Interview with Jan Christian Vestre, Minister of Trade & Industry

15 Apr Interview with Jan Christian Vestre, Minister of Trade & Industry

Business Focus (BF): What major hurdles is Norway currently facing considering the current macroeconomic and geopolitical backdrop?

Jan Christian Vestre: The world is, arguably, going through its largest transition in the history of mankind. Transitioning our economy to become both digital and green is a huge task that requires us to be bold, visionary, and willing to make the right investments.

To achieve this, my job is twofold. On the one hand, I need to make sure we have the right framework for existing companies and industries to safeguard and protect jobs. And on the other, I need to enable a friendly climate for investments. I’m very proud to share that our current track record is amazing. We have never had more people in the labor force, we have hit an all-time high in investments, and we have never registered more exports from our mainland. Our economy is developing.

The ministry’s triple bottom line remains sustainability, environmentally friendly business, and profitability. However, Norway is a small, open and free-trade-based economy, which is challenged by the current trend to turn away from globalization.

It’s no secret that there is currently less trust in the World Trade Organization, and the voices defending and promoting free-trade are no longer as strong as they were in the past. So, our current challenge is to stand up for those values and exchange ideas, policies, products, and services. We must use trade efficiently to reduce inequalities, eradicate poverty, and make the world a better place.

A key challenge facing Norway is our transition away from fossil fuels. We are the number one exporter of gas to European countries, yet we also need to help small and medium-sized companies reduce their emissions and implement the United Nations’ sustainability goals.

Another challenge is handling inflation and instability due to conflicts. We are experiencing the worst energy crisis in the last 50 years and the most stubborn inflation since the 1980s. We need to safeguard existing jobs to make sure we endure these difficult times and come out stronger. The reality is that we cannot make any long-term transitions if we do not tackle these issues.

Another key focus is rapidly reducing our emissions. We have the necessary technologies and understand the urgency, but we are going beyond nice speeches and moving towards bold action and real investments. Yet, to succeed, it is crucial that we mobilize the power of the private sector through public-private partnerships focused on emissions reduction.

BF: Seeing the importance of diversifying the Norwegian economy away from fossil fuels, exactly whatsteps are being taken to achieve this?

Jan Christian Vestre: As is the case with all other countries around the world, we too must transition away from the use of fossil fuels. We are very happy with the decisions made at the 2023 United Nations Climate Change Conference, although Norway would have been a lot bolder with the commitments than what world leaders agreed to in this respect.

However, the reality is we continue to export more petroleum products than any other products and services from the mainland, which is challenging. And while the current demand for oil and gas exists, I am confident it will decline faster than expected. In fact, according to the International Energy Agency, we are seeing a large rise in investments in renewables, and for every dollar invested in fossil fuels this year, $1.7 will be invested in renewables, which is a level we haven’t previously seen.

My main goal is to make our economy less dependent on oil and gas exports by mobilizing other export-oriented industries. We launched an initiative two years ago with an ambitious goal to increase our non-hydrocarbon exports from the mainland by 50% by 2030. This involves making sure we have enough products and services to support the economy beyond oil and gas, and will require a reform of the private sector in addition to private-public partnerships. To achieve this, we have highlighted five to ten sectors based on international demand where we have competitive advantages due to natural resources or competencies and these are the areas we are focusing on.

Collectively, the main goal of our government is to maximize value creation across the board. We are not looking at specific technologies or companies. We want all of them to be able to compete to ensure an efficient and market-based social democratic economy, working for the greater good.

The coming decade will see the promotion of public-private partnerships on a global scale in specific areas where Norwegian solutions will be required. For example, we launched a roadmap called the Green Industrial Initiative that highlights the importance of increasing carbon capture and storage operations. This technology is no longer in the realm of science fiction, and Norway is already a world leader. And next year, we will open the first full-scale commercial project to safely capture and store carbon dioxide. Additionally, we have embarked upon a strategy to capitalize upon our tremendous gas and water resources to convert this gas and use electrolyzers to create both green and blue hydrogen, in addition to ammonia to help reduce global emissions.

On the other hand, we are open to the development of all critical sectors that boost the value chain, including factories for rare earth minerals, recycling of batteries, and deep-sea mining. We need to be extremely careful with the latter segment, though; we won’t open a single piece of the seabed if we aren’t 100% certain it can be done in a safe and sustainable manner.

The Ministry of Trade and Industry is responsible for mainland resources while the Ministry of Petroleum and Energy is responsible for deep-sea mining. We have huge amounts of rare earth minerals on the mainland and mining operations are currently underway, and our goal is to create the world’s most sustainable mining industry. Beyond that, we want to drive growth in the processing, solar and manufacturing industries.

BF: What is the government doing to support local entrepreneurs and boost innovation?

