Effects of higher required rates of return on the tax take in an oil province

For different reasons the oil companies might apply higher required rates of return than they did some years ago, and this has consequences for investments and tax revenue in oil provinces. By applying various required rates of return as well as various oil prices, this study derives future Norwegian tax revenue during 2018–2050 by using a partial equilibrium model for the global oil market. An important contribution is a detailed modelling of the supply side including the complete petroleum tax system. The model explicitly accounts for reserves, development and production. Both investment in new reserves and production are profit driven. With rising required rates of return fewer of the high cost reserves become profitable to develop and investments decline. Intuitively one would think that lower activity and investments will lead to lower tax income for the government. However, because the government in practice carries a large fraction of the investments because of favourable possibilities for deductions of capital expenses for the oil companies, less investment in a period increases the tax base and the tax income. The initial effect is offset by a subsequent reduction in production which has a negative effect on future taxes. The result is that increasing required rates of return will lead to small variations in net present value of total tax revenue. Further, with lower oil prices, tax take increases significantly when required rates of return rise.publishedVersio

The Resource Rent in Norwegian Aquaculture from 1984 to 2020 – Is the Rent Ripe for Taxation?

This study uses the National Accounts and the definitions of the UN System of Environmental-Economic Accounting to calculate the resource rents in Norwegian aquaculture in the period 1984-2020. If we know the remuneration of all input factors such as capital, labour, and inter-mediates except the remuneration of the ecosystem services used in aquaculture, the resource rent will appear as the difference between the value of output and the remuneration of all other input factors. This resource rent is a combination of a Ricardian rent and regulation rent. To as-sess the size of the rent, we perform various sensitivity analysis as introducing higher rates of return, applying alternative wage costs and by treating the stock of growing fish as real capital. A robust conclusion is that there has been a significant resource rent in aquaculture since 2000 and that it has risen markedly since 2012. In the period 2016-2020 it has averaged 18-20 billion NOK per year. Hence, both from an allocative justice and economic efficiency perspective, the Norwegian aquaculture industry seems ripe for resource rent taxation.publishedVersio

The Effects on Energy Markets of Achieving a 1.5 °C Scenario

Net zero emission scenarios are aligned with the criteria for the Paris Agreement to keep global warming below 1.5 °C. By soft-linking an energy model with a macroeconomic model, we create a similar pathway to the net zero emission scenario from the International Energy Agency (IEA) to 2050 both of demand for fossil fuels and total CO2 emissions. Soft-linking entails that we insert endogenous variables from one model into the other model. We implement measures such as CO2 taxes, improved energy efficiency, more renewables in electricity production and other sectors, easier substitution between electricity and fossil fuels for final users, and drastically limiting future production of oil, gas and coal. Our conclusion is that net zero is possible by introducing very strict measures, e.g., a high rate of energy efficiency improvement, far above what has been achieved in the past. While our partial equilibrium energy model, similar to the IEA model, overlooks the potential rebound effects, i.e., more energy used by consumers due to lower prices caused by energy efficiency improvement, our macroeconomic model does capture the rebound effects and has to implement stricter supply-side measures to reduce fossil fuel use to achieve the 1.5 °C scenario.The Effects on Energy Markets of Achieving a 1.5 °C ScenariopublishedVersio

Rask solnedgang for norsk olje og gass i en verden der 1,5 ºC-målet nås?

Norge har sluttet seg til Parisavtalen og 1,5 ºC-målet, som innebærer at verden må nå netto null utslipp av CO2 innen midten av dette århundret. Norsk økonomi lener seg fortsatt tungt på olje- og gassinntekter med et betydelig innslag av ressursrente. Dermed blir det et viktig spørsmål for Norge hvor raskt det grønne skiftet snevrer inn etterspørselen etter olje og gass, og hvilken grad det vil være rom for fremtidige investeringer i petroleum på norsk sokkel. IEAs global netto null-utslippsscenario som kan lede til 1,5 ºC-målet er utgangspunktet for modellanalysen av norsk olje og gass i denne artikkelen. Det innføres både globale etterspørsels- og tilbudssidetiltak slik at målet nås. Denne artikkelen finner noe overraskende at de samlede inntektene fra norsk sokkel ikke trenger å falle i særlig grad.publishedVersio

Maximizing the discounted tax revenue in a mature oil province

Authors website: http://www.ssb.no/english/research/people/lli/index.htmlAbstract: Using a partial equilibrium model for the global oil market, we search for the producer tax that maximizes the government’s discounted tax revenue in Norway. The oil market model explicitly accounts for reserves, development and production in 4 field categories across 15 regions. The oil companies optimize their profit and we study how different tax rates influence their investment and production profiles over time. Our results show that a net tax rate in the range of 83 to 87 percent gives the highest tax revenue over a wide range of oil prices and government’s discount rates. However, to avoid premature policy recommendations based on assumptions that are more or less uncertain, we carry out various sensitivity analysis in the favor of lower taxes. These analysis show that it is generally never optimal to reduce the prevailing net tax rate of 78 percent. Only in a very pessimistic scenario regarding costs and exploration is it optimal with a minor reduction in the tax rate. Hence, even if many regard Norway as a high tax province, a robust conclusion seem to be that reducing the present tax level on oil production will not boost investment and production to such a degree that discounted tax revenue increases. We emphasize that such a conclusion holds whether the oil companies are constrained by credit or not. Keywords: oil market, tax revenue, equilibrium model JEL classification: H21, Q31, Q3

