The U.S. Inflation Reduction Act is Good for Norway. Here's why.
By Marc Nathanson, U.S. Ambassador to Norway
This op-ed was published in Norwegian by Dagens Næringsliv on March 3, 2023.
The Inflation Reduction Act (IRA) is the most significant step the United States government has taken to tackle climate change in our history. It is also one of the most important steps to tackle climate change in global history because of the size of the U.S. economy and our emissions. The IRA puts America firmly on the path to meeting our ambitious 2030 climate goals. It creates good-paying, high-quality clean energy jobs and it will fund rapid new technology development – for the benefit of everyone worldwide. And it will diversify global clean energy supply chains. This is good for the United States. It is good for Norway. And it is good for the world.
As President Joe Biden said, it is possible to harmonize our economic and trade approaches, create high-paying jobs and tackle the climate crisis—and do all of this together.
Norway will benefit, as will the United States, from incentives for green industry investment that increase clean-energy production and deployment around the world.
Let me explain how those benefits will unfold:
The IRA will increase global investment in clean energy globally and drive down costs. This will benefit Norway as it develops its battery industry, expands offshore wind at home and abroad, grows carbon capture and storage technology, and builds a clean hydrogen sector.
- Norway is already one of the largest investors in offshore wind in the United States, thanks to the 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 coastlines, representing a portfolio of more than 5.3 gigawatts (GW) of capacity – a significant share of the Biden-Harris Administration’s offshore wind target of 30 GW by 2030. This in turn will likely drive technology development and bring down costs, which will benefit Norway’s domestic plans to develop 30GW of offshore wind capacity by 2040. Equinor will directly qualify for IRA benefits by investing in the United States, and Norwegian industry will benefit at home from lower costs associated with this technology.
- Norwegian companies are actively pursuing opportunities to expand clean hydrogen using renewable energy and carbon capture and storage technologies. Norway is already a world leader in carbon capture and storage innovation and implementation. The incentives in the IRA will help scale these important technological developments and make them more affordable globally, creating more markets for Norwegian firms. Norwegian companies will directly benefit from scalability made possible by the IRA.
- Norway is a global leader in producing green aluminum. Norsk Hydro is growing 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. Norsk Hydro is not only expanding in the United States, however. It is running a pilot production facility in Norway with the world’s lowest energy consumption and smallest carbon footprint, which will produce 75,000 metric tons of green aluminum annually. Lowering global costs for 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 technology, creating industrial demand that will more quickly scale up needed innovation, so they can compete globally.
- For example, in November 2022, Norwegian battery manufacturer FREYR announced a $1.7 billion preliminary investment to develop a clean battery manufacturing facility in the U.S. state of Georgia based on technology developed in Boston, in parallel to their Giga Arctic facility under construction in Northern Norway. This win-win industrial development is possible thanks to the U.S. government’s clear signal of support for these technologies of the future.
- The United States expects the cost of clean hydrogen to drop by 50 percent in the next ten years, benefitting the clean hydrogen industry globally. The IRA will make it possible to scale up green hydrogen production and incentivize the growing demand for electrolyzers from American industrial customers who are switching to clean energy sources. NEL, a Norwegian electrolyzer producer with operations in Connecticut, will directly benefit from the IRA. Accelerating the deployment of clean hydrogen in America is expected to lower costs for this technology worldwide, including for NEL’s manufacturing facilities in Norway, by overcoming learning curves and achieving economies of scale. That’s important as clean hydrogen moves to replace Russian oil and natural gas.
We cannot do this alone – we need our partners, like Norway, to work with us, invest in the research, and develop technology to tackle the climate crisis facing the world. This will require increasing bilateral and multilateral cooperation, and I’m proud that the U.S. and Norway already have a very strong bilateral relationship in the field of green technology. As Special Presidential Envoy for Climate John Kerry and White House Senior Advisor for Clean Energy John Podesta both said, we support our allies and partners investing in these industries and advancing their own plans in coordination with the United States.
Norway and the United States already have a solid foundation for cooperation. Since my arrival in Norway six months ago, I have been working with the Ministry of Trade and Industry and the U.S. Department of Commerce to formalize deeper cooperation 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 actions to achieve our ambitious climate goals and massively reduce global greenhouse gas emissions. The Inflation Reduction Act is one of our most significant, action-oriented steps to reach these goals. Together, with our Norwegian partners, we see the IRA as an accelerator of global investment in green technologies that will boost the economies of the United States and our allies and partners. This is good for our two nations and, most importantly, for future generations globally.