The government of Norway has published a white paper outlining a proposal to increase the breadth and ‘depth’ of the country’s carbon tax, expanding the coverage to non-EU ETS sectors and increasing the tax to an eye-catching €200/tonne (US$243/tonne). The new rate would be more than triple the current tax, which is already high by global standards, with the reasoning being that such a price would set an incentive strong enough to drive businesses to low-carbon alternatives, an argument with which it is difficult to disagree.

Another interesting aspect of the proposal is that sectors currently covered by the EU Emissions Trading System would still participate in that market, but then make up the difference to €200, the first time that the two systems would be combined. In addition, it is a reflection that the Norwegian government considers the ETS inadequate, an idea which seems to be rather widely shared, with the Netherlands, which is instituting its own carbon tax on industrial CO₂ emissions, starting at €30/tonne this year and rising to €125/tonne by 2030. (The UK government, which formerly participated in the EU ETS, introduced its own floor price for carbon, another sign of the ETS not quite working as intended.)

According to the Bellona website, the proposal to raise the tax is broadly supported in Norway, although the waste incineration industry has flagged that it has little control over the level of carbon in the waste it processes, and could thus claim to be negatively affected, with few options to change (other than to institute CCS). The Norwegian government has said it will lower other taxes so that the overall tax burden will not increase on the economy as a whole.