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Constant Concessions Under Changing Circumstances:the Water and Renewable Energy Directivesand Hydropower in SwedenPeter M. RudbergSecond Revised Edition


Stockholm Environment InstituteKräftriket 2B106 91 StockholmSwedenTel: +46 8 674 7070Fax: +46 8 674 7020Web: www.sei-international.orgHead of Communications: Ylva RylanderPublications Manager: Erik WillisLayout: Richard ClayCover Photo: Messaure hydro power plant, by the Lule river© Vattenfall/flickrThis publication may be reproduced in whole or in part and in anyform for educational or non-profit purposes, without special permissionfrom the copyright holder(s) provided acknowledgementof the source is made. No use of this publication may be made forresale or other commercial purpose, without the written permissionof the copyright holder(s).Second revised editionCopyright © June 2011by Stockholm Environment InstituteISBN: 978-91-86125-30-1


ContentsAcknowledgementsEnglish-Swedish glossarySummarySammanfattningivivvviIntroduction 1Background to EU directives 2Implementation of the RES in Sweden 4Is there a role for hydropower in the fulfillment of the RES? 5Implementation of the WFD in Sweden 7The present system directs future implementation 11Judicial concession trials 12Degree of policy coherence 17Policy implications and suggestions 20Conclusions 22References 24Appendix 1: Interview guide 28Appendix 2: Spending for improved hydromorphology 29


AcknowledgementsThe research presented is part of the Norwegian-Swedish GOVREP project. By focusing on howenvironmental and energy policy concerns can best becombined, the overall aim of the GOVREP project isto produce knowledge and policy recommendationsthat will improve political and administrative practicesdesigned to achieve more sustainable electricityproduction in Norway and Sweden. For furtherinformation please visit http://www.cedren.no/Projects/GOVREP.aspx.The research is predominantly carried out at the Centrefor Environmental Design of Renewable Energy(CEDREN), which is one of eight centers within thescheme for Centers for Environment-friendly EnergyResearch (FME). The FME scheme establishes time-limited research centers which conduct concentrated,focused and long-term research of high internationalcaliber in order to solve specific challenges in thefield.The author wishes to thank Måns Nilsson, AudunRuud, Jørgen Knudsen, Russel James and MatsLännerstad for reviewing and providing valuablecomments to the report. The author is also very gratefulto all respondents who generously provided time andearnest answers to his questions. This research wasmade possible through financing from the ResearchCouncil of Norway and Statkraft.The views and conclusions expressed in this report aresolely those of the author.English-Swedish glossaryOrganizationsConfederation of Swedish EnterprisesRiver Basin District Authorities (RBA)RiversaversSwedenergy (SE)Swedish Board of Fisheries (SBF)Swedish Energy Agency (SEA)Swedish National Grid (SNG)Swedish Society for Nature Conservation (SSNC)Swedish Sport Fishing Association (SSFA)The Legal, Financial and Administrative Services Agency (LFASA)The Swedish Environmental Protection Agency (SEPA)Svenskt NäringslivVattenmyndigheterÄlvräddarnaSvensk EnergiFiskeriverketEnergimyndighetenSvenska KraftnätNaturskyddsföreningenSveriges Sportfiske- och FiskevårdsförbundKammarkollegietNaturvårdsverketTermsConcession change trialConcession reviewEnvironmental Quality StandardEnvironmental Quality Objective (EQO)Extensive examinationGood Ecological Status (GES)Good Ecological Potential (GEP)Highly Modified Water (HMW)Limited examinationRenewable Energy Directive (RES)Swedish Environmental CodeWater Framework Directive (WFD)Prövning för ändringstillståndOmprövningMiljökvalitetsnormMiljömålFullständig prövningGod Ekologisk StatusGod Ekologisk PotentialKraftigt Modifierat VattenBegränsad prövningFörnybarhetsdirektivetMiljöbalkenVattendirektivetiv


