Sweden has – almost – excellent conditions for a sustainable future

For Sweden, 2012 was a year of several records in the energy and climate sector. Some of them underline the Scandinavians’ ambition to meet the EU’s criteria for a sustainable future earlier rather than later. Not without pride, the Swedish Environmental Protection Agency (Naturvårdsverket) announced that Sweden’s greenhouse gas emissions have never been lower than in 2012, a reduction of 20% compared with 1990.

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The Swedish Energy Agency (Energimyndigheten) added that in 2012 the share of renewable energy in the transport sector reached 11.8%. The EU goal is set at 10% for the year 2020. Further, an article in ERA, the Agency’s periodical publication, about the IEA report Review Sweden 2012, is headed “Best in class”. Indeed, IEA has many positive and commendable things to say about the Scandinavians, whose parliament (Riksdag) in 2009 voted for an “integrated energy and climate policy”.

The policy includes: Greenhouse emissions which are not covered by the trade with EU CO2 certificates should be, compared to 1990, reduced by 40% until 2020. By the same year, half of Sweden’s energy consumption should be supplied by renewable energy sources. By 2030, Sweden’s transport fleet should be independent of fossil energy. Net emissions of greenhouse gases should be zero by 2050. And finally, the share of renewable energy in the transport sector should be at least 10% by 2020.

Almost carbon free electricity output

In some way, Sweden is in an enviable position, at least if one looks at electricity production. In 2012, the country produced 162 TWh electricity, 9.8% more than in the previous year. Never before has Sweden delivered more electricity than last year. And, most importantly, hydro power contributed with 77,7 TWh, or 48%, to this result.

Never before has Sweden delivered more electricity than last year
Electricity from hydro power was the third largest in Swedish history and far above of what is regarded as a normal production year. It was especially the result of a very wet 2012 which made another record possible: Never before had Sweden exported so much net electricity. One can compare the exported 19.6 TWH with the beaten record of 1998: 10,7 TWh. The other main contributor to the Swedish electricity supply, nuclear power, performed with 61.2 TWh, 5.9% better than the year before, however, it is still behind normal production levels. Its share of the total production is 38%, whilst wind power delivered 7.1 TWH, up 18%, which gives it a share of 4,4%. Fossil based electricity contributed with 15,5 TWH, down 8%.

So, about 97% of all Swedish electricity output, including heat production from renewable sources, is carbon free. For more than 100 years, hydro power has been the platform of the country’s electricity supply. And so it will remain in the future. However, the potential of hydro power is disputed. There are still four major rivers in the north of the country which are not touched by power companies, and this will not change. No politician or industrialist dares to put a question mark behind the future of these rivers. On the other hand, the industry has many plans to modernise and extend the capacity in the other rivers but face opposition mainly from local people and environmental organisations. And according to the industry, the opposition gets support from an unexpected side. Every plan for changes in the power production along the rivers has to be approved by Kammerkollegiet (there is no English translation, the Agency was founded in 1538 and is active in e.g. administrative, financial and legal services). Now, the Agency does not just look at the replacement of certain equipment but at the entire installation at the rivers. And according to Bosse Andersson from the Swedish Energy Association (Svensk Energi), the Agency is extremely restrictive with permissions. Furthermore, the Parliament dropped the CO2 tax on district heating, but instead increased the taxable value of all energy producing sites from 50 to 70%. This will hit the hydro power companies especially hard. Instead of about SEK 4 billion (€ 468 million) it has to pay 6 billion (702 million) in 2013. This puts about 9 öre (about one cent) on every kWh. From this, Bosse Andersson draws the conclusion: “In the short term hydro power should not face major problems, however, there are serious risks for the future, since the industry is reluctant with new investments.” Lise Nordin, energy spokeswoman for the Green Party, does not share this view. She is of the opinion, that the hydro power industry has lot of reserves left and does not provide an optimal production for tactical reasons.

More or new nuclear remains to be seen

Nowadays, nuclear power is for most Swedes an accepted second pillar for fossil free electricity production. That was not always the case. At a referendum at the beginning of the eighties it was decided to abolish all nuclear power by the year 2010. Later on, politicians ignored the people’s decision, for good reasons. Sweden is, at least for many years to come, dependent on nuclear power.

Nowadays, nuclear power is for most Swedes an accepted second pillar for fossil free electricity production
However, the referendum was followed by another phase-out decision some years later, but in 2009 the four party coalition government agreed on an annulment of the nuclear phase-out and to allow for the replacement of its nuclear reactors at the three existing sites at the end of their operational lifetime. Again, this is welcomed by the IAE: “Sweden has opened the door to an additional option to shape the transition to a low-carbon economy.” New nuclear power is nothing you will find on the agenda of the Green or the Left party, whilst the position of the Social Democrats is not quite clear. Certainly, its parliamentary group voted in favour with the Greens and the Left for “100% renewable energy”, however the party’s leader of one year, Stefan Löfven, was in his previous job as leader of the metal workers union strongly in favour of nuclear power. Right now he has no Parliament mandate and did not participate in the vote. Recently, the state owned energy utility Vattenfall officially applied for permission to build one or two new reactors as replacements for ones to be closed down in the future. Whether they ever will be built is doubtful. The government made it clear that there will be no financial support from the State.

The political opposition to nuclear power does not see any need for new reactors. It is convinced that there will be enough alternative electricity. Besides hydro power it is counting on wind power and bio fuel. In 2003, Sweden introduced the main tool to promote alternative carbon free energy: the electricity certificate. It is described as “a market-based support system for cost-effective production from renewable sources”. The certificates support the electricity production based on wind power, solar energy, wave energy, geothermal energy, certain bio fuels, certain hydro power and – perhaps this is a surprise for some – peat. The objective is to increase by 2020 the production in Sweden of electricity from renewable sources by 25 TWh relative to the production of 2002. In 2012, Norway joined the system which should add another 13.2 TWh relative to the production of 2012. The system will run until the end of 2035.

