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Why Norway - the poster child for electric cars - is having second thoughts

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Nov 1, 2023, 4:51:40 AM11/1/23
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OSLO, Norway — With motor vehicles generating nearly a 10th of global CO2
emissions, governments and environmentalists around the world are
scrambling to mitigate the damage. In wealthy countries, strategies often
revolve around electrifying cars — and for good reason, many are looking
to Norway for inspiration.

Over the last decade, Norway has emerged as the world’s undisputed leader
in electric vehicle adoption. With generous government incentives
available, 87 percent of the country’s new car sales are now fully
electric, a share that dwarfs that of the European Union (13 percent) and
the United States (7 percent). Norway’s muscular EV push has garnered
headlines in outlets like the New York Times and the Guardian while
drawing praise from the Environmental Defense Fund, the World Economic
Forum, and Tesla CEO Elon Musk. “I’d like to thank the people of Norway
again for their incredible support of electric vehicles,” he tweeted last
December. “Norway rocks!!”

I’ve been writing about transportation for the better part of a decade, so
all that fawning international attention piqued my curiosity. Does Norway
offer a climate strategy that other countries could copy chapter and
verse? Or has the hype outpaced the reality?

So I flew across the Atlantic to see what the fuss was about. I discovered
a Norwegian EV bonanza that has indeed reduced emissions — but at the
expense of compromising vital societal goals. Eye-popping EV subsidies
have flowed largely to the affluent, contributing to the gap between rich
and poor in a country proud of its egalitarian social policies.
Worse, the EV boom has hobbled Norwegian cities’ efforts to untether
themselves from the automobile and enable residents to instead travel by
transit or bicycle, decisions that do more to reduce emissions, enhance
road safety, and enliven urban life than swapping a gas-powered car for an
electric one.

Despite the hosannas from abroad, Norway’s government has begun to unwind
some of its electrification subsidies in order to mitigate the downsides
of no-holds-barred EV promotion.

“Countries should introduce EV subsidies in a way that doesn’t widen
inequality or stimulate car use at the expense of other transport modes,”
Bjørne Grimsrud, director of the transportation research center TØI, told
me over coffee in Oslo. “But that’s what ended up happening here in
Norway.”

And it could happen in other countries, too, including in the United
States, where transportation is the single largest source of greenhouse
gas emissions. The federal government now offers tantalizing rebates to
Americans in the market for an electric car, but nothing at all for more
climate-friendly vehicles like e-bikes or golf carts (nor a financial
lifeline for beleaguered public subway and bus systems).

Ending the sales of gas-powered cars, as Norway is close to doing, is an
essential step toward addressing climate change. But a 2020 study found
that even the most optimistic forecasts for global EV adoption would not
prevent a potentially catastrophic 2 degree Celsius rise in global
temperatures. Reducing driving — not just gas-powered driving — is
crucial.

As the world’s EV trendsetter, Norway’s experience offers a bevy of
lessons for other nations seeking to decarbonize transportation. But some
of those lessons are cautionary.

How Norway fell in love with the electric car
At first glance, Norway’s EV embrace might seem odd. The country lacks a
domestic auto industry and its dominant export is, of all things, fossil
fuels. Nevertheless, Norway’s unique geography and identity helped put it
at the vanguard of car electrification.

Historically, Norway has been mostly rural; as recently as 1960, half the
nation’s population resided in the countryside. But as the postwar economy
boomed, Norwegians migrated to cities, and especially to their fast-
growing, sprawling suburbs (much as Americans did at the time). They also
fell hard for the automobile.

“The car was this genius idea for Norwegians,” Ulrik Eriksen, author of
the book A Country on Four Wheels, told me over dinner in Oslo, after
stashing his cargo e-bike. “Because there is plenty of land, cars opened
up urban space for people to live in, letting more of them get sizable
single-family homes.”

Norway embarked on a road-building binge, constructing bridges over fjords
and boring tunnels through mountains to connect downtowns with new
neighborhoods on the urban fringe. As Norwegian cities expanded, public
transit took a back seat. Bergen, for instance, shuttered its extensive
tramway service in the 1960s, dumping some of the trams into the North
Sea.