SummaryIn 2008 hydropower produced almost half of thetotal electricity consumed in Sweden, which makesit the most important source of renewable electricityin Sweden. Storage hydropower – which providesover 97 per cent of the electricity produced – alsohas the additional advantage of being a dispatchableenergy source which can be used to balance theelectric grid. At the same time, storage hydropowerproduction leads to the fragmentation of rivers,creation of artificial dams and highly altered flowregimes with serious and well documented negativeeffects on the ecosystems of the affected rivers andtheir surroundings. As a result, hydropower has thepotential of becoming a political issue in connectionwith the implementation of the Renewable EnergyDirective (RES) and the Water Framework Directive(WFD), since the implementation processes could leadto potentially contradictory demands on hydropowerproduction. This report provides a review of the statusof implementation of the RES and WFD directivesto date in Sweden and an analysis of how the currentnational hydropower concession system directs futureimplementation of the two directives. The report alsodiscusses the degree of policy coherence of the presentand foreseeable outcomes of the two directives inSweden in relation to hydropower. The final part offerssuggestions of feasible policy alternatives for a moreeffective and synergetic implementation of the goals ofthe directives, which would enable an increase in bothrenewable energy production and an improved aquaticenvironment.The main results indicate that the actions and strategiesof both operators and authorities within the currentjudicial and administrative setup have led to a situationof high distrust and conflict between the actors involved.The main implication of this is that the Swedishconcession system is currently working in such a waythat neither the full potential of efficiency gains fromhydropower refurbishments to reach the RES targetsis attained, nor is it likely that the concession systemwill be able to accommodate significant changes tohydropower stations and dams that could be requiredfrom the implementation of the WFD within the settimeframe.The following conclusions and policy suggestions areput forward:• There is an important window of opportunityfor win-win solutions thanks to the extensiverefurbishment that is currently taking place inSwedish hydropower facilities.• Without a change to the incentives of the actors inthe current concession system this opportunity forwin-win solutions could be lost.• It is possible to create a more efficient andcompetition-neutral system by creating anenvironmental compensation scheme thatwould cover the cost of biodiversity and waterstatus improvement measures in connectionto hydropower plants. Such a scheme wouldsignificantly improve the possibilities of reachingwin-win solutions and take a more holisticapproach in concession trial processes.v


SammanfattningVattenkraft producerade närmare hälften av allslutanvänd el i Sverige 2008 och är därmedlandets viktigaste källan till förnybar elektricitet.Dammkraftverk – som producerar över 97% avelen – kan snabbt generera elektricitet och därmedbalansera ojämnheter i den nationella energitillgången.Kraftverksdammar leder dock till fragmentering avfloder, skapar artificiella vattenmagasin och förändrarflodernas naturliga flödesregim. Den negativa påverkanpå ekosystem i vattendragen och närliggande områdenär omfattande och väldokumenterad. På grund av dessaegenskaper är det möjligt att vattenkraften blir en politiskfråga under förverkligandet av Förnybarhetsdirektivet(RES) och Vattendirektivet (WFD), eftersomdirektiven potentiellt har motsägelsefulla krav påvattenkraften. Denna rapport är en granskning av denpågående implementeringen av dessa två direktivoch analyserar hur det svenska koncessionssystemetpåverkar fullföljningen av direktiven. Rapportendiskuterar också i vilken utsträckning de två direktivenär samordnade med hänsyn till nuvarande ochtroliga framtida utfall i relation till vattenkraften.Rapportens sista del för fram möjliga policy alternativför att möjliggöra ett effektivare och mer enhetligtgenomförande av direktivens mål. Vidare diskuterasmöjligheterna för win-win lösningar som skulle kunnaleda till både ökad produktion av förnybar elektricitetoch förbättrad vattenstatus.De viktigaste resultaten vittnar om att operatörersoch myndigheters agerande och strategier inomvattenkraftens nuvarande administrativa system ledertill en situation av konflikt och misstro mellan aktörerna.Ett resultat av det svenska koncessionssystemet blirdärmed att den potentiella effektivitetsökningen som ärmöjlig att uppnå vid förnyelse och renovering av äldrevattenkraftverk inte alltid nås. Vattenkraftens andelav produktionsökningen av förnybar elektricitet somär nödvändig för genomförandet av RES begränsasdärmed. Det är inte heller troligt att systemet kommeratt klara av att genomföra några större förändringarav vattenkraftstationer och dammar som skulle kunnakrävas under genomförandet av WFD inom den utsattatidsramen.De viktigaste slutsatserna och policy alternativen somförs fram är:• Den finns för närvarande ett unikt tillfälle för winwinlösningar tack vare den omfattande renoveringsom pågår av den svenska vattenkraften• Utan en förändring i aktörernas incitament i detgällande koncessionssystemet kommer denna winwinmöjlighet troligen inte uppfyllas• Det är möjligt att skapa ett effektivare ochmarknadsneutralt system genom att upprätta ettmiljökompensationssystem som täcker kostnadernaför miljö- och vattenstatusförbättrande åtgärder ivattenkraftsverk och dammar. Ett sådant systemskulle avsevärt förbättra möjligheterna att nåwin-win lösningar och främja ett mer holistiskttillvägagångssätt i tillståndsprövningarnavi


