At least since Russia’s attack on Ukraine, Europe’s Nordic countries have been strong drivers of the transition to CO2-neutral economies. Not only do they have the necessary raw materials and technologies themselves. Ironically, the traditional industry is also driving the upheaval.
It was a sensational report: at the end of June it was announced that 70 billion tons of phosphate rock was stored under the soil in southern Norway. It had been known for a long time that there were deposits in the region – but the quantity was surprising. The volume now assumed corresponds almost to that of all reserves proven to date worldwide. The raw material is mainly used in fertilizers and is therefore essential for agriculture.
However, the European Commission attached great importance to one factor when it enthusiastically commented on the find: phosphorus is also needed in batteries that drive electric cars or store the energy from photovoltaic systems. It is therefore needed for the transition to a CO2-neutral economy – and it is not bad to have Norway as a supplier who is considered reliable and is not one of the world’s autocracies like Morocco or China.
The news from Norway was also greeted so happily because neighboring Sweden was able to announce a very similar discovery back in January: the largest European deposit of rare earths to date, a group of metals used in mobile phones, but also in wind turbines and electric cars, was found in the Per Geijer deposit in the north of the country. So far, the raw materials have mainly come from China, and here, too, experts celebrated the opportunity to free themselves a little from this dependency.
Scandinavia as “Silicon Valley of Sustainability”
The two finds fit into a development that has been taking place at an increasing pace since the Russian invasion of Ukraine at the latest. The Nordic countries of Europe are becoming the drivers of the conversion towards CO2-neutral economies in Europe. And they bring with them the tantalizing promise of at least complementing the previous suppliers of the raw materials and technologies that are essential to make it happen.
This has created an environment in which the region’s governments, financiers and many industrial companies are pursuing very similar goals, an “ecosystem” in the language of the start-up world. In a study, the consulting firm McKinsey already sees “a Nordic Silicon Valley of sustainability” in the making.
What is striking is that the transformation does not only come from young growth companies, but often comes straight from traditional industry. “To a large extent, it is the established companies that are driving green development,” says Teis Hansen, a professor at the University of Copenhagen who has studied the transformation with a research group. “We’ve seen that in forestry, the paper industry, shipping and transportation.”
Pioneers in carbon taxes
One reason might be that the Nordic countries started taxing CO2 emissions very early on, when this was hardly conceivable in other countries. Carbon pricing was introduced in Finland as early as 1990, closely followed by high energy taxes in Denmark, Sweden and Norway. Joachim Roth from the International Institute for Sustainable Development, a Canadian research institute, comes to the conclusion that the Nordic countries also use energy taxes to consolidate their budgets after economic crises, without doing any harm to economic growth in the medium term: “By the end of the 1990s, all Nordic countries had turned their budget deficits into surpluses and reduced their unemployment rates,” says Roth.
In the meantime, however, the companies had reoriented themselves and thus created an economic environment geared towards renewable technologies early on: start-ups, state funding, university research branches, private equity funds and established companies that were urgently dependent on new technologies. “In a way, the Nordics are as important to sustainability today as Silicon Valley was to technology in the 1990s,” says the McKinsey study. “A lot of what is needed to grow and become dominant in this field is already there and just needs to be used.”
The Nordic countries are already active or in the process of establishing themselves as pioneers in the following areas of a CO2-neutral economy:
batteries
Northvolt AB, based in Stockholm, is the first company in Europe to set up its own development and production of batteries for electric cars. A factory is under construction near the town of Skellefteå on the coast of northern Sweden, which will eventually be three times the size of the Pentagon. The production should take place exclusively with electricity from renewable energies. This is possible because the region in Sweden has an abundance of hydroelectric power.
Among the customers are Volkswagen, BMW and Volvo. Further factories are built in Gdansk in Poland and in Heide in northern Germany. The original investor behind Northvolt, the Swedish Vargas Group, has also funded another company, Polarium, which develops larger energy storage for companies.
electrification
In recent years, the Nordic countries have developed into the ultimate test laboratory for electric cars. In Norway, battery-only vehicles accounted for almost 80 percent of new registrations in 2022. Iceland and Sweden follow with 33 percent each, and Denmark is also at the forefront. In addition, the share of renewables in the electricity mix is high in all countries, so that the CO2 balance of the electric vehicles is better than, for example, in Germany.
But electrification not only plays a role in transport in the north, but also in heating. When it comes to the number of heat pumps installed per 100,000 inhabitants, Norway, Finland and Sweden are far ahead in Europe. The extensive use of technology in these often rather cold states has another advantage: electric cars and heat pumps can be tested on a large scale under comparatively unfavorable conditions.
Capturing CO2
One of the largest projects for the capture and storage of CO2 emissions is being built on the west coast of Norway. The pollutant is captured at industrial plants, converted into a transportable state and brought to huge deposits under the seabed: the so-called Carbon Capture & Storing (CCS). The technology of the Northern Lights project is being promoted by the Norwegian energy company Equinor, among others, and is controversial among environmentalists: while Greenpeace sees it as a risky greenwashing of the oil industry, Norwegian associations are even lobbying for the technology.
Their reasoning: Even if transport and large parts of production have switched to CO2 neutrality, pollutants will still be emitted, for example in cement production or in the manufacture of steel. This can only be countered with CCS. It is a point of view that is also shared by German scientists. By far the largest reception camps for CO2 in Europe are in: Norway.
power generation
Photovoltaics naturally plays a subordinate role in the Nordic countries. However, the countries more than make up for this shortcoming by consistently relying on other renewable energy sources. In Sweden, hydropower had a share of more than 40 percent in the electricity generation mix in 2022, in Norway it was even a unique 88 percent – which makes the country almost CO2-neutral in terms of electricity.
Denmark, on the other hand, has become a kind of world champion in the production of wind power, with turbines generating 55 percent in 2022, well over half of Denmark’s electricity. In this way, the small country has even succeeded in establishing what is still the largest manufacturer of wind turbines in the world: the Aarhus-based company Vestas. Unlike Germany, the Nordic countries continue to rely on low-emission nuclear energy. With the exception of Norway, nuclear power still has an important role in the electricity mix throughout the Nordic region.
aviation
Traveling in the Nordic countries often involves traveling huge distances, the countries are sparsely populated and cities are often far apart. In addition, as in Norway, many fjords break through the coastline, so that even places that are close together as the crow flies can only be reached by car for days. It is therefore no wonder that companies in Sweden, Norway and Finland have taken on one of the most complex tasks of climate change: electrified air traffic.
The Swedish startup Heart Aerospace is working on small, purely electric aircraft for regional traffic and is preparing for the first test flights. The Norwegian company Elfly, on the other hand, has presented an electric seaplane that should be able to land in the fjords and should be used from 2030. However, the technology is still a long way from being approved, which is why work is also being done in other areas: The Finnish company Neste, actually a traditional oil company, has developed into the world’s largest manufacturer of sustainable aviation fuels – which are made from old cooking oil, waste or even algae soon. The fuels, which are coveted by many airlines, already contributed half of the group profit in 2022.
The article first appeared at Capital.de