However, the strong European players such as Volkswagen and Mercedes-Benz will be able to follow, and maybe they will take the lead at some stage. For the last ten years, however, these companies have lobbied against sensible environmental requirements for cars, and they have succeeded. Before now, Brussels has never really pushed zero emission vehicles; they have only pushed more efficient diesel. Yet cars are now emitting around 40-50% more CO2 than their approval number, which is a cause for concern.
I am a very strong advocate for incentives directed towards the purchase of vehicles. For instance, if we increase the diesel and petrol tax enough to make zero emission electric vehicles profitable to consumers, the tax would have to be increased significantly and it would be harsh on the ones already owning a car.
In Norway, this has been approached instead by having a high tax on traditional cars, and non on zero emission electric vehicles (EVs). As a result, when comparing the same model car but in an electric or diesel variation, the electric is cheaper, whilst in the rest of the world it is more expensive. This is a massive incentive.
What role can carbon capture and storage (CCS) and carbon capture, storage and utilisation (CCSU) play?
CCS is certainly a part of the solution, particularly for industry, although there may be some niches in the energy market as well. Effectively, it will not be able to compete with solar and wind due to cost, in industries other options may be much more complicated.
In Norway we are awaiting a decision this year about a CCS plant for three projects:
- A cement factory;
- A fertiliser factory; and
- A combined waste incineration district heating plant in Oslo, Norway.
Those three projects have been subject to pre-studies and will hopefully get an estimate decision during 2018 or 2019. I believe we can also remove carbon from natural gas and use hydrogen for various purposes, but without carbon, whereby the carbon is removed and stored underground. Moreover, I’m very positive that Norway, as an oil and gas exporter, should take particular responsibility for it; we have extracted a lot of carbon and we also have the competence to handle gases and sub-c well operations, so we have the technical capacity to do it.
What do you feel are the biggest barriers when it comes to individual companies to adopt zero emission approaches and strategies? Is it cost?
Yes, I would say that it’s usually the cost because being an early mover is usually expensive and it doesn’t always pay to be the first. I believe strongly in businesses co-ordinating change and creating markets, and one of the things we can do to create and lubricate these markets to allow them to run more smoothly is to provide risk relief and funding for early mover projects. In Norway this is already being practiced — one example is funding for companies who want to trial zero emission electric trucks, whereby the government can carry some of the extra investment costs.
Cities could actually change the transport sector globally because they are markets which are big enough to create change. If a few large cities declared that they would be a zero emission zone by 2025, or at least the inner city by 2020, more electric transport infrastructure would be adopted out of necessity.
How would you like to see the systematic replacement of pollutant technology with emission-free alternatives develop across sectors? How do you think that your role within that is going to change moving forward?
We are trying to use Norway as a tool where it can work, and our aim now is to start growing zero emission markets in all Norwegian sectors. The zero emission electric vehicle market is already fully underway, whilst ferries are taking off, and the next thing is trucks and fishing vessels.
We are looking at buses too, of course, although that is not something that we need to develop because China already has a hundreds of thousands of them.
We also hope to look at heavy machinery such as excavators which can use biodiesel, though we need to move a step further to develop a solution, somewhere between batteries and hydrogen, or a combination of such. We are a part of a project where excavators are fuelled by batteries, which makes high intensity work on buildings in the city possible, but isn’t as accessible for those working far outside of these types of locations.
Do you think that infrastructure is an issue?
Yes, that is a major obstacle towards electrification, although in Norway that is a little less of an issue than elsewhere. Elsewhere in Europe, the grid is not made for high power outtakes in households, although the grid is getting smarter and that will relieve some of the challenges some households moving forwards.
Zero Emissions Resource Organization
This article will appear in SciTech Europa issue 26, which will be published in March, 2018