stockholm environment instituteIntroductionThe main purpose of the present study is toanalyze the implementation and interaction ofthe WFD and RES with regard to the hydropowersector in Sweden. Special attention is given to howthe directives are implemented with regard to thehydropower governance system which is centeredon a highly judicial concession granting and reviewsystem. The strategies and actions of the publicauthorities and operators active in the reviewprocess are discussed and analyzed together withtheir implications for the possibility of achievingthe goals of the WFD and RES within the settimeframe. Some of the perceived conflicts, in termsof policy coherence in the implementation of the twodirectives, are also discussed.Sweden is a country with an unusual energy mixwhen it comes to electricity production in an EUperspective. In 2008, nuclear and hydropowerenergy together accounted for almost 90 per centof the total production of electricity, and there isvirtually no electricity produced from oil and carbon(SEA, 2009b). In the same year, hydropower aloneprovided roughly 47 per cent of the total electricityproduced which makes it the most important sourceof renewable electricity in Sweden. Bioenergy andwind power electricity production are growing butare still relatively limited (ibid). Hydropower istherefore essential for reaching the Swedish REStargets for 2020. At the same time production fromstorage hydropower leads to the fragmentation ofrivers, creation of artificial dams and highly alteredflow regimes with serious and well documentednegative effects on the ecosystems of the affectedrivers (Rosenberg et al., 1997; Vorosmarty etal., Abell, 2002). The high level of hydropowerproduction in Sweden means that roughly threequarters of the major and medium-size rivers inthe country are partially or highly affected byhydropower and dams (Dynesius and Nilsson,1994). It is therefore possible that changes toexisting hydropower stations and limitations to theconstruction of new hydropower stations will berequired in order to achieve the requirement of theWFD. Such changes and limitations could lead toa loss of actual and potential renewable electricityproduction. The implementation, interaction andimpact of the RES and WFD on hydropower istherefore a highly relevant subject for investigationin Sweden since the implementation of the directivescould influence the hydropower sector significantlyin the years to come.Research focus, aim and methodThis research aims to review the status ofimplementation of the RES and WFD in Swedenwith special focus on the hydropower sector. TheseEU policies will be implemented largely througha national concession system which means that ananalysis of the history and functioning of the Swedishconcession system is needed in order to understandthe possible effects of these policies and to whatextent they are coordinated. This analysis will alsoprovide a basis on which to make policy suggestionson how to achieve a more effective implementationof energy and environmental objectives in Sweden.This paper will thus be divided into the followingsections:• a review of the status of implementation of theRES and WFD directives;• an analysis of the current Swedish concessionsystem regulating hydropower in light of thegoals and implementation of the directives;• a discussion of the degree of policy coherenceof the present and foreseeable outcomes of thedirectives; and• suggestions of feasible policy alternatives for amore effective and synergetic implementationof the directives.In order to understand the main challenges in thehydropower sector relating to the implementationof the WFD and RES, an extensive literaturereview was carried out of reports and research fromrelevant public authorities, hydropower companiesand trade organizations in Sweden. Based on thisreview an interview guide was created and usedin interviews with 10 interviewees from differentrelevant organizations. The full interview guide andinformation about the interviewees can be found inappendix 1.DelimitationThe RES deals with renewable energy productionand consumption in all parts of the energy sector,including electricity, transport and heating. In thispaper, the focus is on the interaction of the RES andWFD in relation to hydropower stations producingelectricity. The main part of the paper will thereforefocus on renewable electricity production eventhough the introduction of renewable energy into the1


