Insight  

Can Sweden reach its ambitious climate goals?

2021.11.01

COP 26, the 2021 United Nations climate change conference, just kicked off in Glasgow. From now until November 12, world leaders, negotiators, government representatives, business and citizens are gathering to follow up on where the world’s countries stand on their Nationally Determined Contributions (NDC’s) to reduce emissions. The Paris Agreement of 2015 laid out the terms for these NDC’s and COP 26 represents the first opportunity to update them since the agreement was signed. However, the world hasn’t even come close to limiting global warming to 1.5 degrees, according to the UN. Expectations and pressure are therefore high.

All countries are expected to submit their NDC’s in advance of COP 26 and Sweden will be no exception. Thanks to its high national environmental ambitions and dedication to developing renewable energy technologies, many consider Sweden to be at the forefront of the global climate transition.

In connection with COP 26 and the implications it will have for global climate goals, Cirio’s energy team has summarized the latest developments in Swedish renewable energy.

High climate ambitions, but not without challenges

Like many other Nordic countries, Sweden seeks to be a good example of how to tackle climate change. The government has set very high ambitions: all electricity will come from renewable sources by 2040; and five years later in 2045 a net zero goal of greenhouse gas emissions.

However, Sweden could face some significant challenges in its renewable energy production to meet the country’s ambitious climate goals and maintain its good track record.

Last year renewables represented an impressive 60 percent of Sweden’s total energy production. But one of the main challenges in reaching 100 percent renewable production is that nuclear power, making up 30 percent of production today, is going to be phased out. That means that Sweden will be dependent on intermittent power sources and hydropower – a highly regulated power source – to bear the load in the system.

All this while demand for power is expected to increase due to several factors such as a rising population, the electrification of industry and society, and manufacturing demands.

Few incentives to develop and scale renewable technologies

It won’t just be about replacing nuclear power, but new sources will need to be developed as well.

Onshore wind power, in addition to hydropower, has been high on the Swedish energy market’s agenda. Onshore wind power increased from 2 percent in 2010 to 17 percent in 2020, and it continues to increase every year. Indications are that the next shift is going to be to offshore wind power. Sweden has virtually no offshore wind power today, but there has been notable interest from developers, primarily off the coast of southern Sweden where demand and prices are higher than in the north.

However, it can be argued that few incentives for renewables exist. Offshore wind power could be the lone exception because the government has stated they are willing to cover part of the costs. Corporate Power Purchase Agreements (PPAs), long term contracts in which a business agrees to purchase electricity directly from an energy generator, are becoming stronger in the Nordics. But for the most part, more and more renewable energy technologies are expected to go at it alone, without subsidies or other types of government support.

Unfortunately, this means that other renewable energy technologies in development, like batteries or hydrogen and solar, may not get the help they need.

Procedural improvements are in progress, but it will take time

Other obstacles to developing renewable energy solutions are the current processes for planning and execution of renewable energy projects in Sweden. These must be improved in order to truly provide the sector with momentum to deliver on its own – and the government’s – renewable energy goals.

First of all, it is is time consuming and challenging to get permits for grids and power facilities to be approved and meet compliance requirements. For example, Swedish municipalities have veto power over wind power development in their jurisdictions and they exercise this veto from time to time. Unfortunately, this step comes very late in the process. Developers try to tackle this in advance by having discussions with municipal politicians early on, but with opinions and majorities constantly shifting, it could be yes one day and no the next.

Second of all, the conditions to execute renewable energy projects also risk hindering the promotion and development of renewable energy sources. Access to the grid and ensuring transmission capacity is a challenge, particularly in the north of Sweden.

To resolve the permitting issue, there is a governmental inquiry in progress to investigate how permitting processes can be improved. Ensuring security of supply through improvements to transmission capacity is also frequently discussed in the energy debate. So, we can say that improvements are being made, but it will take time to get the permitting processes right and to build out the grid and transmission capacity to get rid of bottlenecks, primarily from north to south.

For more information about the latest legal developments in Swedish renewable energy, contact our energy team:

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Jörgen Möller
Head of Energy, Partner
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+46 76 617 09 81
Maria Hanbo
Senior Counsel
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+46 76 617 08 81
Fredrik Morfeldt
Managing Associate
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+46 76 617 08 50
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