The effect of policies in achieving the “Norway’s Climate Action Plan for 2021 – 2030”

Abstract

This research paper investigates the impact of energy policies on the energy market in Norway and assesses the possibility of achieving CO2 targets set by Norwegian Ministry of Climate and Environment in the “Norway's Climate Action Plan 2021-2030” using the TIMES (The Integrated MARKAL-EFOM System) model. The TIMES model is a bottom-up framework that minimizes the total discounted cost of the energy system to match the energy services demand at least cost for the area over the definite period. The specific energy policies such as carbon tax increase, EU-ETS price increase, and wind subsidies increase are considered. Our research helps to understand the relationship between energy policies and energy market mechanisms, and CO2 targets.

Our findings show that the CO2 targets set are not attainable under the examined energy policies. According to the most effective policy mix scenario, CO2 emissions will reach 36 million tonnes CO2 equivalents, which is only 32% reduction from the CO2 emissions level of 1990. This implies that further efforts and more effective strategies may be required to achieve desired environmental results. However, it is important to recognize that there are some limitations in the TIMES model and our research such as the requirement of extensive data inputs, rationality of agents, perfect market conditions, complexity of energy systems and absence of uncertainties. These limitations should be taken into consideration for further studies and analysis to provide more accurate and comprehensive insights.