Norway is the world’s third largest exporter of oil and number four in natural gas exports, which corresponds to roughly 15 times its total energy demand. However, from enjoying a plentiful hydro-electric paradigm throughout the last century, Norway all of a sudden became a net importer of electricity in the mid 1990-ies, much owing to a preservation act endorsed by three consecutive governments. Hence, a further harnessing of hydrometric areas in Norway has come to a still-stand.

Over the latest years (2004-2006) the situation has worsen. And there are strong warnings of a severe supply crisis in the event of a dry year – especially in Mid-Norway.

Although the power deficiency can be covered via import, there is a growing concern for:

1. price stability

2. uncertainty regarding sufficient power supply in dry years, and

3. environmental issues, as the marginal import of electricity is predominately generated from coal in Poland and Denmark.

In contrast to any comparable country fuel switching offers no relief to Norway in its commitment of limiting its GHG emissions at 1% above base case (1990). This owes to the high portion of hydroelectricity (99.4%), and because hydroelectricity is among the cleanest of all primary energies. Hence, in the stricter sense Norway is forced to generate additional electricity in systems that obviate GHG emissions, or alternatively to make use of the flexible Kyoto mechanisms (JI and CDM).