Introduction

On June 10 2016 the government and three opposition parties reached an agreement on the long-term energy policy.

The agreement sets the following main goals:

  • By 2045 Sweden will have no net discharge of greenhouse gases.
  • By 2040, 100% of Sweden's electricity production will come from renewable energy sources. According to the government, this goal should not be understood as a cut-off date for nuclear energy and should not imply closure of nuclear reactors by this date.
  • A goal for rendering a more efficient use of energy for the period from 2020 to 2030 will be drafted and decided by no later than 2017.

Improved conditions for nuclear power

Under the agreement, the tax on nuclear thermal output (known as the 'effect tax') will be phased out over two years beginning in 2017. This has been a requirement from the nuclear industry. The agreement also allows for the building of a maximum of 10 new reactors at the present locations and allows for the replacement of old reactors. While the changes are welcomed by the nuclear industry, the agreement states that nuclear power will receive no government subsidies, as well as increasing financial liability for nuclear accidents. Although the agreement enables nuclear power to survive beyond 2020, it is clear that the focus is on renewables.

Hydropower

As part of the process of achieving a 100% renewable energy supply, the agreement provides for a gradual reduction of existing hydropower real estate tax to the same level as most other power generation facilities over a four-year period starting in 2017. This is likely to benefit hydropower investment.

Focus on renewables

The electricity certificate system (a market-based subsidiary system) will be extended and expanded with new certificates of 18 terawatt hours (TWh) up to 2030. However, no increased targets will be introduced before 2020.

The agreement raises the issue that the energy policy must change from focusing almost exclusively on the amount of energy delivered (TWh) to also ensuring that there is enough power/effect provided (megawatts).

Comment

By meeting industry demands, such as the phase-out of the nuclear thermal output tax, the multi-party agreement indicates that the government is not prepared to abolish nuclear power. However, given that there will be no government subsidies, it is unlikely that new reactors will be built despite liberalisations. In addition, concerns have been expressed that the continued supply of nuclear power, together with financial incentives for renewable energy production, could lead to overcapacity in the energy market.

For further information on this topic please contact Peter HögströmJörgen Möller or Philip Tonkin at Advokatfirman Lindahl KB by telephone (+46 8 527 70 800) or email (peter.hogstrom@lindahl.sejorgen.moller@lindahl.se or philip.tonkin@lindahl.se). The Advokatfirman Lindahl KB website can be accessed at www.lindahl.se.

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