CO₂ tax on offshore oil and gas

Last updated: 1 July 2020

Norway introduced CO taxes in 1991.  The CO₂ tax on mineral products applies to mainland activities and is levied on the use of mineral oil (including auto diesel), petrol, natural gas and LPG. It also applied to coke and coal up until January 2003. A specific CO₂ tax applies to emissions from the petroleum activities on the continental shelf (this includes offshore oil and gas). The tax is paid based on the amount of oil and gas combusted or emitted directly to air on platforms, installations or facilities. It is classified as a deductible operating cost associated with petroleum activities, which reduces the ordinary tax and special tax actually paid by oil companies.

The tax made CO2 capture at Norway’s Sleipner and Snøhvit CCUS projects (the two large scale CCUS projects operating in Europe, capturing CO2 from natural gas processing and reinjecting it into dedicated storage sites) commercially viable, since the implementation of CO2 capture enables the operators to avoid paying the tax.

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