The Norwegian government has decided to establish a commission to study the country’s economic prospects in the context of a gradual reduction in hydrocarbon production. This decision is part of an agreement reached with the Green Party Miljøpartiet De Grønne (MDG), in exchange for its support for the 2026 budget proposal put forward by the Labour government, which lacks a parliamentary majority.
A reflection on the future of the economic model
Norway remains the largest European producer of oil and natural gas outside Russia, with its prosperity closely linked to these resources. The commission’s mandate includes the study of various scenarios, including the evolution of employment and the allocation of natural resources as production volumes from the Norwegian continental shelf decline.
The MDG party had called for a complete phase-out of hydrocarbons by 2040, but this proposal was not included in the final compromise. The government only agreed to establish a working group tasked with examining the country’s ability to adapt to a less oil-dependent economy.
Gradual changes to fiscal measures
The agreement also includes an adjustment to tax incentives for electric vehicles. The current value-added tax (VAT) exemption on the purchase of new electric cars up to NOK500,000 (around $42,500) will be gradually reduced. The threshold will drop to NOK300,000 in 2027, then to NOK150,000 in 2028, pending approval from European authorities.
The Labour government had initially planned to eliminate this exemption entirely by 2027. This adjustment supports the continuity of a highly active market, as Norway currently records an electric vehicle renewal rate accounting for nearly all new registrations.
A political process introduced step by step
The issue of the post-oil future arises as long-term forecasts indicate a marked decline in Norwegian production. The commission will be expected to deliver outcomes that guide future political decisions, particularly to ensure economic stability in a country where revenue from hydrocarbons remains significant.
The process launched through this agreement signals a political intent to examine the future of the national energy model while preserving fiscal support deemed essential for certain strategic sectors.
