The ‘resource rent tax’, as the tax is officially called, is an instrument that Norway often uses to better distribute the profits from raw materials. For example, there has been such a tax for hydroelectric energy since 1997, and one for oil since 1995. The latter has led, among other things, to the filling of a government pension fund.
No detriment
From January 1, 2024, such a tax will also apply to onshore wind energy. Developers of new wind farms will hand over 35 percent of their profits to the Norwegian government, so that (in theory) the entire population can benefit from the generation of sustainable energy. It says the new tax will not affect the profitability of wind turbine projects, and there will be favorable arrangements for existing parks.
“Norway has a long and cherished tradition of ensuring that added value from our shared natural resources also benefits society,” said Norwegian Prime Minister Jonas Gahr Støre. “This tradition has served the country well. The government therefore believes that the introduction of a raw material tax on wind energy is the right decision.”
Municipalities are making progress
The tax mainly helps municipalities near wind farms, according to the Norwegian government. It is expected that around 26 million euros can be raised in 2024, about half of which will flow to municipalities.
Industry concerns
The tax is not without controversy. An earlier government proposal that set the tax at 40 percent was ultimately abandoned. This was partly because wind farm developers warned of lower profitability, which could ultimately stunt the growth of renewable energy. Although a percentage of 35 makes them more satisfied, the Norwegian energy group Fornybar Norge is calling for additional relaxations. For example, there was a push for a complete exemption for current wind farms, but the government did not listen to this.