Jan Christian Vestre: We want to reduce bureaucracy and make everyday life easier for entrepreneurs. We have an ambitious goal of reducing their costs by more than $1 billion in the next two years by increasing our level of digitization. This will allow us to eliminate old time-consuming procedures while enabling small businesses to spendmore time on value creation instead of public bureaucracy.

It’s also important that we invest heavily in research and development. We have a knowledge-based economy and are a high-cost country. We have never competed on state subsidies, reduced labor rights, or created cheap and bad-quality products. We lead the world in what we do, and we need to build on that strong foundation by investing heavily in innovation.

We have a roadmap for the health and battery industries, and we are launching roadmaps for the services and creative industries, with several more in the pipeline. And we see tremendous opportunity for increased exports inour maritime, offshore wind, design and manufacturing segments.

There are different economic theories when it comes to boosting innovation. Some economists say politicians should stay away from the private sector and focus on research and development, infrastructure, and reducing taxes. Under this model, companies are expected to compete in a pure market economy. On the other hand, there’sa mixed-economy theory based on the principles of the free market where active policies are put in place to promote key sectors when there are obvious reasons for doing so.

For example, we have invested heavily in building offshore wind capacities driven by the high demand in Europe for green energy. The European Commission has made the decision to transition away from oil and gas and plans on decarbonizing the European Union’s entire electricity grid during the next 25 years. With seven times more coastal areas than its mainland, Norway has a significant role to play. We also have more than 50 years of advanced offshore oil and gas operations with perhaps the best offshore engineers and skilled workers in the world. We are actively promoting these opportunities by building public-private partnerships and implementing active trading policies.

BF: What is Norway doing to promote industrial partnerships with foreign markets such as the USA and EU countries?

Jan Christian Vestre: De-risking does not mean decoupling; it is important that we stand up for globalization and international trade and work closely with other countries. Historically, closing our doors has never worked. We are working with our friends in Washington D.C. and Brussels to create a sustainable American-European value chain to fulfill areas where we are vulnerable such as critical raw materials.

We must ensure we are not dependent on procuring important products from countries that do not have the same level of partnership as the North Atlantic Treaty Organization and its allies. This new landscape requires keeping several ideas in our heads at the same time such as fighting for our ideals while ensuring we are not naive and make incorrect risk assessments.

We have introduced some new tools in our trade policy. We understand we must now fight for free trade agreements as the political landscape has become more difficult. Furthermore, we have signed green strategic partnerships with the European Union, Germany and France, and we are in process of strengthening our partnership with the USA and the United Kingdom in order to realize our common ambitions towards the green transition in a faster and smarter manner.  Such partnerships will create advantages for all parties through common goals and shared policies. We want to mobilize investments and create jobs in all countries involved; we aren’t only focused on creating opportunities in Norway.

When we talk about industrial partnerships with the USA, it is as much about creating well-paying, safe and attractive American jobs as it is about bringing investments to Norway. We are stronger when we team up, and we are in it to win together. There are many arenas where we want to enhance collaboration such as research and development, innovation, regulatory frameworks, standards, testing, risk mitigation, and creating a better climate for private investment.

BF: What strengths will Norway lean on to solve its greatest challenges in 2024 and beyond?

Jan Christian Vestre: Our greatest challenge is our dependence on oil and gas. We need — and not just Norway but the entire world — to shift our model away from a dependency on fossil fuels towards to renewable energy. This needs to be done in the next 10-20 years, not in 50. To do so, we need to change our mindset, which is challenging. Norway started the process late, but we are now strongly dedicated to the energy transition.

I come from a small village on the west coast that was built on the herring industry 100 years ago. They are now world-leading experts in offshore wind. The maritime industry has continuously gone through large transitions, and it is the same now with moving from fossil fuels towards the use of renewables.

The Nordic welfare model has served us well. We have created a society with a lot of trust. Our ongoing goal is to reduce inequality and provide free and high-quality public education. Our social safety nets stimulate and encourage people to think outside the box.

If one leaves one’s job in Norway to become an entrepreneur and fails, they are not risking their health insurance or the education of their children. Our safety net allow citizens to realize their full potential. It is not only about being fair and reducing inequality through social democratic policies but also about efficient economic development. We know that societies with reduced inequality are more innovative and productive and have stronger economic growth. It is good for the economy. The model and our history are on our side.

BF: You will joining His Royal Highness Crown Prince Haakon on an official visit to West Coat of the US later on this month in an effort to promote business cooperation within the green transition and digitalization. Can you tell us about your priorities?

I will accompany the Crown Prince of Norway to California in mid April. With us, we are bringing a business delegation engaged in AI, digitalisation, and the green transition of ocean industries. Norwegian companies are well positioned to contribute to the US’ ambitious climate goals, and I will use this opportunity to facilitate dialogues between Norwegian and American companies.

I will also make a stop in Washington D.C., where the focus will be to activate the start-up of negotiations of a critical minerals act between Norway and the US. In addition, I will be discussing the role that tripartite cooperations play in advancing the green transition by participating in an event organised, in part, by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO).