the impact of climate change on aggregated economic variables will not necessarily be substantial in the next few years, the situation for individual businesses might be different. norwegian firms will have to be prepared for the introduction of new climate mitigation measures and new, more environmentally friendly technology. public attitudes and consumer demand patterns are also changing. many of norges bank ’ s regional network contacts report that they are being affected by the increased focus on climate and sustainability. 2 statutory emission limits and customer demands are steering investment and production methods in a greener direction. a number of retail trade contacts reported that sales are declining because customers are increasingly focused on sustainability. the trend towards lower meat consumption has, on the other hand, given a boost to aquaculture and fish farming. chart : carbon pricing in norway a number of industries are likely to have to comply with a stricter climate policy, particularly industries with low or zero carbon prices today. stricter climate policy requirements may also speed up the introduction of new technologies. some firms will have to undergo major changes, while others may gain competitive advantages. electricity production in norway is largely environmentally friendly and could be more so. the transition to a low - carbon economy may therefore provide opportunities for the norwegian business sector. on the other hand, our large oil and gas sector may expose the norwegian economy to transition risk. this was an issue that then governor of norges bank hermod skanland addressed as early as in 1989 : “ many accounts could be given of how they [ international climate agreements ] will affect prices and quantities in our production of oil and gas, ” said skanland, and he went on : “ but we cannot pretend that they will not be influenced by a climate policy we are pursuing ourselves. at the very least, they will increase uncertainty, and in sum, i believe, in a negative direction ”. 3 today, 30 years later, much of norway ’ s oil wealth has been converted into financial wealth. petroleum revenues have been transferred to the government pension fund global ( gpfg ) since 1996. petroleum revenue spending over the central government budget has been in line with the so - called fiscal rule since 2001. chart : from oil in the ground to financial wealth the dark blue bars in this chart are the present value of government petroleum revenues at different dates, while the light blue bars show the value of the gpfg. the norwegian government has used this model to convert north sea oil and gas wealth into a 3 / 7 bis central bankers

øystein olsen : oil and the norwegian economy – the challenges ahead speech by mr øystein olsen, governor of the norges bank ( central bank of norway ), at a lunch hosted by danske bank markets, new york city, 27 march 2015. * * * accompanying slides can be found on the norges bank ’ s website : slides ( pdf ). it ’ s a great pleasure to be in new york city again and an honour to be invited to give a lunch presentation here today. as norges bank, a week ago, published its latest monetary policy report, the economic outlook and the considerations behind the interest rate decision naturally warrant some attention in my speech today. first, however, i would like to give some background information on the economic policy framework in norway, focusing on the sovereign wealth fund – the government pension fund global – the fiscal rule and norges bank ’ s foreign exchange transfers to the fund. norway is a small, open, natural resource - rich economy. about a quarter of our gdp is related to oil and gas extraction, and a large share of our petroleum production is exported. the oil and gas industry has played a vital role for the strong growth in our economy over the past 40 years. when the first oil was brought to the surface in 1971, gdp per capita in norway was lower than the average for a western economy. the picture has reversed since then. we have gradually caught up to the wealthiest nations. measured by gdp per capita, norway now ranks close to the top. even if we disregard the oil sector ’ s contribution to growth for a moment, norway ’ s mainland economy has shown relatively robust developments. the ripple effects from activities on the continental shelf to the wider economy have been wide - ranging. a growing number of firms have targeted the oil industry. a state - of - the - art oil service industry has emerged. for many firms, the contracts on the norwegian continental shelf have been a springboard to new export markets. although norway ’ s oil age began 40 years ago, the past 15 years stand out. from the end of the 1990s to 2013, the price of north sea oil rose from about usd 10 to over usd 100 per barrel. high oil prices and a profitable petroleum production industry have been accompanied by record - high oil investment in recent years. increased spending of petroleum revenues over the fiscal budget has provided a growth impetus to domestic demand. employment has remained high and unemployment low for many years, even when the financial crisis hit