Norway has approved a plan to connect Equinor's EQNR.OL Hammerfest liquefied natural gas (LNG) plant to the national power grid in a bid to cut greenhouse gas emissions, despite local opposition, the government said on Tuesday.
The plan includes shutting down a gas power plant, Norway's largest single source of carbon dioxide, by 2030 and replacing it with power supply from the grid where renewable energy dominates.
"This is an important day for building industry and creating jobs in northern Norway, and for the climate," Norway's Prime Minister Jonas Gahr Stoere told a news conference held in front of the LNG plant in Arctic Norway.
Equinor estimates the measure at Western Europe's largest LNG plant could save around 850,000 tonnes of CO2 emissions per year, or about 2% of Norway's total annual emissions.
The plan, however, has been contentious with locals due to its perceived clash with green industry development, rising power prices as well as the rights of Indigenous Sami reindeer herders.
To ease voters' concerns ahead of local elections in September, the centre-left government has pledged to support the development of new renewable power sources in its northernmost region and the building of new power lines to offer more grid connections.
The planned power switch at the Hammerfest plant would also have to take place in 2030, two years later than previously planned, the government said.
Norway's parliament has previously asked the government to consider an alternative way to cut carbon emissions, such as capturing CO2 at the gas plant and injecting it underground for permanent storage.
Equinor and its partners plan to invest a total of 13.2 billion crowns ($1.30 billion) to electrify and otherwise upgrade the plant, extending its operations by about 10 years.
Hammerfest LNG, also known as Melkoeya, can deliver 6.5 billion cubic metres (bcm) of gas per year, enough to cover energy demand for about 6.5 million European homes.
Equinor has a 36.79% stake, while state-owned Petoro has 30%, French TotalEnergies has 18.40%, Neptune Energy has 12%, and Wintershall Dea has 2.81%.
Neptune is in the process of being acquired by Vaar Energi.
($1 = 10.1488 Norwegian crowns)
(Reuters - Reporting by Nerijus Adomaitis, editing by Gwladys Fouche, Kirsten Donovan)