Norway CO2 emissions decision to impact Elkem operations

Oslo – Silicon and silicones group Elkem SA expects a Norwegian government decision to limit its 'CO2 compensation scheme' to impact its operations by up to NOK220 million (€19 million) per year.

In place since 2022, the government scheme is intended to avoid carbon leakage – whereby production and manufacture is moved to countries without CO2 emissions tariffs.

Elkem’s Norwegian operations are eligible for support under scheme, though the group says compensation is “significantly lower level than what is available in other EU countries.”

In its 2024 budget proposal on 6 Oct, the Norwegian government raised the price floor for compensating companies for CO2 costs.

As part of the adjustment, Norway has proposed raising the 'deductible quota price floor' in the scheme from NOK200 to NOK375.

If approved by the country's parliament, the change will have a negative one-off impact on Elkem’s third quarter results of NOK170 million, Elkem said 6 Oct.

From there on, the raised price floor will have a negative impact of NOK220 million per year going forward compared to the 2022 level.

“Today’s announcement from the Norwegian government significantly reduces the attractiveness of future investments in Norway compared to other parts of the world,” said Elkem’s CEO Helge Aasen.

The decision, he added, is “surprising and disappointing” as high energy costs are leading to “a widespread shutdown of industrial activities across Europe.”

“We now have to evaluate what this means for our current and future investment plans at our production sites in Norway," the CEO added.

According to Elkem, Norway is “the leading supplier” of silicon metal to the EU, with a market-share of close to 40% for a material which is on the EU Commission’s list of critical raw materials.

The company, said Aasen, is experiencing growing interest for European supplies of such materials, which also serve as key raw materials for the production of silicone polymers.

Elkem has six production sites in Norway: Salten, Rana, Thamshavn, Bremanger, Bjolvefossen and Kristiansand and has invested NOK10 billion in the operations over the past ten years.