Notes from Norway

In Norway, fjords are as much a part of the landscape as roads. And ferrying across these fjords can be a gorgeous break. Somewhere between Oslo and Geiranger, I did just that. While I was standing alone on the top deck in quiet reflection, a man approached me. He spoke English haltingly, but with enough clarity to allow a conversation. I had noticed him earlier waving out from a Tesla Model S.

“So why am I noticing Teslas all over Norway?” I asked as we sipped coffee to palliate the chill of the wind.

“Well, this tiny country is Tesla’s second largest market in the world,” he said with a certain seriousness. “We value cars that are environment-friendly, and if you buy an electric car, the annual registration fee is waived, as are tolls, and you get access to less congested traffic lanes.”

At 215 vehicles per 10,000 inhabitants, Norway has the highest per capita number of electric vehicles (the majority being Tesla, of course). Norway has laid down an aim to sell only zero-emission vehicles only by 2025. Though hugely ambitious, the plan is working out well and electric vehicles are beginning to account as much as 60% of new sales.

The Tesla tax

The key driver for this growth have been the tax breaks and subsidies offered by the government. However, these may soon come to an end. The government is now proposing a ‘Tesla tax’ that could add to the costs of owning a Tesla.

When I visited the country this autumn, the ‘Tesla tax’ was being heavily debated. Some argue — and rightly so — that this tax will undercut the 2025 ambition. A similar tax in neighbouring Denmark (where I work) brought down the sales considerably. But supporters of the tax, mostly the government, believe that the success of Tesla has led to increased congestion in the cities and more wear and tear of roads, which needs to be compensated by car owners.

Norway is a rich country. The wealth is reflected not only in the expensive Tesla cars but also in everyday prices. A pizza in Norway could 30 euros.

For a rainy day

What’s not apparent is that Norway’s wealth comes from an economy that is skewed into a single track given its oil dependency. Given the sluggish oil prices recently, one would have expected Norway to go through some form of economic slump. But no. Norwegians have focused on not overspending but growing the country’s sovereign wealth fund, a massive $1 trillion rainy-day cashpile largely made up of oil money.

The oil fund has been an unexpected success, growing faster than anyone imagined. It is one of the world’s largest investors (including in Facebook and Apple), with more than half of its asset contribution coming from smart investment decisions rather than oil sales.

Norway’s success in managing its wealth should be studied. While most countries are struggling with debt, here is one that has converted its natural assets into a source of recurring income.

In Oslo, over coffee with friends, I learnt that the big policy decision being debated currently is not whether the government should keep 3% of the value of the fund for budget but whether that contribution should be brought down even further.

When I left Norway, I came away with the impression that there were more than a few things that Norway could teach the rest of the world — not only about policy-making but also about how to wear contrasting shades successfully, for instance leveraging oil money to subsidise electric cars.

An adrenaline rush-seeking travel writer who lives in Malmö, Sweden, and hopes to one day travel the world in a boat.

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Printable version | May 28, 2020 9:52:21 PM |

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