2021-04-21 17:56News

21 April, 2021

Mundus Nordic Green News

Epic day for climate and sustainability with twin EU decisions

With Biden’s climate summit beginning tomorrow, today saw twin announcements of environmental regulations from the EU. First up, was the 5am announcement that the European Parliament had reached an agreement with EU member states about the level of ambition in a new climate law. The 2030 target was the most contentious, with the parties agreeing to reduce net greenhouse gas emissions by “at least 55%” by 2030, compared to 1990 levels. The Parliament had wanted a 60% reduction, but member states appear to have won the day by pointing out just how dramatic a change it would be to move from the current 40% target.

The agreement defined the target on a net basis, meaning that it allows for the use of carbon sinks, such as forests. As Mundus Nordic Green News has explained, the difference between net and gross is like chalk and cheese. Given that a maximum of 255 million tonnes of carbon storage in the landscape is allowed across the EU, gross emissions from industry need to fall by a minimum of 52% by 2030. Putting this into the Nordic context, Sweden currently sequesters around 40Mt p.a. of carbon and Finland sequesters around 20Mt p.a., meaning that these two countries represent around a quarter of the Union’s budget for sinks.

Although the new targets will be legally binding, it will only be so at EU level, and consequently individual countries do not need to achieve the level, as long as other countries overdeliver.

Overall, most observers tend to agree that the deal is a significant climate achievement, described by Nordic Green News expert guest blogger, Magnus Nilsson, as “epoch-making but with beauty spots”. Politico says “EU policymakers agreed to speed up the bloc’s emission reductions to levels considered unthinkable just a few years ago. That puts the EU way ahead of China and the U.S., the world’s two biggest polluters.”

The flipside of the ambition is that in the words of Frans Timmermans that such a target would be “bloody hard to do” and require sacrifices of everyone — industry, citizens, the transport system and the rest of the economy. (EU press release, Euractiv, Politico)

The second announcement came officially around lunchtime when the European Commission released its revised taxonomy proposal. As much of this had been leaked earlier, the news was somewhat old. Nonetheless, it was extremely important for the Nordics, especially Finland’s and Sweden’s forest industries. The Commission needed to deal with a number of political “hot potatoes”. The roles of nuclear and gas was deemed too hard to handle for the moment, and decisions on these were postponed. But when it came to forestry, the Commission agreed to accede to Nordic wishes and declare forestry “sustainable”, rather than a transition solution [which it is assumed will make financing more expensive]. Pascal Canfin, a French centrist MEP who chairs the European Parliament’s environment committee, said “The pressure from Nordic countries, notably Sweden and Finland, has been colossal.”  

Although forestry attracted the most attention, there were other important elements for Sweden in the new package. In the Commission’s initial proposal, hydroelectric power was not considered sustainable, as it violated the "do no significant harm" criteria. This requirement seems to have been relaxed, allowing for balance the protection of ecosystems with watercourses while supporting hydropower.

For vehicles (cars), there was an allowance for vehicles that emit less than 50 gram of CO2 per kilometer to be sustainable prior to 2025, but after than only cars with no CO2 emissions at all in their exhaust are considered sustainable. In practice, this means that only all-electric and hydrogen vehicles can be stamped green. Wording was also introduced to address Swedish concerns about the energy performance of buildings. 

Despite the apparent victory, the end result did not satisfy the Swedish forestry industry. Svebio, an organization representing forest energy was critical of the administrative burden placed on landholders, but also with “the fine print”. It observed that “The production of biofuels and biogas is included in the taxonomy, but that activity will be meaningless in the long run if no new vehicles are produced that can use these renewable fuels... We question whether taxonomy is the right method to govern climate policy in the EU. Establishing a regulatory framework that distinguishes between sustainable and unsustainable solutions provides scope for both free opinion and lobbying from different industries, companies and member countries. In Svebio's opinion, it is better to govern with carbon dioxide taxes, emissions trading and environmental legislation, and then leave it to the financial market players to operate in a free financial market without political cues.” The point of this critique is that while today’s announcements are an apparent victory, and do allow for the continuation of burning woodchips to make electricity and heat, it acts against the dream of the Swedish forest industry to manufacture liquid biofuels for use in vehicles. How hard a blow this is is yet to be determined. The Danish biomass industry strikes a more philosophical line, arguing that most biomass will be phased out by 2040, in any case. (Dagens Industri, Euractiv, Svebio, Altinget)

Norway aims for hydrogen exports

The Norwegian state must help if the production of green hydrogen in Norway is to accelerate, according to the companies Agder Energi, Aker ASA, Akershus Energi, BKK, Norsk Hydro ASA, Statkraft, Varanger Kraft and Yara. The demand is also supported by LO (Norwegian Confederation of Trade Unions) and NHO (The Confederation of Norwegian Enterprise), as well as Energi Norge and Norsk Industri. The actors have submitted a memorandum on green hydrogen to Minister of Petroleum and Energy Tina Bru, in which they point out the framework conditions that can make Norwegian players among the first in Europe to build production of green hydrogen on a large scale. Bain, a management consultancy, has estimated that Norway could generate exports worth NOK 100 billion p.a. by 2040.  (E24, E24)

Klarna to implement carbon footprint-stamp

The Swedish fintech-giant Klarna will collaborate with greentech-company Doconomy to help consumers understand just how much their consumption affects the climate. Klarna users will see the carbon footprint of their purchase directly in the app. "This has never been done on this scale before. We want to make the climate impact visible for our customers and help them to make educated decisions," the CEO of Klarna Sebastian Siemiątkowski said. (Svenska Dagbladet)

What we’re reading
  • IEA issues 'dire warning' on CO2 emissions as it predicts 5% rise (Reuters)


About Nordic Green News

The Nordic countries are some of the most dynamic and successful economies in the world. They are also leaders in sustainability, from renewable energy, biofuels, carbon capture and storage and the hydrogen economy, circular economy business models and battery development, the Nordics are pioneers in policy design, technology development and consumer uptake. Mundus Nordic Green News is covering this transition for the international community. Every day we clip the stories of most relevance to international businesspeople and policy experts from the flow of news. We supplement these with our own opinion pieces and commentary, in English.