constant concessions under changing circumstancesheating and transport sector and energy efficiencyand saving in general are equally or more importantin order to achieve the overall goals of the RES.Background to EU directivesSince the publication of the first IntergovernmentalPanel on Climate Change (IPCC) report in 1990,results from scientific research and observations ofclimate change have increasingly validated the climatechange thesis. In a global perspective we are now at apoint where there is unequivocal evidence of warmingof the climate system and we are certain that thiswarming is very likely due to the observed increase inanthropogenic Greenhouse Gas concentrations (IPCC,2007a). This realization has led to a number of policyresponses at both an international and local level. AtEU level one of the more ambitious initiatives is theclimate and energy package that provides legislationto help reach the 20-20-20 EU targets by 2020. Inessence the aim is for the EU to reduce its greenhousegas emissions to at least a level of 20 per cent belowthe 1990 levels. In addition it is stipulated that20 per cent of EU energy consumption should comefrom renewable resources and that there should be a20 per cent reduction in primary energy use comparedto projected levels due to increased energy efficiency(EU, 2010a). There are a number of pieces of EUlegislation that are related to this goal such as thosesetting up the Emissions Trading System (EC, 2003/87)and binding national targets for renewable energy (EC,2009/28). There is also an Energy Efficiency Directive(EC, 2006/32) and an Energy Efficiency Action Plan(EU, 2010b).The Renewable Energy Directive (RES) (EC, 2009/28)establishes a common framework for the promotionof energy from renewable sources. The targets areset for the share of gross final consumption of energyand for the share of energy from renewable sources intransport. The RES constitutes an important part of thepackage of measures needed to reduce greenhouse gasemissions and comply with the Kyoto Protocol to theUnited Nations Framework Convention on ClimateChange and with the EU commitment of a 20 per centgreenhouse gas emission reduction by 2020. The RESamends and repeals the Renewable Electricity Directive(RES-E) (EC, 2001/77) which set national indicativetargets for the contribution of renewable electricityto gross national electricity consumption by 2010(Lafferty and Ruud, 2008). The RES goal is expressedas a percentage of gross final consumption of energy,which means it can be reached by increasing productionfrom renewable energy, decreasing production fromnon-renewable energy or a mix of both. The EU-widetarget of a 20 per cent share of renewable energy istranslated into national overall targets where Swedenis expected to go from a 39.8 per cent share in 2005 toa 49 per cent share of renewable energy in 2020. Allmember states also have the common goal of achievinga 10 per cent share of energy from renewable sourcesin transport, and it is also stated that increased energyefficiency, particularly in the transport sector, is vitalfor achieving the target.With increasing population growth, water usage andpollution from agriculture and industry, the pressureon our fresh water resources and ecosystems has beenmounting during the last century (Hassan, 2005). On aglobal scale we are facing a situation where problemsdue to water scarcity and decreasing water quality arereaching critical levels. The strained situation of ourwater resources will most likely become even worsein many parts of the world due to population growth,increasing economic activity and the effects of climatechange (Postel, 2008; Jackson et al., 2001; Bates et al.,2008). In Europe many of these pressures are being feltand between 1973 and 2000 the EU responded to someof these concerns by developing policy in the watersector by means of five environmental action programs(Chave, 2001). These programs treated a number ofissues related to water pollution and improving thequality of natural waters in the EU. This work resultedin a number of separate directives dealing with issuessuch as urban waste-water treatment (EEC, 1991/271),quality standards of drinking water (ECC, 1980/778)and protection of natural habitats (ECC, 1992/43).The directives dealing with the water sector hadhowever been developed to deal with specific problemsand there were concerns that a comprehensiveprotection of our water resources was missing andsome crucial issues, such as groundwater protectionand water quality, were not sufficiently addressed.This led to the start of negotiations for a frameworkdirective providing more comprehensive protectionof EU water resources (Chave, 2001). The ensuingWater Framework Directive (WFD) (EC, 2000/60)establishes a framework for the protection of inlandsurface waters, transitional waters, coastal waters andgroundwater, which prevents further deterioration andprotects and enhances the status of aquatic ecosystems,terrestrial ecosystems – with regard to their waterneeds – and wetlands that depend directly on aquaticecosystems. The WFD also promotes sustainablewater use based on a long-term protection of availablewater resources and aims at enhanced protectionand improvement of the aquatic environment. Theoverarching goal is for all water bodies to achieve2


