Latest news regarding the Norwegian NOx fund
The Business Sector's NOx-fund to replace the NOx-tax in Norway.
Agreements can achieve emission reduction aims much cheaper for business than emission taxes.
Such agreements can sometimes be a viable policy option. An example is the recent Environmental Agreement between the Norwegian Ministry of Environment and fourteen business organisations on the reduction of NOx. Agreement on the main elements was reached 9 January 2008. The main objective is to obtain reduction in emissions of NOx in Norway as quickly and efficiently as possible, in order to contribute to the fulfilment of Norway's commitments under the Gothenburg Protocol related to annual emissions of NOx. The Agreement has a time frame up to the end of 2011.
The operating body to fulfil the commitments under the Agreement will be the Business Sector's NOx fund. The fund will be financed by a duty of payment by the companies that enters into the Agreement by signing a Statement of Association in order to obtain an exemption from the NOx tax (at present at NOK 15.39/kg NOx). The yearly cost for companies of the NOx tax was NOK 1,600 million in 2007, which was the first year of such a tax. In practice there was no support scheme available to reduce emissions.
The plan is that the duty to the NOx fund will be at the level of NOK 4/kg NOx for 2008 for ships, aircraft, industry, ferries and so on whereas the offshore oil and gas sector will pay NOK 10/kg NOx. The basis for calculating the duty is the same as for the emission tax. The intention is to keep this duty as stable as possible. Under the Agreement all companies that sign the Statement of Association before 1 July 2008 will be able to get a refund of NOx taxes paid from 1 January 2008.
Companies that join later will get refund from the time of association. The NOx Fund will have a yearly income of around NOK 500 million to support investments and other activities in the undertakings to reduce NOx emissions over a 4 year period. All income minus administrative expenses will be used to reduce emissions.
The obligations of the individual undertaking are designed to reach the collective obligations and support the objectives of the Agreement. The Agreement does not pre-determine a specific individual reduction obligation for each undertaking.
However, in order to achieve a zero tax rate each undertaking must accept certain specific obligations towards the NOx Fund, such as refraining from unilaterally withdrawing from the Agreement, to oblige to pay the emission tax in proportion to the degree of failure to reach the annual targets of the collective, report and document emissions, and carry out emission reducing measures according to a specific agreement with and/or upon instruction from the NOx fund.
The Agreement as such will not enter into force before it has been approved by ESA, for not breaching EU State Aid rules. In 2010 the parties will decide whether the Agreement will be prolonged.
