Norwegian CO2 tax plan survives... just

Prime minister's resignation threat forces opposition to submit despite holding majority

Resignation threats by Norwegian prime minster Kjell Magne Bondevik followed by a vote of confidence in Norway's parliament on Friday have resuscitated a controversial, and apparently defeated, plan to extend the country's system of carbon dioxide taxes.

Put forward by the minority three-party coalition government, the proposal to increase CO2 taxation is part of the government's strategy for reducing emissions of greenhouse gases announced earlier this year (ENDS Daily 23 April), but was presented to parliament as part of a highly contested revised national budget for 1998.

Norwegian opposition parties, which hold a majority in the parliament, have strongly resisted the government's CO2 taxation plans, and looked to have killed off the plan with a parliamentary vote two weeks ago.

Under an opposition-inspired counter-plan voted through in place of the government's proposal, Norway was set to become the first country in Europe and possibly the world to set up a national trading system for all six gases controlled by the Kyoto protocol. Under the proposal, quotas would be distributed to companies operating in the metals, petrochemicals and cement industries as well as oil refineries. These could then be bought and sold by firms involved in the scheme.

Mr Bondevik, however, refused to cede to the majority opposition and last week presented a revised budget package, retabling his CO2 tax proposal. In addition, the prime minister threatened to resign if he did not receive support - effectively calling a vote of confidence in the government. The opposition responded by calling for separate votes on the package's constituent parts and by resisting it becoming a vote of confidence. As the week progressed, the government's plan to extend CO2 taxation became a central point of difference between the parties.

On Friday, the government succeeded in putting the revised budget package to the parliament as a vote of confidence, the first in Norway for 12 years, and won. As a result, the government can now move ahead with plans to increase CO2 taxes, and in particular to extend taxation of Norway's key offshore oil and gas industry up to a ceiling of NKr95m (Ecu11.4m).

Despite their numerical superiority, opposition parties were dissuaded from voting down the government by a reluctance to force a general election, according to Carl Hagen, leader of the right-wing Progress Party and one of the strongest opponents of the CO2 tax extension plan. "Our desire to avoid a change in government now is more important than voting against a proposal for increased CO2 taxes on the continental shelf," Mr Hagen told the Aftenposten newspaper.

Follow Up:
Office of the Norwegian prime minister, tel: +47 22 24 90 90.

Please sign in to access this article. To subscribe, view our subscription options, or take out a free trial.

Please enter your details

Forgotten password?

Having trouble signing in?

Contact Customer Support at
subs@endseurope.com
or call 020 8267 8120

Not a subscriber?

Take a free trial now to discover the critical insights and updates our coverage offers subscribers.