Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.
Factsheet for measure NO-2021-49/2321 – Updated – measures in Norway
|Country||Norway , applies nationwide|
|Time period||Temporary, 01 December 2021 – 31 March 2023|
|Context||COVID-19, War in Ukraine|
|Type||Legislations or other statutory regulations|
Responses to inflation
– Support for energy bills
|Author||Aasmund Arup Seip, FAFO and Eurofound|
|Measure added||18 May 2022 (updated 05 September 2022)|
As a result of increased energy prices in the autumn 2021, the government introduced a temporary electricity support scheme for households that compensate for extraordinarily high expenses for electricity consumption. It applied initially for the period 1 December 2021 to 31 March 2022. The scheme is regulated in the Temporary Act of 22 December 2021 no. 170 (the Electricity Benefits Act).
On 10 March 2022, the government announced that it would extend the electricity support scheme for households until March 2023. The extension was based on an updated assessment of the power situation in Norway and Europe. Expectations of continued high gas prices in Europe was an important factor, as well as high CO2 prices. In addition, the government felt there was uncertainty about how much the reservoirs, especially in southern Norway, will be filled up until next winter.
In a new announcement on 1 April 2022, the government proposed increased support to housing benefit recipients in areas with high electricity prices in April and May 2022.
The aim of the electricity support scheme, introduced in December 2021, is to contribute to a reduction in the costs of electricity consumption in the monthly electricity bill for private households connected to the distribution network, if the electricity price exceeds a set threshold value. The electricity benefit scheme is designed so that the state provides benefits to households if the average electricity spot price for the month exceeds the threshold level of NOK 0.7 (€0.07) per kWh in the price range of the household. When calculating benefits, the difference between the average monthly electricity spot price and the threshold value of NOK 0.7 (€0.07) per kWt excluding VAT shall be used as a basis. This amount must be multiplied by the benefit rate. For energy use from January to March 2022, the benefit rate is 80%. For electricity consumption in December 2021, the benefit rate was 55%.
In addition to the electricity support scheme, the electricity tax is reduced in the period January to March 2022 by 47% compared to 2021, and in the period April to December 2022, the electricity tax is reduced similarly by 9%.
The allocation to the electricity benefit scheme was in December 2021 set at NOK 5.5 billion (€550 million) on an uncertain basis. Total expenditure for the state on the current benefit scheme will depend on the actual average electricity spot price in the various price areas as well as the actual consumption in the period. The estimated allocation for benefits to households in the period December 2021 to March 2022 is a total of NOK 9.2 billion (€920 million), according to the government’s hearing document of 10 March 2022.
For the whole year 2022, measures have been adopted or proposed for approximately NOK 22.3 billion (€2.23 billion) to help people cope with the high electricity costs. In addition, the government expect the extension of the electricity support schemes to March 2023 to entail a need for funding in 2023 of approximately NOK 6.3 billion (€630 million). Expenditure for increased support to housing benefit recipients in areas with high electricity prices in April and May 2022, was estimated at NOK 151 million (€1.51 million) in 2022.
|Does not apply to workers||Does not apply to businesses||Applies to all citizens|
Public support service providers
Social partners' role in designing the measure and form of involvement:
|Trade unions||Employers' organisations|
|Form||Any other form of consultation, institutionalised (as stable working groups or committees) or informal||Not applicable|
Social partners' role in the implementation, monitoring and assessment phase:
No information on social partners involvement during design and implementation of the measure.
Confederation of Norwegian Enterprise (NHO) was not invited to give any comments on the extension of the electricity support scheme in the government’s hearing. However, it is reason to believe NHO supports the scheme all the time the employer’s organisation has called for a corresponding support scheme for companies. In a statement on 11 March, the Deputy CEO of NHO, Anniken Hauglie, argued that the situation was extraordinary and that the European effort to become independent of Russian gas, would make it necessary to establish an electricity support scheme for a period. Based on the current price situation for energy, the rapid restructuring of European energy policy and the challenges this entails for Norwegian companies, NHO proposes that a scheme for electricity support to companies be established, with rapid implementation, NHO stated on its web site.
The Norwegian Confederation of Trade Unions (LO) gave in a hearing to the extension of the scheme in March 2022 support to the proposal to extend the electricity benefit scheme. LO asked the ministry in the future to evaluate the accuracy of the scheme, various distributional effects it provides and effects in the power market. Furthermore, LO argued that the evaluation of the scheme must be seen in connection with a long-term work to ensure more renewable power and assess the necessary regulation of the market to avoid power shortages and high electricity prices in Norway. LO also asked the government to extend the period with reduced electricity tax to keep inflation down.
Eurofound (2022), Electricity Support Act: Reducing household electricity costs, measure NO-2021-49/2321 (measures in Norway), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/NO-2021-49_2321.html
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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.