EU energy policy row triggers government collapse

It would be wrong to tie Norway to the ‘dysfunctional’ EU electricity market, the leader of one of the nation’s ruling parties has said

Norway’s coalition government collapsed on Thursday after the Euroskeptic Center Party rejected EU energy policy regulations advocated by Prime Minister Jonas Gahr Store. The move would subject people to an electricity price hike, the party leader and finance minister, Trygve Slagsvold Vedum, warned.

It leaves Store heading a minority Labor Party government. The cabinet can govern until the next elections, which are scheduled for September, but has lost its majority in the parliament and could struggle to pass legislation.

At the heart of the dispute is the fourth EU energy package, which is also known as “clean energy for all Europeans.” Adopted in 2019, it introduced a set of policies with a focus on renewables and “energy efficiency,” including reduced CO2 emissions, as well as a “robust governance system” for energy in the bloc.

Norway, which is not a member of the EU, is still closely tied to the bloc through the European Economic Area (EEA) and normally has to adopt the bloc’s rules unless it invokes a right of reservation. The Nordic nation is also a major oil and gas producer and exporter.

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The Center Party has argued that the changes advocated by Store would erode the nation’s autonomy, and maintained that Oslo should instead reclaim its authority in the area of energy policy. Earlier this week, Verdum blamed previous Conservative governments for contributing to energy price hikes in Norway by allowing the construction of undersea power lines to Germany and the UK.

“When the Labor leadership, instead of solving the problem, chooses to make the problem even bigger by tying Norway even closer to the EU in electricity policy through the introduction of the EU’s fourth energy market package, the Center Party chooses to leave the government,” he said.

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“We believe it is wrong to become more closely linked to the EU’s energy policy,” Vedum told NRK broadcaster on Thursday. “What we were clear about all along is that beginning the process of linking ourselves more closely to the EU’s dysfunctional electricity market and energy policy is completely out of the question,” the Center Party leader told a press conference following the decision to leave the cabinet.

The development drew criticism from Brussels. “We are not happy with Norway. The sentiment is as bad as I have known it,” an EU ambassador to Oslo told the Financial Times on Thursday, calling the Nordic nation “selfish” for “trying to keep this electricity for itself,” and profiteering off the EU through its gas exports.

It’s not the first time that Norway and the EU have clashed over energy issues. In August 2022, Oslo said it could ration its electricity exports to the EU and the UK against the backdrop of a heatwave affecting its hydroelectric power production and domestic electricity price hikes. The announcement was slammed by Germany as a thinly veiled threat to put pressure on the bloc.