Emission pricing and CO2 compensation in the EU. The optimal compensation to the power-intensive and trade-exposed industries for increased electricity prices

Unilateral CO2 emission reduction can lead to carbon leakage, such as relocation of power-intensive and trade-exposed industries. In the EU emission trading system, these industries are also subjected to higher cost of electricity due to emission pricing in this sector. As a result, the industries in the EU receive free emission allowances to mitigate carbon leakage as well as CO2 compensation due to higher electricity cost. This paper examines the welfare effects of supplementing free allowances with a CO2 compensation on the power-intensive and trade-exposed goods. The analytical results suggest that introducing CO2 compensation has a regional and global welfare improving effect under certain plausible conditions. Numerical simulations in the context of the EU ETS support the analytical findings if the emission reduction target is stringent enough

Ressursrenten i naturressursnæringene i Norge 1984-2021

Norge er et land rikt på naturressurser. Ekstraordinær høy avkastning i en kommersiell sektor som baserer seg på en naturressurs omtales som grunnrente eller ressursrente. Denne rapporten bruker nasjonalregnskapstall fra Statistisk sentralbyrå for å undersøke om det har vært ressursrente i de naturressursbaserte næringene i perioden fra 1984 til 2021. Disse næringene omfatter kraftproduksjon, akvakultur, skogbruk, fiske og fangst, jordbruk, bergverk og olje- og gassutvinning. Holder vi jordbruket utenom ligger samlet gjennomsnittlig ressursrente for de fem siste årene i perioden 1984-2021 nesten 260 milliarder 2021-kroner over gjennomsnittet for de fem første årene. Holder vi også olje- og gassektoren utenom ligger samlet årlig ressursrente over 60 milliarder kroner høyere mot slutten i forhold til i begynnelsen av perioden. Det er særlig kraftproduksjon, akvakultur og fiske og fangst som har bidratt til denne økninge

Evaluation of five DNA extraction methods for purification of DNA from atherosclerotic tissue and estimation of prevalence of Chlamydia pneumoniae in tissue from a Danish population undergoing vascular repair

BACKGROUND: To date PCR detection of Chlamydia pneumoniae DNA in atherosclerotic lesions from Danish patients has been unsuccessful. To establish whether non-detection was caused by a suboptimal DNA extraction method, we tested five different DNA extraction methods for purification of DNA from atherosclerotic tissue. RESULTS: The five different DNA extraction methods were tested on homogenate of atherosclerotic tissue spiked with C. pneumoniae DNA or EB, on pure C. pneumoniae DNA samples and on whole C. pneumoniae EB. Recovery of DNA was measured with a C. pneumoniae-specific quantitative real-time PCR. A DNA extraction method based on DNA-binding to spin columns with a silica-gel membrane (DNeasy Tissue kit) showed the highest recovery rate for the tissue samples and pure DNA samples. However, an automated extraction method based on magnetic glass particles (MagNA Pure) performed best on intact EB and atherosclerotic tissue spiked with EB. The DNeasy Tissue kit and MagNA Pure methods and the highly sensitive real-time PCR were subsequently used on 78 atherosclerotic tissue samples from Danish patients undergoing vascular repair. None of the samples were positive for C. pneumoniae DNA. The atherosclerotic samples were tested for inhibition by spiking with two different, known amounts of C. pneumoniae DNA and no samples showed inhibition. CONCLUSION: As a highly sensitive PCR method and an optimised DNA extraction method were used, non-detection in atherosclerotic tissue from the Danish population was probably not caused by use of inappropriate methods. However, more samples may need to be analysed per patient to be completely certain on this. Possible methodological and epidemiological reasons for non-detection of C. pneumoniae DNA in atherosclerotic tissue from the Danish population are discussed. Further testing of DNA extraction methods is needed as this study has shown considerable intra- and inter-method variation in DNA recovery

Stress-testing the Norwegian economy: The effects of the 1.5°C scenario on global energy markets and the Norwegian economy developing a baseline scenario by soft-linking three models

I dette prosjektet myklinker vi tre modeller; GRACE, FRISBEE og KVARTS for å studere effektene på norsk økonomi av å nå 1,5°C-målet om global oppvarming. Vi utvikler en strategi for hvordan vi kan konstruere et konsistent basisscenario frem til 2050 for alle tre modellene. GRACE er en generell likevektsmodell av verdensøkonomien, FRISBEE er en delvis likevektsmodell av de globale energimarkedene, mens KVARTS er en modell av norsk økonomi. For FRISBEE og GRACE vil vi innrette oss etter den regionale energiutviklingen av grunnscenarioet i IEAs World Energy Outlook fra 2019, men streber ikke etter et perfekt treff. Hvis den simulerte etterspørselen til de ulike energivarene i de ulike regionene er langt unna målene i henhold til IEA, vil vi justere relevante parameterverdier. Videre, på grunn av mangel på data, utfører vi ulike estimater angående BNP-vekstrater og CO 2-priser i ulike regioner. Denne rapporten viser en strategi for å studere effektene på økonomien i Norge i et referansescenario. De viktigste variablene som skal implementeres fra FRISBEE og GRACE i KVARTS-modellen er olje- og gasspriser, samt investerings- og produksjonsprofiler for olje og gass. Selv om referansebanen er i fokus i denne rapporten, beskriver vi også flyten av variabler mellom modellene i policyscenarioene