stockholm environment institutegood chemical and ecological status by 2015 with thepossibility of extension in reaching these targets by2027. The passing of the Water Framework Directivein 2000 is unique since it combines and coordinates thediverse water legislation that had been in force up untilthen and creates one instrument that covers the watersector as a whole (Chave, 2001).3


constant concessions under changing circumstancesImplementation of the RES in SwedenSweden has a relatively long history of using policyinstruments to decrease carbon dioxide emissions.The first carbon dioxide tax, which is still in force,was introduced in 1991, and is levied on emissionsfrom all fuels except bio-fuels and peat (SEA, 2008a).Sweden also participates in the EU emission allowancetrading scheme, which is a climate policy instrumentwithin the EU’s ECCP climate change program thataims to achieve the emission reduction commitmentsof the Kyoto Protocol. In Sweden about 35 per cent ofgreenhouse gas emissions are covered by the emissionallowance trading scheme (ibid). A third policyinstrument is the Renewable Electricity CertificateSystem, which is a market-based support systemto incentivize the expansion of renewable energyproduction in Sweden. The Renewable ElectricityCertificate System was introduced in 2003 and is oneof the most important tools for reaching Sweden’scommitment towards the RES of a 49 per cent share ofrenewable energy by 2020 (SEA, 2009a).The law that introduced the Renewable ElectricityCertificate System (SFS, 2003:113) and the ensuingregulations from the SEA (STEMFS, 2009:3) specifyThe Swedish electricity sectorThe Swedish electricity sectorwas deregulated in 1996 froma planned to a market-basedsystem. The framework conditionsfor the electricity market areset by regulations but the actualcommercialization of electricitytakes place on the Nord PoolSpot exchange. Nord Pool Spotis a market place for producers,energy companies and largeconsumers on which they can buyor sell electrical energy. Norway,Sweden, Finland, Denmark andEstonia participate in the NordPool Spot exchange and in 2009the marketplace had a turnoverof 288 TWh representing morethan 70 per cent of the total consumptionof electricity in the Nordiccountries (Nordpool 2010).The Swedish Energy Agency(SEA) is the central governmentagency for national energy policyissues and is the agency responsiblefor the emissions tradingscheme, the Renewable ElectricityCertificate System and climate researchin connection with energypolicy. The Renewable ElectricityCertificate System is a marketbasedsupport system to increasethe production of electricity fromrenewable sources and peat. It isone of the main mechanisms forreaching Sweden’s commitmenttowards the RES.The Swedish National Grid(SNG) is the transmission systemoperator and is responsible forsecuring electricity supply in theSwedish grid and ensuring thatthe balance of supply and demandis kept constant in the grid.The main sources of electricityproduction in Sweden are specifiedin Figure 1.Hydropower65.3Nuclear power50Combined heat and power9.7Industrial back pressure powerWind powerCold condensing power0.42.55.90 10 20 30 40 50 60 70Figure 1: Sources of electricity production in Sweden in 2009 in TWh (out of a total of133.8 TWh) (SEA 2009b)TWh4


