The Economist - USA (2020-02-08)

44 Europe The EconomistFebruary 8th 2020

S

everal times a year neighbours in Nor-

way get together to sweep leaves, trim

bushes, weed flowerbeds and fix up their

communal areas. These occasions belong

to a tradition called dugnad(communal

volunteering). Cilia Holmes Indahl says

Norway now needs dugnadon a much big-

ger scale to turn it into a greener society. Ms

Holmes Indahl is the 30-year-old boss of

Katapult, a group of companies that invest

in technology firms with green aims. Kata-

pult organises an annual three-day “future

fest” in Oslo, a mix of tech conference and

Burning Man.

Many young Norwegian greens want to

wean their country off oil. Technology

startups are proliferating in Oslo, helped by

generous subsidies from the government.

The startups have names like “Douche-

bags” and “Monster”. They meet in rooms

called “Creative Cocoon” or “Bug Fixer”.

They sit in open-plan offices in trendily

converted factories, surrounded by fruit

bowls and bean bags, clad in the obligatory

black sweatshirts and beanies. Last year

Oslo came third in a ranking of the world’s

most talent-competitive cities by insead, a

European business school. Engineering

graduates used to flock to the lucrative oil

sector; these days oil majors have trouble

recruiting talent.

Yet although Innovation Norway, a

state-owned agency, has in recent years

done a good job of promoting startups,

Norway’s economy will remain dominated

by oil for the foreseeable future. Petroleum

has transformed the country since it was

discovered at the Ekofisk oilfield in the

North Sea in 1969. Norway is one of the

world’s largest oil exporters. Hydrocarbons

account for half its exports and 19% of gdp.

And another oil rush is beginning. Johan

Sverdrup, a giant new oilfield in the North

Sea, could earn Norway an estimated

$100bn over the next 50 years.

Sveinung Rotevatn, the 32-year-old

newly appointed minister of climate and

the environment, admits that Norway is a

paradox—one of the world’s leaders in the

use of renewable energies and tech-

nologies, but also a fossil-fuel giant. Al-

most all Norway’s electricity comes from

renewable sources. Heating with oil will be

banned this year. Half of newly registered

cars are electric (Norway is one of Tesla’s

biggest markets). Oslo was the first city in

the world to set a ceiling every year for its

greenhouse-gas emissions. In late 2018 it

removed nearly all parking spaces from the

city centre, replacing them with benches,

bicycle docks and more pavements. In Oc-

tober last year Norway’s $1.1trn sovereign-

wealth fund, the world’s largest, estab-

lished in 1990 to prepare the country for a

post-oil future, announced that it would

sell all its shares in companies dedicated to

oil and gas exploration.

Is Norway doing enough to prepare for

that post-oil future? Some argue that it

should do more. “The government is deep-

ly embedded in old industries, but has

shown no interest in investing directly in

tech firms,” says Trond Riiber Knudsen,

chief executive of trk, an Oslo-based in-

vestment firm. The state owns a third of the

shares on the Oslo stock exchange, includ-

ing large stakes in Telenor, the country’s

biggest telephone operator; Norsk Hydro,

its biggest aluminium producer; Yara, its

biggest fertiliser-maker; and dnb, its big-

gest bank. It also controls some non-listed

giants such as Statkraft, a power generator,

which if listed would be the third-biggest

company on the stockmarket. However,

the state has not fussed when several suc-

cessful technology firms were sold to for-

eigners. In 2010 Cisco, an American tech ti-

tan, paid $3.3bn for Tandberg, a Norwegian

maker of videoconferencing kit. In 2016 a

Chinese group bought Opera, a Norwegian

software company.

Ivar Horneland Kristensen, boss of the

federation of trade and services, argues

that the government should pay more at-

tention to the services sector. Services ac-

count for 55% of gdp. According to Mr Hor-

neland Kristensen, Norway faces four

challenges. It needs to reduce its focus on

oil and gas, increase its productivity

through the use of technology, decarbonise

the economy to meet the goals of the Paris

agreement on climate change and create

25,000 jobs a year so that laid-off oil work-

ers remain gainfully employed.

Norway has profited from its wise deci-

sion to save the principal and invest the re-

turns of its oil riches. But the sheer size of

its sovereign-wealth fund—more than

$200,000 for every citizen—encourages

dependency. Fully 20% of Norwegians rely

on welfare, and that does not include pen-

sions. Norway spends 4.3% ofgdpon inca-

pacity benefits, the second-highest in the

oecdafter Denmark. Youngsters have nev-

er known a country without oil riches.

They are used to excellent free schools and

universities as well as free health care. But

for how long?

“There is no future for oil,” insists Ma-

thias Mikkelsen, the 29-year-old ceo of

Memory, a startup that developed an app to

track time at work. Oil is the new coal, so

clever investors are putting their money

elsewhere, says Inge Berge, ceo of Waste-

front, which, backed by Innovation Nor-

way, is building a factory to recycle tyres.

Yet both Mr Mikkelsen and Mr Berge bene-

fited from the ecosystem for startups fi-

nanced by oil wealth—and would have a

much tougher time building their compa-

nies without it.^7

OSLO

Norwegians yearn to be green, but depend on fossil fuels

Norway

Ecowarriors bankrolled by oil

Where there’s muck...

Norway, sovereign-wealth fund

Market value, $bn

Sources:NorgesBank;StatisticsNorway

1,200

1,000

800

600

400

200

0

2000 05 10 1915

Valueper

Norwegian,$’000

204.9

9.8

Why every family of five has a $1m nest-egg