The Norwegian success story of Electromobility

By Aditya Chhatre

Carbon Dioxide (CO2) once released into the atmosphere could stay around for 300 – 1000 years. Around one-fifth of the global CO2 emissions come from the transport sector (passenger + freight), in which 75% can be accounted to only road transport. Hence, popularizing electromobility could have a significant impact in reducing those CO2 emission and reduce environmental risks. Looking at countries with maximum number of electric vehicles, USA and China stand on top of the chart. But when it comes to market share of electric vehicles within a country then Norway is the winner by a large margin. The journey of EVs in Norway started in 2011 with share of passenger cars at just 1.6% and now Norway has the world’s largest market share for EVs with 61.5%. With this astounding success Norway has set a benchmark for all the aspiring nations to achieve better electromobility goals. A number of factors helped Norway to achieve this feat.

Secure Pre-conditions

Looking a few decades back, till the 1950s Norway’s economy was mainly dependent on fishing. In 1959, Shell – a Dutch oil and gas company – discovered little gas sources around Norway. With further explorations, one of biggest oil fields was discovered near the Norwegian waters. In 1972 Norway founded its national oil company ‘Statoil’, now known as Equinor. That is how the oil boom started in the country, and today Norway is the fourth largest oil producer in the world. After sufficing the domestic needs, natural gas and oil form a major part of their exports. With reference of electromobility, increasing the use of electric vehicles will reduce the domestic consumption of oil and gas. This was a perfect blend for an oil and gas intensive country, and promoting electromobility technology at home eventually increased the high-in-demand oil and gas exports globally, generating higher revenue for the country.

Norwegian state owns a major share in the company Equinor, so in a way Norway’s economy is significantly controlled by the state. The Norwegian administration was prudent enough in investing this oil wealth in a global fund called the sovereign wealth fund. Some other progressive countries, in particular China, Singapore, United Arab Emirates and many more varied countries, are co-investors in this fund. However, Norway has the largest of the all sovereign wealth fund which stands at $1.17 trillion providing a strong financial backbone. Moreover, the government uses only the interests/profits of this fund and not the capital for public use. It is the one of the few countries of the world which does not have a significant debt which makes it net a positive economy. Having a strong and stable economy allows a country to push new technological boundaries and bear the potential risk involved. The Norwegian government had ample scope to invest and take risks in new technologies such as electric vehicles.

Managing to manufacture such high quantities of vehicles could be tricky as setting up manufacturing factories and predicting the initial demand can be a tough task. Along with the imperative of economic security, Norway ranks at 119 globally with regards to population. Because of comparatively low population their demand-supply threshold is low. Taking into consideration lower population manufacturing facilities to meet the EV demand was manageable which made penetration in the country achievable compared to other highly populated countries.

EV attributes

It is only environmentally viable to adapt to EV and reduce combustion engine vehicles only if the electricity generated in the country has higher share of renewables; promoting EV and charging them from fossil-fueled electricity would not be as efficacious with regards to the aim of reduction of CO2emissions. In Norway, 98 percent of all electricity production comes from renewable sources. Hydropower is the basis of renewable energy sector of Norwegian industry with around 95% of the electricity generated in Norway being from flexible hydro power plants. There was a large installation of wind power as well in 2019. With such high shares of hydro and wind power, Norway is electricity surplus country. This surplus of renewable energy fits in perfectly for supplying added electricity demand from the EV market with clean electricity.

Even after all these pre-conditions which support the idea, its actual implementation is always a challenge. Charging infrastructure needs planning and high investments. Strategically, for establishing infrastructure for electromobility there is a dilemma between whether to increase the number of electric cars as a first step or the first step as making charging stations widely available. Norway targeted areas with higher population density to tackle this dilemma. The population in the country is concentrated in the southern part of Norway, with the counties of Oslo and Viken being the most inhabited regions of the country. Initial focus of developing the necessary EV infrastructure was laid in these regions. This made majority of the people familiar with the technology and eventually believe in it. Once the demand of cars increased in these regions, multiplying the infrastructure to other regions of the country was done with efficacious planning. Now, there are hardly any regions without charging stations to be found in Norway.

Governance and incentives

Technology alone cannot meet success; it needs favourable laws and incentives in the initial phase to have an exponential growth. It simultaneously needs to flatten the use of the previous technology in the market to replace it. Norway levied massive taxes on the ICE vehicles and reduced the sales and import tax on electric vehicles making it pocket friendly for the customers buying cars. Along with it, the government awarded free parking and free toll roads for EVs and such plans for electric vehicles turned out to be a much easier choice for the buyer for long term investment too. Commuting was also made faster by permitting EVs to access the bus lanes which has comparatively lesser traffic.

The investments and the plans for electromobility in gaining ground were implemented mainly between 2009 and 2011. Approximately 7 Million Euros were invested during these 2-3 years in building infrastructure for manufacturing and charging. Since then the percentage of market share of electric vehicles have seen constant growth by maintaining technological and governmental upgradations in the schemes and policies.

Figure 1 : Elements of EV Success for Norway

Conclusion

The efforts to make electromobility a success for Norway took focused efforts for longer than a decade. This EV success story for Norway continues to progress. The next goal for Norway is to have all new cars sold from 2025 be electric or hydrogen-fueled to achieve zero emissions. Learnings from Norway shows that transition from ICE to EV is surely possible. For countries looking up for implementing plans for electromobility, it is absolutely possible to adapt similar corresponding plans in their respective countries. The key fundamentals elements which need to be at place are share of renewable energy, revenue for the infrastructure and governance support for execution. An overall effort, wherein the fundamental, economic and systemic factors incorporate and evolve gradually for longer goals should be roadmap of all countries for transitioning the transport sector to a low emission sector with electromobility.

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