How tax support for the petroleum industry could contradict Norway’s climate goals

The document analyzes the impact of 'fast depreciation' and 'uplift' tax provisions on the profitability of over 700 licensed but non-producing oil and gas fields in Norway. It finds that these measures significantly increase the internal rate of return (IRR) for investors, making many fields economic that would otherwise be abandoned. At an oil price of USD 50 per barrel, the analysis suggests 95% of new oil investment depends on these supports, which could lead to an additional 8 billion barrels of production and 2.9 billion metric tonnes of CO2 emissions.

• Two specific tax provisions—fast depreciation (allowing capital investment deductions over six years) and 'uplift' (allowing further deductions of 5.4% of capital investment costs for four years)—significantly increase the internal rate of return (IRR) for petroleum investors.
• At an oil price of USD 50 per barrel, fast depreciation and uplift tax supports would enable the production of 8 billion more barrels of oil and gas than would otherwise be produced, resulting in 2.9 billion metric tonnes (Gt) of CO2.
• The dependence of new oil investment on these tax measures varies by oil price: at USD 50 per barrel, 95% of new investment would not occur without them, while at USD 70 per barrel, 54% of investment depends on these measures.
• The tax supports provide a production-weighted average increase in IRR of 9 percentage points, with 5 points attributed to fast depreciation and 4 points to uplift.
• The Barents Sea is particularly dependent on these tax supports; at USD 50 per barrel, 100% of licensed but non-producing resources in this region are dependent on fast depreciation and uplift.
• Norway's current tax system may conflict with its goal of becoming a "low emission society" by 2050 and its commitment to the Paris Agreement, as the tax code steers investment toward fossil fuels and increases global CO2 emissions.

APA

Erickson, P., & Down, A. (2017). How tax support for the petroleum industry could contradict Norway’s climate goals. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/SEI-DB-2017-how-tax-support-for-the-petroleum.pdf

Chicago

Erickson, Peter, and Adrian Down. How tax support for the petroleum industry could contradict Norway’s climate goals. Stockholm Environment Institute, 2017. https://www.sei.org/mediamanager/documents/Publications/SEI-DB-2017-how-tax-support-for-the-petroleum.pdf.

Wikipedia

{{cite report |last1=Erickson |first1=Peter |last2=Down |first2=Adrian |title=How tax support for the petroleum industry could contradict Norway’s climate goals |publisher=Stockholm Environment Institute |date=2017 |url=https://www.sei.org/mediamanager/documents/Publications/SEI-DB-2017-how-tax-support-for-the-petroleum.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{erickson2017how, author = {Erickson, Peter and Down, Adrian}, title = {{How tax support for the petroleum industry could contradict Norway’s climate goals}}, institution = {Stockholm Environment Institute}, year = {2017}, url = {https://www.sei.org/mediamanager/documents/Publications/SEI-DB-2017-how-tax-support-for-the-petroleum.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }