Published 2022-09-21

This post is also available in Swedish

Report on how Russia’s war affects the climate transition

How does Russia’s war in Ukraine affect the climate transition in Sweden and within the EU? The Mistra Carbon Exit research programme has studied this in a new report focusing on energy, critical minerals and climate policy. The researchers propose a series of measures to strengthen climate policy by increasing security in key supply chains and eliminating dependency on Russian gas.

The idea of studying how the Swedish and European climate transition is affected by Russia’s invasion of Ukraine was hatched at an early stage. Soon after the outbreak of war, Lars Zetterberg, Programme Director of Mistra Carbon Exit, started thinking about the economy, energy supply and the EU’s ability to pursue an ambitious climate policy in times of crisis. The fact that Russian gas accounted for 40 per cent of Germany’s energy supply was an eye opener, and when the price of nickel tripled in a week, he saw how the Mistra Carbon Exit research programme could contribute interesting insights.

The report Impacts of the Russian invasion of Ukraine on the planned green transformation in Europe has been written by Lars Zetterberg together with Filip Johnsson, Deputy Programme Director of Mistra Carbon Exit and Programme Director of Mistra Electrification, and Milan Elkerbout, at the Brussels-based think tank CEPS, the Centre for European Policy Studies. The report focuses on three key areas to accelerate the climate transition and reduce dependency on Russia. The researchers have looked at both short-term and long-term solutions.

Simplified permit process for renewables

Regarding the energy transition, the report recommends a faster expansion of renewable electricity in the form of solar and wind power. It is the cheapest and simplest solution in order to become independent of Russian gas. To succeed in Sweden, the permit processes should be simplified.

“Today, the municipalities and the Swedish Armed Forces can exercise a veto, and the permit processes can take up to seven to eight years,” Zetterberg explains. “We need to facilitate the process so that, as a rule, it takes no more than two to three years to obtain a permit. One idea that has emerged is to give local communities economic compensation to motivate the municipalities to approve the establishment of local wind power.”

Zetterberg thinks that nuclear power, which became a subject of debate during election campaigns in Sweden, is a currently a non-issue. It takes at least 10–20 years to establish nuclear power, and it can absolutely be part of a long-term solution according to Zetterberg. But to solve the acute situation, the report shows that improving energy efficiency is of utmost importance. Zetterberg highlights the discussion within the EU about all countries needing to reduce their national energy consumption by 10 per cent. It also involves working with flexibility in the electricity system. The researchers draw attention to solutions such as hydrogen storage and how industries can adapt their production according to energy availability.

Bring minerals production home

Availability of minerals such as platinum, cobalt, lithium and rare earth metals is a prerequisite for electrification and climate transition. The report notes that Russia is an important producer, but that availability is mainly concentrated to other countries – South Africa for platinum, the Democratic Republic of the Congo for cobalt and China regarding rare earth metals. However, the fact that the manufacture is concentrated to only a few countries makes Sweden and Europe vulnerable to global crises. Zetterberg points out that there are mines for rare earth metals in Europe, but that the minerals are shipped to China for processing. To reduce vulnerability, the report recommends that Sweden takes an active role in the EU’s work to bring production home, known as reshoring, and to investigate the opportunities for new mines in Europe. Good competitive conditions and production with a low climate impact, a good working environment and a high level of circularity should be promoted.

“There are large finds of lithium and rare earth metals in Sweden and the Nordics, but new mines would undoubtedly lead to conflicts between various stakeholders and be the subject of difficult discussions in the future,” Zetterberg says.

Climate policy can take two paths

Zetterberg says that the war and the subsequent energy crisis in Europe have led to discussions about opening coal power stations in Germany, which will increase emissions. Meanwhile, there is every reason to take the opportunity to strengthen climate policy to create independence from Russian gas for evermore and to secure key supply chains.

The development of the EU Emissions Trading System, EU ETS, is a key instrument in climate policy. Due to fear that the price will soar, the European Commission has now proposed issuing more emission allowances. However, this risks slowing down the climate transition and leading to higher emissions. The EU’s new emissions system for transport and heating, EU ETS2, may also be more difficult to accept for countries that are already being hit hard. The report also highlights the EU’s proposal for carbon border tariffs that has already affected climate policy in countries outside the EU because the level of the border tariffs is based on the climate ambitions of the exporting country.

Which path do you think that climate policy will take?

“I think that certain parts of the Green Deal will be delayed. The new emissions trading system for heating and transport will be difficult to implement now that households are on their knees. The principle of carbon border tariffs is good, and I hope that the work continues. Within Sweden, the permit process for wind power is the most important issue of all to work on, but also the expansion of transmission lines to connect northern and southern Sweden. Here, the issue is who will pay for the expansion. The new Government will need to appoint several new commissions of inquiry. The greenhouse gas reduction mandate has been temporarily suspended. What will happen in light of the promises that the Sweden Democrats party made to its voters?”

In spring 2023, Sweden will hold the Presidency of the Council of the European Union. What issues do you hope Sweden will pursue to prevent the climate transition from stopping?

“I have three things on my wish list during Sweden’s Presidency of the Council of the EU: Sweden should pursue a high level of ambition in emissions trading as well as pursuing the development of climate border tariffs. Sweden should also endeavour to phase out free allocation of emission allowances within the next 10 years,” Zetterberg says.

 

On 10 October, the researchers within Mistra Carbon Exit will present the report at a webinar. For more information, visit www.mistracarbonexit.com