Proposed reduction of Norwegian CO2 compensation

10/10/2022

The Norwegian National Budget for 2023 proposes a reduction of the CO2 compensation to Norwegian industry of approximately NOK 2.7 billion annually. Norske Skog expects a reduction in the CO2 compensation payment to be received from 2023 and onwards of approximately NOK 140 million annually.

Yesterday, 6 October 2022, the Norwegian government presented its National Budget proposal for 2023. The budget proposes to reduce the CO2 compensation to Norwegian industry. The CO2 compensation is an EU initiative, which can be implemented at the discretion of each individual member country, designed to mitigate the impact of high CO2 allowance (EUA) prices on electricity costs. The overall ambition is to avoid transfer of energy intensive industries to countries with less strict climate policies outside the EU, this has been termed Carbon Leakage.

The size of the CO2 compensation is, among other, based on electricity  consumption and the average CO2 allowance price for the preceding year. Starting in 2023, the government has proposed to introduce a price floor whereby the  industry will only receive compensation for the CO2 allowance price that exceeds NOK 200.

“The Norwegian government had a possibility under the EEA agreement to support investments in energy intensive industries by using the scope of the CO2 compensation scheme. By first lowering the adjustment factor and now introducing a floor in the scheme, Norway is losing competitiveness to its European trading partners. This makes future investments in Norway less likely and increases uncertainty for the industry”, says Sven Ombudstvedt, CEO of Norske Skog ASA. 

For Norske Skog, this implies that the Norwegian CO2 compensation to be paid in 2023 under the National Budget for 2023 will be reduced with approximately NOK 140 million. The CO2 compensation to be paid in 2023 is directly tied to electricity consumption and the related publication paper production in 2022, and has thus been recognised as a decrease in cost of materials in 2022. The reduction of the Norwegian CO2 compensation for the first three quarters of 2022 will be reflected in the third quarter results for 2022. 

The Norwegian CO2 compensation to be paid in 2022 under the National Budget for 2022 has not been changed, and the payment is expected to be received in the fourth quarter of 2022.

About Norske Skog
Norske Skog is a world leading producer of publication paper with strong market positions and customer relations in Europe and Australasia. The Norske Skog Group operates four mills in Europe, two of which will produce recycled containerboard following ongoing conversion projects. In addition, the Group operates one paper mill in Australia. Norske Skog aims to further diversify its operations and continue its transformation into a growing and high-margin business through a range of promising energy and bio product development projects. The Group has approximately 2 100 employees, is headquartered in
Norway and listed on the Oslo Stock Exchange under the ticker NSKOG.

Norske Skog
Communications and Public Affairs

For further information:
Norske Skog media:
Vice President Communication and Public Affairs

Carsten Dybevig
Email: carsten.dybevig@norskeskog.com
Mob: +47 917 63 117

Norske Skog financial markets: 
Investor Relation Manager
Even Lund
Email: even.lund@norskeskog.com
Mob: +47 906 12 919