Op-Ed: The US Inflation Reduction Act is good for Norway

The US Inflation Reduction Act is good for Norway. Here’s why.

By Marc Nathanson, US Ambassador to Norway

This comment was posted in Norwegian on March 3, 2023 by Dagens Næringsliv.

The Inflation Reduction Act (IRA) is the most significant move by the US government to combat climate change in our history. Because of the size of the US economy and our emissions, this is also one of the most important steps in combating climate change in world history. The IRA puts America firmly on track to meet our ambitious 2030 climate goals. It will create high-paying, quality clean energy jobs and will fund the rapid development of new technologies for the benefit of all around the world. And it will diversify global clean energy supply chains. This is good for the United States. That’s good for Norway. And it’s good for the world.

As President Joe Biden has said, it is possible to harmonize our economic and trade approaches, create high-paying jobs, and tackle the climate crisis—all together.

Norway, like the United States, will benefit from incentives to invest in green industries that increase the production and use of clean energy around the world.

Let me explain how these benefits will unfold:

The IRA will increase global investment in clean energy worldwide and reduce costs. This will benefit Norway as it develops its battery industry, expands offshore wind power domestically and internationally, expands carbon capture and storage technology, and builds a clean hydrogen sector.

• Norway is already one of the largest investors in offshore wind energy in the United States, thanks to expertise developed in its oil and gas industry and Europe’s advanced offshore wind sector. Equinor is investing in offshore wind projects on our east and west coasts, representing a portfolio of more than 5.3 gigawatts (GW) of capacity — a significant fraction of the Biden-Harris administration’s offshore wind target of 30 GW by 2030. This in turn is likely to drive technology development and reduce costs, which will benefit Norway’s plans to develop 30 GW of offshore wind capacity by 2040. Equinor will directly qualify for IRA benefits through investment in the United States, and Norwegian industry will benefit from lower associated costs at home with this technology.
• Norwegian companies are actively exploring ways to scale up clean hydrogen with renewable energy and carbon capture and storage technologies. Norway is already a world leader in innovation and implementation of carbon capture and storage. The incentives in the IRA will help scale these key technological developments and make them more affordable globally, creating more markets for Norwegian companies. Norwegian companies will benefit directly from the scalability enabled by the IRA.
• Norway is a world leader in the production of green aluminum. Norsk Hydro is expanding its significant low-carbon aluminum business in the United States and is currently investing in the construction of a greenfield aluminum recycling plant in Michigan. However, Norsk Hydro is not only expanding in the United States. It operates a pilot production facility in Norway with the world’s lowest energy consumption and the smallest carbon footprint, which will produce 75,000 tons of green aluminum annually. Reducing the global cost of these technologies is a win-win for the United States and our partners.

In Norway, the IRA will encourage investment in the next generation of clean energy technologies and create an industrial demand that will scale the innovation needed faster so they can compete globally.

• For example, in November 2022, Norwegian battery maker FREYR announced a $1.7 billion upfront investment to develop a clean battery manufacturing facility in the U.S. state of Georgia based on the technology developed in Boston, in parallel with its im Giga Arctic plant under construction in northern Norway. This win-win industrial development is made possible by the clear signal from the US government to support these future technologies.
• The United States expects the cost of clean hydrogen to fall by 50 percent over the next decade, benefiting the clean hydrogen industry worldwide. The IRA will make it possible to increase production of green hydrogen and stimulate growing demand for electrolyzers from American industrial customers who are switching to clean energy sources. NEL, a Norwegian manufacturer of electrolysers with offices in Connecticut, will benefit directly from the IRA. Accelerating the deployment of clean hydrogen in America is expected to reduce the cost of this technology globally, including for NEL’s manufacturing facilities in Norway, by overcoming learning curves and realizing economies of scale. This is important as clean hydrogen is starting to replace Russian oil and natural gas.

We cannot do this alone – we need our partners like Norway to work with us, investing in research and developing technologies to tackle the global climate crisis. This requires increasing bilateral and multilateral cooperation, and I am proud that the US and Norway already have very strong bilateral relations in the field of green technology. As John Kerry, the President’s special envoy on climate, and John Podesta, senior White House adviser on clean energy, both said, we support our allies and partners to invest in these industries and advance their own plans in coordination with the United States.

Norway and the United States already have a solid basis for cooperation. Since arriving in Norway six months ago, I have been working with the Department of Trade and Industry and the US Department of Commerce to formalize deeper collaboration on green industry growth to build on our existing agreements on clean energy and carbon capture and storage .

The United States is fully committed and taking significant action to meet our ambitious climate goals and massively reduce global greenhouse gas emissions. The Anti-Inflation Act is one of our most important action-oriented steps to achieve these goals. Together with our Norwegian partners, we see the IRA as an accelerator for global investments in green technologies that will boost the economies of the United States and our allies and partners. This is good for both our nations and especially for future generations worldwide.