It was rabbit-out-of-the-hat time in the Swedish Parliament last Friday, June 10, when Energy Minister Ibrahim Baylan presented an agreement reached within the Energy Commission he appointed in March 2014. Support for the agreement is broad, with five of the eight parties represented in Parliament pledging to honor it. The remaining three parties represent 24% of the electorate, but they do not form a bloc of any kind.
The compromise consists of nine principal points:
– The goal is for Sweden's electricity supply to be 100% from renewable sources in 2040.
– New nuclear plants may be built at existing reactor sites. The total number of Swedish reactors at any time is limited to 10; they may operate, as needed, beyond 2040.
– The existing system of premiums for electricity generated from renewable energy sources will be extended and expanded by 18 TWh between now and 2030.
– Nuclear operators' liability for accidents will triple, from 4 billion SEK to 12 billion. (The so-called Paris Convention contained such a provision, and it has been on the books in Sweden since 2010. But until now, it would take effect only when all the signatories have ratified the Convention. Now, Sweden is taking the step, regardless.) Operators will be required to have full insurance coverage.
– The tax on installed reactor capacity, which the government recently raised, will be scrapped entirely within the next two years. (The fiscal deficit will be covered by a 0.04 SEK hike in energy taxes for households and business. Energy intensive industry is exempt.)
– A comprehensive program for more effective and efficient energy use in the decade starting 2020 is to be drawn up. Funding will also be made available to research on innovative technologies to increase the efficiency of renewable energy sources.
– Currently protected stretches of the country's major rivers will continue to be 'untamed' by dams, etc.
– Property taxes on hydroelectric installations will be reduced (gradually, over the next four years) by an amount that corresponds to the removal of the capacity tax on nuclear power.
– Transmission capacity between Sweden and neighboring countries will be expanded.
Plus a couple of recommendations:
– A special program for energy efficiency in power-intensive industries should be introduced.
– The existing fee for connecting marine-based wind power to the national grid should be removed.
Seen from an energy policy perspective, the agreement is rife with inconsistencies. Not least the first two points on the list are hard to reconcile. The only way to understand it is to see it as a way out of a dilemma, one that has paralyzed energy policy since 1980.
That year, an advisory referendum on the future of nuclear energy in Sweden was forced upon the Social Democratic government. The Social Democrats, who had ruled Sweden a half century, had started a massive nuclear energy program without popular support. The Government narrowly avoided defeat by introducing a third alternative to Yes and No, namely, "Yes, but No": the number of nuclear reactors would continue grow, from six to twelve, but all would be 'retired' by 2010. That short-term subterfuge resulted in a generation-long party-political stalemate.
Last week's grand compromise would appear to follow the same sort of 'logic', this time, "No, but Yes".
But this is not about energy policy, it's all about solving a massive parliamentary impasse. The 'genius' of the compromise is that everyone at the table leaves with a trophy, some measure of 'triumph': "We will have 100% renewable energy by 2040, and nuclear operators will pay a greater share of their costs to society," said the negotiator for the Greens. "We've saved nuclear energy," declared the Christian Democrat, referring to the abolition of the capacity tax and the absence of a time-table for phase-out.
Both statements find support in the agreement.
All the parties stress the value of "long-term certainty" and "stability" of energy policy for industrial planning and competitive strength on world markets, and all have agreed to a laissez-faire approach to nuclear energy. Reactor owners, not politicians, will decide when to call it quits. One key factor makes this policy retreat possible: Nuclear energy is not competitive on the electricity market – even with no capacity tax – and no positive trend is foreseeable. There will be no change in E.ON's and Vattenfall's decisions over the past few months to shut down Sweden's four oldest reactors.
In an interview after the press conference announcing the compromise, Minister Baylan was asked how long the market would support nuclear energy in Sweden. He responded, "That's a matter of personal judgment", but then added that, barring unforeseen developments, he believed that Swedish nuclear energy would be a thing of the past in some thirty to forty years.
One big trophy Mr Baylan takes back to his Cabinet colleagues is this: Sweden has never had a government with such weak parliamentary support, 38% in the last general election. The figure shrinks even further when one considers that the nuclear issue splits the Social Democrats; several labor unions are vehemently pro-nuclear. Moreover, Opposition parties have rallied around nuclear, one of the few issues on which they agree. As a consequence, the one issue that might fell the 'Red-Green coalition' has been nuclear energy. The agreement neutralizes that threat – for the time being.
Sources:
– Energy Commission Press Conference, 10th July, SVT.
– 'Hushållen betalar slopad effektskatt'. Östra Småland, 11 June 2016, p.B13
– 'OKG:s ägare om energiuppgörelsen: "Vi är glada"'. Östra Småland, 11 June 2016, p.A4
English-language commentary:
– Sam Pothecary, 14 June 2016, 'Major Swedish parties agree to 100% renewable goal by 2040', http://reneweconomy.com.au/2016/major-swedish-parties-agree-100-renewabl...
– Richard Milne, 10 June 2016, 'Boost to nuclear energy as Sweden agrees to build more reactors', www.ft.com/intl/cms/s/0/b44e3214-2f13-11e6-bf8d-26294ad519fc.html
– NucNet, 13 June 2016, 'Sweden Could Build 10 New Reactors After Major Change To Policy On Nuclear', www.nucnet.org/all-the-news/2016/06/13/sweden-could-build-10-new-reactor...