Unleashing Nordic energy excellence through collaborative policy and energy efficiency

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The four core Nordic countries—Denmark, Norway, Sweden, and Finland—consistently rank among the most advanced and successful in the world. For six consecutive years, Finland has topped the World Happiness Report, while Norway placed second in the UN’s most recent Human Development Index—with all four ranking very highly for life expectancy, literacy rate, GDP per capita, trade, income equality, and more. Today, the region is often used as a case study and role model for other countries looking to improve their governance, equality, and social and economic policies. It’s a testament to the forward-thinking nature of the Nordics’ governments and citizens.

The Nordics also punch far above their weight when it comes to sustainability. According to the latest Environmental Performance Index, Denmark ranks first overall among 180 countries worldwide, with Finland third, Sweden fifth, and Norway twentieth. Recent reports from the IEA back up the region’s positive environmental progress. However, just because they are ahead today doesn’t mean they will remain there—or that our work here is complete.

Carbon zero, the holy grail of the global fight against climate change, is still yet to be realized by any Nordic nation. Denmark, Norway, Sweden, and Finland still grapple with challenges that demand significant enhancements for genuine climate neutrality. We must not conflate necessary regional collaboration, with the need for a ‘one-size-fits-all’ approach. When it comes to policy, we must acknowledge the unique challenges and aspirations of each Nordic country. Let’s delve into what these distinct challenges and actions look like:

Norway: Navigating away from fossil fuel trade

Norway has an almost entirely renewables-based electricity system and is a leader in electric vehicle (EV) uptake. In the IEA’s most recent review of Norway’s energy policies, the organization found that an abundance of affordable hydropower has enabled the development of energy-intensive Norwegian industries and a high level of electrification of homes and businesses with limited GHG emissions.

In 2020, electricity covered almost half of the country’s total final consumption (TFC), the highest share among IEA member countries. However, Norway is also a main exporter of oil and gas, so it must support an evolution of its energy sector amid a global energy transition and has a key role to play in creating a greener Northern Europe (via low-carbon energy carriers). Grid expansion is needed to enable surplus generation in the north to easily make its way south, reducing regional price differences.

To meet its ambitious target of being a low emissions society by 2050, Norway has considerable work ahead. Many of its easy wins for reducing emissions have already been achieved, so the country’s remaining emissions reductions will be more complex, challenging and costly, notably in transport and industry.

Potential solutions include assessing various scenarios for future global oil and gas demand as part of a longer-term strategy for transformation from oil and gas revenue dependency, including diversification into low-carbon energy carriers. It should also prioritize energy efficiency as a policy area, including through sectoral targets, action plans and supporting measures, especially in the buildings and industry sectors. Finally, Norway should increase its ambitions in areas where it may have competitive advantages and means, such as hydrogen, green shipping, carbon capture and storage, and offshore wind.

Sweden: Stepping up transport electrification

According to the IEA, Sweden is a global leader in decarbonization. By 2030, it’s targeting a greenhouse gas emissions cut of 59% compared with 2005 and aims to have a net-zero carbon economy by 2045, five years ahead of the standard 2050 target. Most of Sweden’s electricity supply comes from hydro and nuclear. So, while it’s a hefty consumer of energy, its carbon emissions are low due to large financial and public support of renewables. It’s now Europe’s largest net power export, reaping the benefits of its investments into green energy.

However, while there have been positive steps taken in buildings, energy efficiency improvements have slowed over recent years.​ There’s also a big opportunity to decarbonize transport—most of Sweden’s greenhouse gas emissions come from the transport sector, which remains reliant on oil. The government has a target to reduce transport emissions by 70% from 2010 to 2030 and is supporting transport decarbonization through electrification and advanced biofuels.

To make significant progress, Sweden must design policies and measures that specifically meet the targets of its 2016 energy agreement, such as giving preference to technology-neutral policies and market mechanisms and closely monitoring the outcome of new policies to ensure the targets are reached, particularly within transport. It should also share its 2045 vision and pathways with academia, industry, and civil society to enable faster, wider progress.

