Norway, the largest producer of oil and natural gas in Europe excluding Russia, owes much of its prosperity to its reserves of oil and gas, which are responsible for climate change.

Those reserves are however starting to decline.

In hard-fought negotiations overnight Tuesday to Wednesday, the minority Labour government agreed with the Greens to create a commission tasked with reflecting on what shape Norway's post-oil economy could take.

"We are now beginning to write the final chapter in Norway's oil history, and paving the way for all the new adventures that will make Norway progress," Greens' party official Ingrid Liland said in a statement.

The deal is however far from the Greens' goal in its political programme, which calls for the country to adopt a plan to phase out hydrocarbons by 2040.

The "transition commission" will "examine various scenarios and measures aimed at improving the adaptability of the Norwegian economy, particularly how the workforce and natural resources can be used more effectively, as the Norwegian continental shelf enters a new phase marked by a decline in oil and gas production," according to the text agreed upon by the left-wing political partners.

The composition of the commission is not clear yet.

The Labour government's allies also secured another victory in the late-night negotiations: an extension of the phase-out of a VAT exemption on the purchase of electric cars.

In its 2026 budget proposal, the Labour government proposed to lower next year the threshold above which the purchase price of a new electric vehicle would be subject to value-added tax (VAT), from 500,000 kroner ($50,000) to 300,000 kroner.

The VAT exemption would have then been removed entirely in 2027.

VAT is 25 percent for cars in Norway.

But according to the agreement clinched early Wednesday, the removal of the VAT exemption will be pushed back until 2028, subject to approval from European authorities.

"It's very important for the growth of electric cars that VAT is introduced more gradually than what the government initially proposed," Christina Bu, secretary general of the Norwegian EV Association, said in a statement.

"This will make it possible to reduce emissions further," she said.

Norway has the highest rate of electric car adoption in the world, representing nearly 100 percent of all new car registrations.