Those decisions cast a long shadow: Norway still has one of Europe’s
lowest rates of public transportation usage and a higher car ownership
rate than Denmark and Sweden, its Scandinavian neighbors. “Most Norwegian
cities now have more of a car-centric, American approach toward
transportation than a multi-modal, European one,” Eriksen said.

Norway’s city residents often own an automobile even though they seldom
use it, Oslo-based urban planner Anine Hartmann told me. “Norwegians
identify as coming from the place where their parents or grandparents come
from,” she said. “Many people have a car to return to that place or simply
to visit a cabin in the country.”

By the 1990s, the automobile was Norway’s indispensable vehicle. It was
then that Norwegian entrepreneurs launched two early electric car
startups, Buddy and Think. Though their models were clunky and inefficient
by today’s standards, the companies spurred excitement that Norway could
become a global hub of EV production. Seeking to give the carmakers a
tailwind, the Norwegian government exempted EVs from the country’s steep
taxes on car purchases, which today add an average of $27,000 to each
sale. Even better, EV owners — who at the time were few and far between —
would not pay for tolls, parking, or ferries (over all those fjords)
anywhere in the country.

Norway’s dreams of becoming a global hub of EV manufacturing quickly
fizzled when the companies ran into financial problems. (This summer, I
spotted a tiny, aged Buddy squeezed into an Oslo parking spot, dwarfed by
SUVs on either side.) But the incentives remained on the books; since few
people were buying EVs, their cost was negligible.

That changed as the global EV market improved in the mid-2010s, with
carmakers like Tesla offering stylish, high-performance models that
attracted more buyers. Norway’s EV policies were now championed as a
centerpiece of the national effort to slow climate change in an economy
whose electricity is already clean, produced largely from hydropower. “We
want people to buy electric cars,” Norwegian Prime Minister Erna Solberg
said in 2019. “It is the most important thing you can do personally and
privately to help reduce climate emissions.”

As EV models improved, Norwegians began to realize how valuable the cost
savings from government incentives could be, particularly for urban
commuters. After an already discounted EV purchase, owners’ ongoing
expenses were minimal because Norwegian electricity is inexpensive (due to
abundant hydropower), and EVs were exempt from tolls, parking, and
ferries. EV owners were even invited to drive in bus-only lanes.

Hundreds of thousands of Norwegians responded to the government’s
invitation to buy an EV, seemingly saving money and the planet in one fell
swoop. But not every EV purchase replaced a gas guzzler; Grimsrud noted
that the Norwegians owned 10 percent more cars per capita at the end of
the 2010s than they did at the decade’s outset, in large part due to the
EV incentives. “The families who could afford a second or third car ran
off to the shop and bought one,” he said.

Norway’s incentives have unquestionably reshaped the country’s car market
and reduced carbon emissions. EVs’ share of new vehicle sales surged from
1 percent in 2014 to 83 percent today. Around one in four cars on
Norwegian roads is now electric, and the country’s surface transportation
emissions fell 8.3 percent between 2014 and 2023.

The national government seems ready to declare victory. “When it comes to
electrical vehicles, I’m quite proud,” Cecilie Knibe Kroglund, Norway’s
state secretary for transportation, told me at the Oslo headquarters of
the Ministry of Transport. “My main lesson is that incentives work. We
have succeeded at a large scale.”

But not everyone shares her enthusiasm. Although the EV rush has reduced
tailpipe emissions, it has also entrenched car dependence, which inflicts
other kinds of damage. “Climate change gave Norway an opportunity to
change how we travel,” said Eriksen. “I worry we had this once-in-a-
generation chance to fix our transportation network, and we blew it.”

EV subsidies fueled car sales, but Norway’s cities want fewer cars
As electric car sales picked up throughout the 2010s, Norway placed few
constraints on its EV incentives. Wealthy Norwegians could buy as many
high-end EVs as they liked, receiving a full package of subsidies on each
one. Luxury carmakers like Porsche advertised Norway’s promotions in their
marketing materials.

