4 Method used for the climate budget analysis

4.1     Calculation of the impact of measures and instruments in the Climate Budget

The calculations of the climate impact of measures are based on many prerequisites and assumptions. Many of the calculations are based on external analyses. Assessments of the rate of phasing in and emission-reducing impact are generally carried out by the Agency for Climate in consultation with the associated responsible municipal enterprises. This is partly based on professional assessments of practical feasibility and technological maturity.

All the measures in Table 2.2a of Chapter 2 Proposition 1/2022 were calculated with an annual measure impact during the period through to 2030. Table 2.2a presents the impact of each measure in the years 2022 and 2025.

4.1.1   Delimitation

The impact specified for the measures in the Climate Budget only include direct GHG emissions within the boundaries of the municipality. The quantified impact of measures on indirect emissions (emissions that occur outside the municipal boundary) is not included in the analysis. This is in accordance with the delimitation of the climate budget and the municipal emissions inventory from the Norwegian Environment Agency. The greenhouse gases carbon dioxide (CO₂), methane (CH₄) and nitrous oxide (N₂O) are included. Conversion of greenhouse gases to CO₂ equivalents is carried out in accordance with the Norwegian Environment Agency’s guidance, using factors obtained from the UN Intergovernmental Panel on Climate Change (IPCC, 2007).

4.1.2   Comparison with projection of emissions, the zero alternative

The annual impact of a measure is calculated as the reduction in GHG emissions compared with the emission level in the projection in the same year. The projection is thus a zero alternative which shows the anticipated development in emissions in the absence of measures. In some cases, the measure analyses are based on a more detailed zero alternative than that shown in the projection for the emission source.

The impact is calculated using the following formula for each year:

Impact = (emissions in zero alternative) – (emissions after implementation of measure)

Thus, the impacts of the measures presented in Table 2.2a of Chapter 2 Proposition 1/2022 for 2022 and 2025 constitute the difference between the emission levels in the projection in 2022 and 2025 and emissions after the measure has been implemented in 2022 and 2025.

4.1.3   Bottom-up and top-down approach

Measure calculations can be performed using either a top-down or bottom-up methodology. Top-down is based on total emissions and assesses the proportion of emissions that can be eliminated via the measure. In the case of bottom-up, the impact of a measure is calculated as the change in activity (activity data) or emissions per unit of activity (emission factor).

Change in emissions per year

Bottom-up calculations require high-quality data concerning the change in activity or emission factor that the measure will lead to. Activity data could for example be the number of kilometres travelled, and the emission factor indicates the emission intensity of, for example, a petrol car. The change resulting from the measure could be a reduction in the number of kilometres or a transition to electric cars with zero emissions, while the emission reduction is shown as the sum of this change.

Calculations based on bottom-up methodology provide more precise estimates of the impact of individual measures than those based on top-down methodology.  In the measure analyses, an attempt was therefore made to increase the proportion of bottom-up assessments relative to top-down assessments.

Bottom-up calculations have for example been performed for measure 6 Zero emissions or sustainable biofuel in the municipality’s vehicles, where the number of vehicles, distance travelled, expectations concerning transition rate and emission factors are used to calculate the impact. An example of a top-down calculation is measure 11 Zero emissions/sustainable biofuels in the transport of bulk materials and waste from the construction sector, where a percentage emission reduction of the total emissions is estimated.

4.1.4   Correction for double-counting

The impact calculations must also take into account the fact that the projections are partly based on estimates of emission reductions. Amongst other things, the projection includes electrification of the vehicle fleet and a reduction in road traffic as a result of the revised Oslo Package 3 (also referred to as the “road toll payment system”), other electric car benefits, as well as the blending of biofuels as a result of the sales requirement. If the measure is assumed to have an emission-reducing impact beyond what is already included in the projection, the impact of the measure will be included in the climate budget analysis.

4.1.5   The distinction between measures and instruments

The Climate Budget makes a distinction between measures and instruments. This distinction is described in Climate Cure 2030 (Norwegian Environment Agency, 2020). A measure is the physical actions that various actors (businesses, households and central government and municipal enterprises, etc.) can take to reduce GHG emissions, such as investments in new technological solutions, transition to less energy-intensive energy carriers or energy efficiency measures. Instruments are the governance tools that are available to government agencies to trigger specific measures such as taxes, subsidies, orders, bans, agreements, information campaigns, etc. For example, zero-emission goods and service vehicles is a measure, while an example of an instrument that is intended to contribute to this measure is loading and unloading stations for zero-emission vans.

When assessing the climate impact of the measures in the Climate Budget, the overall emission-reducing impact of the associated instruments as a whole has been analysed.

4.1.6   Measures where the emission reduction has not been quantified (Tables 2.2b and 2.3)

Table 2.2b describes measures that are expected to result in emission reductions, but for which it has not been possible to determine the emission-reducing impact with sufficient certainty. There are various reasons why the impact of the measures cannot be quantified, e.g. because the measures are in an early design and implementation phase or because the data and knowledge base is poor or non-existent.

Table 2.3 shows activities which reinforce the climate work being carried out in the City of Oslo and which could provide a basis for further emission reductions. This applies to communication/mobilisation, facilitating measures and reports/pilots.  It has not been possible to determine the emission-reducing impact of these activities.

In the long term, it may be possible to quantify the impact of measures from Table 2.2b and transfer them to 2.2a, if the underlying data is improved. In the 2022 Climate Budget, measure 3 Extraction of landfill gas has been moved from Table 2.2b to Table 2.2a.

4.2     Uncertainty in the analyses

The Climate Budget was prepared on the basis of the best available knowledge base. Nevertheless, the various aspects of the climate budget analysis are subject to some uncertainty.

4.2.1   The municipal emissions inventory

The inventory of emissions from Norwegian municipalities is continually being developed, partly as a result of the fact that Oslo and other municipalities have called for greater precision and more frequent updating. In each publication of the emissions inventory, the entire time series is recalculated whenever a new method or data is introduced.

In cooperation with the Norwegian Environment Agency, the Agency for Climate has reviewed the existing method and assessed the potential for using local data to create a more accurate historical time series. An analysis by CICERO (2020) commissioned by the Agency for Climate identified a consistent challenge that the municipal emissions inventory does not reflect the impact of local measures implemented by the City of Oslo. This is a major challenge, particularly in the emissions sector “Other mobile combustion”, where the City of Oslo imposes requirements regarding the use of biofuel, and the climate impact is not reflected in the inventory. It is important to further develop the emissions inventory so that it reflects both actual GHG emissions in Oslo and the impact of climate measures in the Climate Budget.

There is particular uncertainty associated with the historical emission figures for fossil fuel heating and diesel-powered motorised equipment. Emissions from fossil fuel-fired heating and diesel-powered motorised equipment are calculated on the basis of sales figures from Statistics Norway and are subject to considerable uncertainty. The Norwegian Environment Agency is working to improve the method by the time of the next publication in 2021.

Continual improvements to the emissions inventory are making the analyses in the Climate Budget more accurate, and it is essential to continue the work on method development in order to improve both the quality of the figures and the inventory itself.

4.2.2   Projection of emissions (baseline trajectory)

The projection is based on the best available knowledge concerning the driving forces that will impact on GHG emissions through to 2030. It is therefore an estimate of how GHG emissions will develop in a fictional future and is therefore subject to considerable uncertainty. Amongst other things, it can be challenging to determine the right assumptions for the transport sector, where rapid technological advances are taking place. The projection should therefore only be used as an indication of what could happen in the future in the absence of further climate measures.