Two of the highlighted areas covered by the Tidö agreement are energy and climate. In this commentary, we review what consequences the cooperation between the governing parties and the collaborating parties to implement reforms within these areas can have, above all for nuclear power, review of hydropower and the expansion of wind power.
Background
The Tidö agreement sets out that the aim of the agreement regarding the climate and energy issue is to re-establish a functioning electricity system with increased electricity generation and low electricity prices, as well as facilitate an effective climate transition.
When analysing which effects the Tidö parties' policy can have on the legal regulation that governs the energy and climate issues, it is important to note that the cooperation according to the agreement only covers a limited part of the issues mentioned. For example, the Tidö agreement does not cover infrastructure, questions concerning forestry and agriculture, or the more general environmental law ruling such as questions about protected areas, biological diversity and climate adaptation. Within the areas that are not covered by the Tidö agreement, it remains to be seen how environment and energy policies will be formulated.
ENERGY AND CLIMATE IN THE TIDÖ AGREEMENT – AN OVERVIEW
New energy policy goal and new rules for the electricity market
The energy policy goal has changed from 100 per cent ”renewable” to 100 per cent ”fossil-free”. The design of the electricity market shall be investigated and proposals produced with the aim of creating equivalence between renewable- and fossil-free types of energy.
The goal is also linked to a clear security of supply goal for electricity provision, with the system operator (Svenska kraftnät) identified as responsible for the goal's compliance. The division of responsibility between the electricity system's different actors shall also be clarified.
High cost protection and expanded charging infrastructure
A high cost protection for electricity prices is going to be introduced to the benefit of households and companies, which shall be paid retrospectively. It is also emphasised that the expansion of cables that export electricity should be paused until such time as the price difference between electricity price areas has been significantly reduced, with the long-term ambition that Sweden will become a unitary electricity price area.
The charging infrastructure shall also be developed and the funds distributed between public charging stations for light traffic and support for the electrification of heavy vehicles. The initiative has two focuses, in part to support the expansion in areas where it is currently progressing slowly, in rural areas for example, and in part through removing obstacles, lowering costs and placing requirements on expanded charging infrastructure. Examples of the obstacles referred to are inadequate possibilities to charge at home, possibility of providing electric cars and heavy vehicles with fastcharging in connection with high traffic loads, and rapidly scaling up all parts of the battery value chain in a sustainable way.
Nuclear power
The Tidö agreement places particular emphasis on expansion and development of nuclear power in Sweden. Special state credit guarantees shall be introduced with the aim of strengthening the conditions for investments in nuclear power. The conditions for actors that own or intend to construct nuclear power plants shall be made more generous and new rules shall be introduced to prevent policies arbitrarily shutting down nuclear power plants. The agreement also guarantees the right to operation and electricity generation insofar as the plant is safe and in good condition. If the state forces the decommissioning of a plant, the owner shall be entitled to compensation.
As an element in the nuclear power initiative, legislative changes identified as necessary include:
- The prohibition in the Environmental Code on permitting new reactors in locations other than the current ones (i.e. Ringhals, Forsmark and Oskarshamn), having more than ten reactors in operation at the same time, and also restarting closed reactors shall all be removed.
- Regulations to facilitate construction and utilisation of small modular reactors (SMR) shall be developed and implemented.
- The permit process for new nuclear power shall be shortened and permit matters shall be dealt with as high priority.
- The application fee for new nuclear reactors shall be substantially reduced.
Vattenfall has been commissioned to commence the planning of new nuclear power at Ringhals and other suitable locations. To ensure this, a new ministerial group has been appointed with the task of steering Vattenfall towards expanding plannable, fossil-free electricity generation. Furthermore, the possibilities to recommission Ringhals 1 and 2 shall be investigated.
Cogeneration (combined heat and power)
The strategy pertaining to district heating and cogeneration has changed. Ongoing commissions for the Swedish Energy Agency shall be supplemented with publications on sectoral links between electricity, process heat, district heating and hydrogen. The commission shall also be supplemented with specific instructions to evaluate nuclear energy and include it in the strategy. Finally, the nuclear power tax, the waste incineration tax and the tax on bio-oil shall be reviewed.
Hydropower
Review of the environmental permit shall be paused until it is clear which consequences the review might have for electricity generation. A new regulation for review shall be produced with the aim of ensuring that the interest of electricity supply is given high importance, and that small-scale actors will not incur unreasonable expenses for a new review. Consideration shall also be taken to older hydroelectric plants that constitute valuable cultural and historic environments.
