Vindturbiner
COMMENT: RENEWABLE ENERGY

Nordic cooperation can boost Norwegian cleantech exports

Building cross-border clusters will help increase competitiveness.

Building cross-border clusters will help increase competitiveness.

Climate change is a grave threat – but also a tremendous business opportunity. In July, Bloomberg New Energy Finance released its latest New Energy Outlook, which forecasts global investments of USD 11.5 trillion (USD 1,500 billion) in new power production from 2018 to 2050. Some USD 8.4 trillion of this amount is to be channelled into wind and solar, while USD 1.5 trillion is set to be invested in other zero-carbon technologies such as hydro and nuclear power.

Ivar Slengesol

Ivar Slengesol is Director Strategy and Business Development. Mr Slengesol was previously business development director at Eksportfinans. He has a broad experience from start-ups in the renewable energy sector and has also worked at Shell and the World Bank.

 

Norwegian suppliers of renewable energy solutions are growing but have yet to achieve critical mass.

Ivar Slengesol, Export Credit Norway

Norwegian suppliers of renewable energy solutions are growing but have yet to achieve critical mass. By and large, these companies are smaller, independent sub-suppliers that deliver into international supply chains. In addition, the domestic market is very small. Wind and solar, for example, employ around 1,000 persons each in Norway, compared to 150,000 persons working in the oil and gas industry and 300,000 employed in the building and construction sector. Renewable energy exports of technology and services amount to approximately NOK 6 billion a year, making up a small fraction of total exports of some NOK 1,000 billion.

I have previously written about the challenges Norwegian businesses face in bringing cleantech solutions and products to the international market. International rankings also indicate unrealised potential. In the Global Cleantech Innovation Index, Norway was outperformed by its Nordic neighbours, taking ninth place behind Denmark in first and Sweden in third. According to the index, Norway has the world’s highest cleantech R&D budget relative to the economy’s size. Global investments in cleantech R&D would be four times as high if all countries made the same investment relative to GDP as Norway. Nonetheless, the effect on Norwegian businesses in terms of sales and earnings is mixed.

Despite ranking a little higher on innovation, Norway’s Nordic neighbours face similar challenges with regard to commercialisation, critical mass and international competition. Like Norway, Sweden and Finland have growing but scattered clean-tech sectors. The exception is Denmark, which has spent decades developing a domestic wind power industry that in 2017 generated some NOK 50 billion worth of green energy technology exports and sustained almost 30,000 local jobs.

The Nordic countries are known for sustainability and quality.

Ivar Slengesol, Export Credit Norway

The Nordic countries are known for sustainability and quality. To a large extent they share culture and language. There must therefore be potential to achieve more through Nordic cooperation in the cleantech sector.

This was the vision behind the assignment given to Jorma Ollila by the Nordic Council of Ministers in 2016: to identify 10 to 15 specific measures to boost Nordic energy cooperation, based on input from industry, academia and other stakeholders. As a former chief executive of Nokia and former board chair of Shell, Ollila was well-qualified for the task.

Ollila’s report Nordic Energy Co-operation: Strong today-stronger tomorrow contained 11 proposals, many of which deserve further consideration.

Among other things, Ollila proposed a survey of R&D and innovations programmes in the Nordic region. He pointed out a lack of coordination, including at the national level, that has resulted in different research institutions working on the same research topics. “A certain volume of funding resources and critical mass is needed to get the intended results, which therefore requires the streamlining of Nordic and national activities,” he wrote. The survey was intended to lead to a joint Nordic vision and joint programmes concentrating on R&D and cleantech commercialisation.

In addition, wrote Ollila, steps should be taken to market Nordic solutions to global problems. Clusters of Nordic suppliers should be formed to enable suppliers to join forces to offer the integrated system deliveries (turnkey solutions) demanded in larger markets like China. Moreover, trade organisations should liaise on the development of a Nordic export strategy for the energy sector, with related marketing activities.

Former Norwegian Minister of Climate and the Environment Tine Sundtoft has reiterated the recommendation to promote Nordic cleantech solutions in her recent report on Nordic climate cooperation, which was also commissioned by the Nordic Council of Ministers.

Various organisations are already promoting Nordic cooperation, including NordForsk, Nordic Energy Research, Nordic Innovation, the Nordic Environment Finance Corporation (NEFCO) and the Nordic Investment Bank (NIB). While much good work is being done, there is clearly also unrealised potential to boost the awareness and relevance. Although Ollila did not cover this topic, I would question whether the Nordic institutions are equipped to achieve his vision, given their modest budgets and limited human resources. Nordic Innovation has a staff of about 20, and NEFCO just over 30 employees. NordForsk, Nordic Energy Research and Nordic Innovation are all headquartered in Oslo.

Last year, the Norwegian Government published its strategy for “green competitiveness”, which contained little discussion of Nordic cooperation. Minister of Trade and Industry Torbjørn Røe Isaksen has recently announced a review of what he called a “jungle” of public support schemes for entrepreneurs and businesses in Norway. Like Ollila, Røe Isaksen has identified an over-abundance of overlapping programmes and schemes.

The minister and his ministry should incorporate a Nordic perspective into this review. Further, Norwegian industry and trade organisations should re-examine the Ollila report and use it in their strategic planning. In various respects, Nordic cooperation may be part of the answer to the question of how to develop what the Norwegian cleantech industry most needs: critical mass.

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Ivar Slengesol
Ivar Slengesol Director Strategy and Business Development +47 991 14 110 +47 991 14 110