Although the EV policies were fueling a car-buying frenzy for affluent
residents, they offered little to those of limited means. Many low-income
Norwegians do not own a car: In Bergen, for instance, 67 percent of
households in the lowest income quartile go without one. One recent study
found the likelihood that a Norwegian household would purchase an EV rose
26 percent with each 100,000 Norwegian Krones (around $11,000) in annual
income, suggesting that electrification subsidies — which ballooned to $4
billion in 2022, equivalent to 2 percent of the national budget — have
redistributed resources toward the rich.

Meanwhile, EV incentives have undermined the shift away from automobiles
that Norwegian city officials, like their counterparts throughout Europe,
are increasingly encouraging. “Everyone agrees that 100 percent of cars
should be electric. That’s not the question,” Tiina Ruohonen, a climate
advisor to the mayor of Oslo, told me. “The real question is whether you
really need to own a car in Oslo.”

Over the last decade, Oslo has joined Bergen, Trondheim, and Stavanger
(Norway’s four largest cities) in committing to meet all future trip
growth through transit, biking, and walking — not cars. Seeking to reduce
driving, Oslo has removed over 4,000 parking spots since 2016 while also
building bike lanes, widening sidewalks, and adjusting traffic patterns to
reduce through traffic. Those efforts helped the city achieve a remarkable
milestone in 2019: For a full year, not a single pedestrian or cyclist was
killed in a crash.

Walking and biking through Oslo helped me understand how it became so
safe. The few motor vehicles I encountered within the city center moved
carefully through streets thronged with pedestrians (some blocks are
entirely car-free). Traffic typically moved at the speed of my e-bike; my
one moment of anxiety came when a passing streetcar startled me as I gazed
at Oslo’s picturesque harbor.

Many local leaders recognize that reducing car dependence will enhance
urban life. “I am certain that when people imagine their ideal city, it
would not be a dream of polluted air, cars jammed in endless traffic, or
streets filled up with parked cars,” Hanne Marcussen, Oslo’s former vice
mayor of urban development, told Fast Company in 2019.

But there are inherent conflicts between cities’ efforts to limit driving
and the Norwegian government’s promotion of EVs. Oslo’s elimination of
street parking and creation of pedestrian-only streets, for instance,
nudge Norwegians away from driving, but they also diminish EVs’
usefulness.

“The way to get people to buy EVs is to make them easy and cheap to use,”
said Eriksen. “But cities don’t want driving cars to be easy and cheap.” A
recent study of EV subsidies in Bergen underscores those tensions, finding
that promoting EV adoption hampers cities’ ability to build dense
neighborhoods that shorten trips and strengthen transit.

The effect of EV adoption on public transportation has been a particular
concern for Norway’s cities because boosting transit ridership has been a
linchpin of local mobility strategies. Bergen, for instance, opened its
first light rail line in 2010, and Trondheim overhauled its bus fleet in
2019. But because generous EV incentives make driving cheaper, they make
public transportation relatively less cost-competitive.

Worse, EV promotions have shrunk the funding available to invest in
transit improvements because Norwegian public transportation budgets are
partly funded through the road tolls that the national government exempted
EV owners from paying. As more Norwegians purchased EVs, transit revenue
fell, threatening major investments like a new metro line in Oslo. “One of
my primary concerns is that because we are subsidizing EVs through the
cheaper toll roads, we don’t have the money to pay for big transit
infrastructure projects,” said Eivind Trædal, an Oslo city councilmember
who until a few weeks ago led the city’s council’s environment and
transportation committee.

National officials, for their part, have stuck to pro-EV messaging and
refrained from discouraging driving. Despite its generous incentives for
electric cars, the Norwegian government provides no discounts for those
buying e-bikes or e-cargo bikes (Oslo and Bergen offer limited programs
for residents). The country’s current 12-year National Transport Plan
includes initiatives to catalyze the adoption of zero-emissions vehicles,
but none to reduce car trips.