Wind power
Wind power is indicated as having an important role for Swedish electricity generation and it is emphasised that all new electricity generation that strengthens and expands the power system is needed. The plan to subsidise offshore wind turbines' connections to the electricity grid has however been halted. Importance is instead placed on the party that connects to the electricity grid being accountable for costs when connecting to the grid from offshore wind turbines. Svenska kraftnät shall be included in the Swedish Agency for Marine and Water Management's commission to examine questions concerning exclusive rights to areas for construction of wind farms. When an operator obtains exclusive rights to an area, this shall also be linked with the investments that they order from Svenska kraftnät. The Strengthening Incentives to Expand Wind Power (Dir. 2022:27) enquiry has also been given the supplementary task of proposing how operators shall compensate municipalities in connection with expansion of wind farms.
Solar power
Solar power is only mentioned briefly in the agreement. It observes that the technical development of solar cells is moving extremely rapidly and that planning permission for integrated solar cells shall be reviewed. Funds shall also be allocated within energy research to develop methods to recycle worn-out solar cells.
Shortened and simplified environmental permit processes
An enquiry shall be appointed to examine the possibilities to simplify and shorten the processing of environmental permits according to the Environmental Code. According to the agreement, the aim is to make the process more flexible, effective and predictable. The number of authorities representing the state in the permit process shall be reduced. It is mentioned that the enquiry shall in particular obtain and take into account opinions from the business world and also that certain parts of the proposal from the Environmental Assessment Enquiry (SOU 2022:33) shall be introduced. However, it does not specify which parts of the Environmental Assessment Enquiry shall be taken into consideration.
Comments
Expansion and extension of nuclear power
The Tidö agreement largely focuses on a new direction, with construction of new nuclear power plants and a potential restart of Ringhals 1 and 2. The initiative is described in depth in the agreement, and the energy policy goal's change of wording reflects the prioritisation.
According to the Tidö agreement, the investments in nuclear power shall be implemented promptly in order to be able to rapidly counteract rising electricity prices. To achieve this rapid implementation, it states that the permit process for new nuclear power will be shortened. According to the agreement, an element in this seems to be the desire to simplify the environmental permit processes. Shortening and simplifying the permit processes is a controversial issue and one that has been the object of several enquiries, most recently the Environmental Assessment Enquiry (SOU 2022:33). With regard to permit assessments that include a government review, there is always a risk of the permit assessment being protracted, even though it is in the nature of the matter that a united and decisive government can conceivably shorten this part of the assessment. In consideration of the fact that assessing nuclear power will need to be subject to a government review, there can therefore be significant difficulties in shortening the permit assessment process. The current rules concerning the right of local residents and environmental organisations to appeal are based on international agreements and EU rights. This means that there is no simple way to shorten the permit processes through changing the rules of appeal. The regulation on consultation and production of environmental assessments is based on the EU's legal directive, which means that simplification of these parts must also must accord with the EU's legal ruling.
Review of hydropower
In relation to the question of ”pausing” the review of hydropower, there are no detailed indications of how the pause in the legal reviews that have commenced will take place. The legal ruling that governs the review is in the Environmental Code. This means that it will require legislative amendments to bring about the pause indicated. One of the reasons for the currently ongoing reviews of hydropower is that for a long time Sweden has been subject to criticism from the European Commission in relation to compliance with the Water Framework Directive. The Tidö agreement states that the legal change that shall be adopted after the pause is intended to ensure that the energy interest shall have very high importance in the review. The risk with the national plan having now been paused is that water operations that are subject to a permit for generation of hydroelectricity are conducting operations that do not meet the requirements concomitant on the Environmental Code and the EU's Water Framework Directive.
Wind power
Wind power, on the other hand, is encountering opposition as, among other things, the collaborating parties in the agreement are backing away from the decision that offshore wind farms shall be able to have a proportion of the connection cost paid by Svenska kraftnät. Offshore wind power is expanding in our neighbouring countries, while an implementation of the specifications in the Tidö agreement may entail expansion of Sweden's offshore wind power being delayed. In practice, it has transpired that the connection cost for installing power lines at sea has a major significance for the willingness to invest in offshore wind power.
Cables that export electricity
It is not clear how long it is intended to pause the expansion of cables that export electricity. Considering that the price difference will have to substantially decrease before the expansion is resumed, the interruption can be expected to proceed for a lengthy period. True, the measure might mean that Swedish electricity exports will not increase, but at the same time, neither will electricity exports decrease in the near future as existing cables will still be used.
To conclude
Thus far, it is only possible to present a general account of which potential legal changes might be relevant. However, the new focus on facilitating nuclear power is naturally the major change that will entail a need for amendments and administration of forthcoming permit processes. Regarding a pause in the review of hydropower, as a result of the pause announced, the legislation will need to take into account the fact that reviews are already in progress in the Land and Environmental Courts. The question of whether applications that have already been submitted will be covered by the pause must be addressed promptly, as there is otherwise a risk of operators not being treated equally in terms of the trade-offs in relation to energy provision that will take place in the review process.
We will naturally continue to monitor legal developments resulting from the new Government's policy. Did the article raise any questions? You are welcome to contact any of us or your normal contact person at Lindahl.
