Mundus Nordic Green News – 23 November, 2020

Sweden’s LKAB plans SEK 400 billion push into carbon-free iron ore

Sweden’s government owned iron ore producer, LKAB hit international headlines today, when it profiled its ambition to create and dominate a global market for fossil-free steel. Hailing the announcement as "the biggest change in the company's 130-year history.” LKAB expects to reduce its customers' emissions by up to 35 million tonnes of carbon dioxide per year, within 20 years. 

 

The Financial Times says that LKAB plans to have net-zero carbon emissions by 2045 via a switch to hydrogen-based DRI, also known as “sponge iron”, which would go into electric arc furnaces rather than coke-fuelled blast furnaces. Mr Mostrom added that the resulting reduction in greenhouse gases at its steelmaker customers would be equivalent to two-thirds of all Sweden’s emissions and three times greater an effect than abandoning all cars in the country permanently. But green hydrogen also requires large amounts of energy. LKAB estimates the energy required in its transformation would be equivalent to about one-third of Sweden’s current 160TWh of annual production.

 

LKAB believes success could lead to its revenues more than doubling over the same period, but the venture has may risks and contingencies on which its success, or not, relies. Amongst these LKAB wants new, faster permitting processes, better access to fossil-free electricity and government investments in research and development. In addition, LKAB’s CEO, Jan Mostrom says that the transformation would go only as fast as its clients wanted

 

The Minister of Trade and Industry Ibrahim Baylan (S), who has been involved in the project in his role as representative of the state as LKAB's owner, told Swedish Radio's that the change is "necessary", and that both LKAB and Sweden have a lot to gain from this being possible.

 

Energy chiefs want Sweden to oppose EU climate taxonomy

Executives from energy providers Fortnum, Uniper and Vattenfall urge the Swedish Government to oppose future EU rules on classifying sustainable energy investments. They argue that the European Commission’s proposal makes it “nearly impossible” to define what is perceived as sustainable, which is why they want the Government to raise the issue on the European level.

 

The managers illustrate their point with examples of how the proposed EU rules deliver perverse results. For example, the European Commission's bill states that Swedish hydropower would not be classified as sustainable unless environmental adjustments are carried out that are significantly more far-reaching than what is required by existing EU regulations. For example, there are requirements for fishing roads and special turbines that are not always effective or even desirable with regard to the Swedish ecological conditions. There are also demands on water regulation that would unfortunately reduce hydropower's ability to balance the power system. This in turn would reduce the amount of wind and solar power that can be integrated into the power system. 

 

They claim that the outlook for nuclear is even darker, subjecting the industry to political pressure that is not scientific in its view. This is a big deal for Sweden, where in 2019, hydropower and nuclear power accounted for 78% of Swedish electricity production. And the rules that would apply to bioenergy are also unclear, but there is a risk that parts of the bioenergy will not be classified as sustainable by the Commission. Given that bioenergy accounts for 40% of Sweden's total energy use – making it Sweden's largest energy source –  this is a further concern.

 

The author’s wonder how it got to this point, and say that the Government must have taken its eye off the ball, putting Swedish industry at risk from widespread opposition to large-scale hydropower, nuclear power, bioenergy and energy recovery from waste on the Continent. They call for high-level political resistance, appealing to the Government to urgently address these issues with the European Commission in cooperation with other Nordic countries, who have similar needs.

 

Sweden’s Debt Office to make preparation to issue government credit guarantees for green investments

The Government issued a press release saying that it will give the Debt Office the task of making preparations to be able to issue green credit guarantees.

 

In the budget bill for 2021, the government proposes government credit guarantees for green investments in Sweden to help enable the financing of socially important industrial investments, which increases the possibilities for a transition to a more circular economy and to achieving the goals of the environmental goals system and the climate policy framework. The credit guarantees will be assessed on the basis of technology-neutral criteria. In 2021, the credit guarantees are proposed to amount to a maximum of SEK 10 billion. For 2022, the guarantee framework is estimated at SEK 15 billion and for 2023 at SEK 25 billion. The credit guarantees will be designed so that the measure is compatible with EU state aid rules.

 

Veolia plans to build a “first of its kind” methanol purification plant in Finland

Veolia Services Finland intends to build a treatment plant in connection with Metsä Fibre's Äänekoski bioproduct plant. The plant will produce 12,000 tons annually of of purified biomethanol, refined from crude methanol which is generated in pulp production as a transport fuel. The value of the plant's total investment is more than 30 million euros. Tomi Ihalainen, CEO of Veolia Services Suomi Oy, says that the construction of the new plant could start early next year and the plant could be in production in 2023. The Ministry of Employment and the Economy has granted almost EUR 9.5 million in investment support.  

 

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