Trædal said that politics led the Norwegian government to downplay
reducing transportation emissions through transit, biking, and walking —
all of which produce significantly fewer emissions than driving an EV.
“Nobody’s mad about getting a cheaper new car, right?” he shrugged. “It’s
politically easier to just give them car subsidies.”

When I asked Kroglund, the country’s transportation state secretary, if
Norway’s government seeks to reduce total kilometers driven, she said it
does not. “We don’t have a specific goal [to reduce driving],” she told
me. “Of course, we would like to get more people on public transportation
and bikes. But that is more something that cities work on.”

But national policy decisions inevitably affect local transportation
efforts — and sometimes undermine them. Last October, the Norwegian Public
Roads Administration opened E39, a four-lane highway into Bergen that the
city had opposed due to concerns that it would increase driving. Those
fears proved justified. Lars Ove Kvalbein, a Bergen city adviser on
sustainable mobility, told me that before E39 opened, 30 percent of those
traveling into the city from the south had used a car, but after the
highway opened that share jumped to 40 percent.

“E39 was part of a national plan that smashed all the positive local plans
to pieces,” he said.

Other countries can avoid repeating Norway’s mistakes
In the last few years, Norway has begun to confront the tensions within
its push for car electrification. In 2017, the country began requiring EV
owners to pay for parking, road tolls, and ferries, although they still
receive a discount. As of this past January, only the first $45,000 of a
new EV’s purchase price is tax-free. Buyers of the largest (and often
priciest) EVs must also pay an additional fee that scales with vehicle
weight.

“The argument is to make the tax system more fair,” said transportation
state secretary Kroglund, “and not give benefits for things that are
unnecessary for the transition to EVs.” As a result of the new policies,
Norwegian sales of some high-end EVs, like the enormous Chinese Hongqi
SUV, have collapsed.

Looking to the future, TØI’s Grimsrud hopes that Norway’s next 12-year
National Transport Plan beginning in 2025 will include a goal of limiting
total driving, which could restrain highway expansion plans and direct
more investment toward transit. “If you start with a national goal for
reducing transportation emissions, it will force you to focus more on
public transportation and less on road construction,” he said.

For other countries, a clear Norwegian lesson is that a focus on reducing
transportation emissions through electric car adoption can worsen
inequality. Capping the price of eligible vehicles and limiting the number
of EVs that a household can purchase tax-free are intuitive moves that
Norway took only belatedly.

At the same time, Norway offers a warning about the dangers of promoting
EVs at the expense of modes that are more beneficial to the environment as
well as urban life. The national government’s decision to subsidize
electric cars but not e-bikes makes no sense from a climate perspective,
although the United States Congress made the same mistake when it passed
the Inflation Reduction Act last year. At a minimum, countries should
ensure that EV adoption does not deplete resources needed for public
transportation investments, as has happened in Norway and could occur in
the US, since EVs reduce gasoline tax revenues, a portion of which funds
American transit.

With frequent bus and rail service, walkable city centers, and expanding
networks of bike lanes (including, in Bergen, the longest purpose-built
bike tunnel in the world), Norwegian cities are far ahead of American
peers in providing viable alternatives to driving. Nevertheless, over the
last decade, US cities have taken significant steps forward: Bike share
programs are now a fixture, and new bus rapid transit lines have emerged
in places like Madison, Richmond, and Washington, DC. New York City and
San Francisco have even experimented with making major thoroughfares car-
free. But if local initiatives aren’t matched with supportive federal
policies, Norway’s experience suggests that an influx of electric vehicles
can hinder efforts to escape the automobile’s urban stranglehold.

“The mistake is to think that EVs solve all your problems when it comes to
transport,” said Ruohonen, the Oslo mayoral adviser. “They don’t.”

https://www.msn.com/en-us/money/markets/why-norway-the-poster-child-for-
electric-cars-is-having-second-thoughts/ar-AA1j90Uv
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