Denmark: Delivering new policies to meet 2023 targets

Denmark has the highest share of wind electricity (54%) in the IEA, which together with bioenergy and solar photovoltaic (PV) make up 81% of its power mix. The country’s district heating sector has practically phased out coal, helping lower the reliance on fossil fuels in Denmark’s total energy supply (TES) from 75% in 2011 to 53% in 2022, well below the IEA average of 79%.

By 2030, its electricity system will be completely independent of fossil fuels as part of a goal set by the Danish parliament. However, the Danish Energy Agency’s (DEA) Climate Status Outlook warns of a gap towards the 2030 targets based on existing measures and policies. Extra initiatives will be needed to reach the targets, notably in transport, agriculture and industry. Additionally, the country’s average annual temperature has been rising more quickly than the global average, clearly seeing the effects of global warming.​

Environmental progress will require Denmark to scale up the delivery of policies and measures towards its 2025-2030 energy and climate goals. It should focus on energy savings, accelerating the deployment of renewables and maximizing domestic energy production. An energy security roadmap must address challenges from extreme weather events, cybersecurity, and supply chain risks, and prepare green infrastructure masterplan that includes major regional projects to progress Denmark’s ambition for green power, CO2 and hydrogen.

Finland: Fortifying domestic energy security

Finland’s ambitious 2035 carbon neutrality target and investment in nuclear, thermal and wind has made it an energy transition front-runner.​ Nuclear is its largest source of electricity generation and in April 2023, Finland opened Europe’s first new nuclear reactor for over 15 years. However, imported fossil fuels still account for over 30% of its energy supply, with transport and some industrial areas highly dependent on fossil fuels.​ The energy intensity of the economy and energy consumption per capita are both very high due to the country’s relatively large heavy industry sector and the high heating demand from its cold climate.

Energy efficiency is key in Finland’s push to reduce its dependence on imported energy and improve energy stability. Finland’s Climate Change Act, which legislates its net-zero targets, requires the development of several documents defining the specific measures to achieve these targets. The IEA also states that the country’s plan to achieve carbon neutrality relies on increasing carbon removals from land use, land-use change and forestry (LULUCF) to offset remaining emissions.

A strong increase in renewable energy is needed to meet the 2035 climate neutrality goal. Finland should promote an increased deployment of energy storage to boost the resilience and flexibility of its electricity grid and heating networks. It also needs to accelerate the uptake of electric vehicles with a clear plan for expanding charging infrastructure and prepare an offshore wind power road map that establishes a clear regulatory regime and ambitious targets and timelines for deployment.

It’s time to step up the pace to achieve net-zero

While the Nordics are undoubtedly a leader in supply-side innovations like hydrogen, energy storage and renewables, we must not overlook the demand-side. Clean, plentiful electricity for all parts of the Nordics must be the end goal. It’s about grid readiness and connectivity, plus energy storage, to ensure the green energy we generate is seamlessly and cost-effectively made available to the places and people that need it.

Efficiency is the main area for improvement to achieve Nordic energy excellence.​ Digitalization of energy not only helps to automate energy efficient processes, but also empowers informed decision-making when it comes to energy usage—from hyperscale data centers to individual homes. The countries must continue to develop the Nordic/Baltic electricity market and coordinate preparations for national climate policies.

Ultimately, net-zero can’t happen in isolation​. Collaboration and connection are at the core of the new energy landscape. From the balancing of investment in supply and demand-side solutions or connecting green energy sources to the places and people that need it, to connecting energy usage with digital tools to drive efficiency, to building partnerships between government, business, and across borders to drive forward green policy and innovation, we must nurture current and future talent to ensure our ambitious plans can come to fruition. By fostering public and private sector collaboration, both in and outside of the Nordics, together we can drive forward policies and programs that support the energy transition.

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