The system is generally regarded as a success. Electricity producers receive one certificate for each MWh they produce. On the other hand, all electricity suppliers and certain end users as well as part of the electricity-intensive industry and end users using their own produced or imported electricity are required to purchase certificates corresponding to a certain portion (quota) of their electricity sales or use. The quota is progressively changed from year to year and the certificates are traded on a sort of exchange administrated by Svensk Kraftnet (Swedish national grid) and through brokers. Current prices are published regularly by Svensk Kraftmätning (SKM).

“First of all we have to ask: what does fossil fuel independency really mean?”
For the last twelve months (until April 2013), the average price per certificate amounted to SEK 219 (€ 25,67). Since 2002, Sweden’s electricity production from renewable energy sources has increased by 13.3 TWh. On April 1st of every year, the amount of certificates required to meet the quota must be cancelled. This year 16.53 million certificates had been cancelled. The largest group of certificate buyers are domestic consumers (45%), followed by the service sector (29%) and the quota-obligated industry (17%). The view of the IEA: “Other countries can learn from this advanced co-operation and this first joint renewable market in the European Union.”

Electricity production is not the main problem in Sweden’s fight for decarbonisation. However, it will get more and more expansive in order to eliminate the last 3%. The situation in the transport sector is totally different. Almost 60% of all oil supplies are used by transport and 23% by industry. Also, transport is responsible for 40% of all CO2 emissions, followed by industry and agriculture.

Striving for zero greenhouse gas emissions

In addition to the certificate system, Sweden already introduced carbon tax and energy tax decades ago. Additionally, it is due to lower taxes supporting the introduction of low-emission cars, helps local communities with environment friendly projects and is campaigning for improved public transport. Whether Sweden will be successful in presenting the transport sector in 2030 as fossil fuel independent, is doubtful. “First of all”, argues Bosse Andersson, “we have to ask: what does fossil fuel independency really mean?” Marie Sunér Fleming, energy expert at the Confederation of Swedish Enterprises (Svensk Näringsliv), is sceptical about the view that transport can be reduced, in fact, she criticises the lack of investment into infrastructure.

However, the final goal is to present Sweden as a country free of greenhouse gas emissions by 2050. For that purpose, the government has asked the Swedish Environmental Protection Agency for a roadmap. The Agency provided a comprehensive plan which concludes that there is the need for drastic changes; in industry, in politics and for the Swedes as individuals. Some of the Agency’s recommendations include: Working for broad political consensus for the Roadmap’s main proposals. A more rigid system for the trade with EU-certificates. Higher energy- and carbon taxes. More funds for climate research. Stricter rules for energy efficiency in buildings. The Agency points out the connection between consumption in Sweden and greenhouse gas emissions abroad. Stricter EU-rules for car emissions. Closer cooperation between State and industry regarding the development of new low-carbon techniques. Certificates for the purchase of fertilizers and climate tax on meat. Improve the absorption of carbon dioxide by forests and land by establishing new national parks.

The Agency notes that if today’s situation is not changed, by 2050 Swedish emissions will only have been reduced by 10 million to 55 million tons. In Scenario 1 Sweden will end up with an 85% reduction, the equivalent of 10 million tons CO2.

Even though Sweden puts its main efforts into the increase of wind power, this energy source is controversial
And these 10 million tons could be absorbed by forest and land. Important here are new vehicle and transport techniques, less travel for people and the movement of goods from the road to trains and sea. The consumption of liquid fuel could be reduced by 70%, the industry’s combustion will become fossil free and the industry turns to carbon capture storage (CCS). Without CCS the reduction will stay at 70%. Should Sweden, according to the Agency, not succeed in its objectives, it should contemplate investing in emission reduction in other countries. The cost to eliminate the last carbon emissions could be so high that it would be more efficient to pay for the emission reduction in other countries.

Even though Sweden puts its main efforts into the increase of wind power, this energy source is controversial. The prestigious energy committee of the Royal Swedish Academy of Sciences (Kungliga Vetenskapsakademien) writes in the national daily newspaper Svenska Dagbladet: “It is unbelievable that these gigantic energy investments are allowed to continue in a country which already is equipped with a workable and fossil free electricity system. If the purpose is to reduce carbon emissions, the hundreds of billions should instead go to the transport sector, from where about 35% of all fossil emissions originate.” In a response, Lennart Söder, professor for electricity systems at Stockholm’s Royal Institute of Technology (KTH), describes the committee’s argument as preposterous. Recently he looked at the need for reserve electricity production in order to compensate for the erratic supply of up to 55 TWh wind power and came to the conclusion, that “there is no dramatic change in the need for regulatory power. The additional cost would almost be zero or some few öre per kWh”. Another critical voice comes from Stefan Fölster, until recently chief economist of the Confederation of Swedish Enterprises and now head of the think tank Reforminstitutet. He criticises the “inefficient use of about SEK 50 billion (€ 5.85 billion) a year”, because Sweden looks at only one thing: to reduce carbon emissions in Sweden. “And this rarely helps the world”. His advice: Sweden should not invest in more wind power but much more into research which would help the entire world.

There is one issue most Swedes do agree upon: The wish for a broad political consensus on energy and climate. However, the prospects are not good. In September 2014 Sweden is facing elections to the Parliament, and the views on this issue currently diverge widely.