• The cost of electricity has spiked to the highest level in more than a decade, so Norway's government plans to subsidize the electricity bill to soften the impact.
  • The subsidy proposal means that Norway's government would pay half of the portion of power bills above the prices of 0.70 Norwegian crowns per kilowatt-hour.
  • This proposal would come at a heavy cost for the government as well.

Norway's government plans to subsidise the electricity bill of households to soften the impact from soaring power prices, Prime Minister Jonas Gahr Stoere said on Saturday.

The cost of the proposal, which is subject to approval by parliament, could amount to some 5 billion Norwegian crowns ($560 million) combined for the four months from December 2021 to March 2022, the government said.

A spike in the cost of electricity to the highest level in more than a decade has put pressure on the centre-left minority government to find ways to cushion the blow.

"An extraordinary situation like this requires extraordinary measures," Stoere told a news conference.

The plan comes on top of earlier measures presented by the government amounting to between 4 billion and 5 billion crowns, Finance Minister Trygve Slagsvold Vedum said.

What's the World Economic Forum doing about the transition to clean energy?

Moving to clean energy is key to combating climate change, yet in the past five years, the energy transition has stagnated.

Energy consumption and production contribute to two-thirds of global emissions, and 81% of the global energy system is still based on fossil fuels, the same percentage as 30 years ago. Plus, improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing. In 2018 energy intensity improved by 1.2%, the slowest rate since 2010.

Effective policies, private-sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system.

Benchmarking progress is essential to a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how well they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing energy transition is the lack of readiness among the world’s largest emitters, including US, China, India and Russia. The 10 countries that score the highest in terms of readiness account for only 2.6% of global annual emissions.

To future-proof the global energy system, the Forum’s Shaping the Future of Energy and Materials Platform is working on initiatives including, Systemic Efficiency, Innovation and Clean Energy and the Global Battery Alliance to encourage and enable innovative energy investments, technologies and solutions.

Additionally, the Mission Possible Platform (MPP) is working to assemble public and private partners to further the industry transition to set heavy industry and mobility sectors on the pathway towards net-zero emissions. MPP is an initiative created by the World Economic Forum and the Energy Transitions Commission.

Is your organisation interested in working with the World Economic Forum? Find out more here.

Under the proposal, the government would pay half of the portion of power bills above prices of 0.70 crowns per kilowatt hour (KWh) or more, with a cap set at 5,000 KWh per month.

So far this month, wholesale spot prices in southern Norway have averaged 1.89 crowns/kWh including value added tax, according to data from electricity bourse Nord Pool.

($1 = 8.9304 Norwegian crowns)