stockholm environment institutethe conditions and type of facilities that can receiverenewable electricity certificates. The system iscurrently set to run until 2030 and all electricitysuppliers are required to buy certificates correspondingto the particular portion of their total electricity salewhich creates demand. The quota should reach amaximum of 17 per cent of total electricity sales anddecrease to 4 per cent in 2030. The aim is to produce25 TWh more renewable energy by 2020 comparedto 2002. Apart from peat, which is not a renewableenergy source, there are a number of renewable energysources that are entitled to certificates such as wind,solar, wave and geothermal energy and biofuels. Onlycertain hydropower production facilities are allowedto participate in the certificate scheme. These are:small-scale hydropower facilities with a maximuminstalled capacity of 1.5 kW per pro¬duction unit; newplants; plants that have resumed operation; the shareof increased production capacity from existing plants;and plants that are no longer economically feasibledue to injunctions from authorities or extensiverebuilding (SEA, 2009a). Between 2003 and 2008there was an increase in renewable energy productionof 8.5 TWh. In terms of energy production capacity,the most important increase occurred in biofuelproduction with an increase of one GW. During thesame time wind power production capacity increasedby 0.4 GW while hydropower increased by 0.29 GW(Eurostat, 2010).There have also been several policy initiativescoming from the RES in the government’s Climateand Energy Bill (Govt. bill, 2008/09:163). The billspecifies a plan of action for renewable energy whichincludes a revision of the production goal level of therenewable electricity certificates to 25 TWh and anational planning frame for wind power developmentof 30 TWh. There have also been additional billswith the aim of both facilitating the net connectionof new renewable energy production units (Govt. bill2009/10:51) and simplifying the concession processfor new wind power facilities (Govt. bill, 2008/09:146). Overall the government aims to create a thirdmajor source of electricity production, apart fromhydropower and nuclear power, from combined heatand power production, wind power and other renewablesources in order to increase the security of supply. Thisis clearly stated in the government bill: “To reduce thevulnerability and increase supply security, a third legfor electricity supply should be developed and hencereduce the dependence on nuclear and hydropower.To achieve this, combined heat and power production,wind power and other renewable energy productionhave to supply a significant part of electricityproduction” (Govt. bill, 2008/09:163).Is there a role for hydropower in thefulfillment of the RES?Between 1918 and 1975 Sweden experienced asignificant and rapid expansion of hydropowerproduction. In 1975, a final target for hydropowerproduction of 66 TWh a year to be achieved by 1985was set by the government. This was a clear signal ofthe level of hydropower production that was politicallydesirable. The target was given ample support by theSwedish Parliament and was on several occasionsconfirmed by the Parliament in the following decade.The last general hydropower plan in 1984, for example,refers to this 66 TWh target (Govt. bill, 1983/84:160)and it was also included in the Energy Policy Bill of 1985(Govt. bill, 1984/85: 120). By 1987 the protection ofrivers also started to become institutionalized with thelaw that specified rivers and tributaries that should beprotected from hydropower production (SFS, 1987:12).The number of protected rivers and tributaries has sinceincreased and at present four of the major unexploitedrivers and many of the remaining unexploited riversand tributaries are explicitly protected according tothe Swedish Environmental Code. In practice Swedenreached the 66TWh production target in the 1980swhich, in combination with low electricity prices andthe increasing judicial protection of rivers, has ledto a halt in new hydropower development of majorimportance in Sweden during the last few decades.At present there are mixed signals coming from theSwedish government relating to the role of hydropowerin the fulfillment of the RES. Hydropower is notspecified as a source of increased energy production inthe 2009 Climate and Energy Bill and the focus of thebill is rather on reducing the dependence of Swedishelectricity production on nuclear and hydropowerproduction (Govt. bill, 2008/09:163). At the sametime, the law and regulations that govern the renewableelectricity certificate system, which is one of the maintools for the fulfillment of the RES, grants subsidiesfor hydropower production plants. This duality of aimsis also present in the directive from the Ministry of theEnvironment to the public commission of inquiry onwater operations (SOU, 2009:42). The directive asksfor a review of changes to the Environmental Code thatwill benefit a high production capacity of hydropowerwithout undermining other significant environmentaland fishing interests.There are a number of actors – mainly Swedenergy(SE) which is the stakeholder organization for thecompanies producing, distributing and tradingelectricity in Sweden – that are pushing for a reviewof this de facto halt in significant hydropower5


constant concessions under changing circumstancesdevelopment in Sweden (SE, 2009). Swedenergyis also the initiator of a private inquiry with theinstruction to propose measures to maintain the currentproduction capacity of hydropower and render futuredevelopment of hydropower possible. Other actorsdefending fishing and environmental interests, mainlythe NGOs Riversavers, the Swedish Society forNature Conservation and the Swedish Sport FishingAssociation, are working for the continuation of thestatus quo and to ensure that any possible increase inhydropower production is to come from refurbishmentsof existing plants and not from new plants.Most of the current Swedish hydropower facilitiesare old and in need of refurbishment. It is estimatedthat the rate of refurbishment will be in the order of2.5 billion SEK/year in the coming decade (Elforsk,2010). At present it therefore appears most likely thatthe main increase in hydropower production will comefrom increased efficiency through refurbishment ofexisting power plants. There are calculations that pointtowards a potential of a 5 per cent increase in electricityproduction from such refurbishments although thereare several examples of much higher efficiency gainsthat could come from such refurbishments (Bernhoffet al., 2003). A marginal increase in production couldalso come from the construction of new small-scalehydropower plants although such development iscontested (SSFA, 2010).6


stockholm environment instituteImplementation of the WFD in SwedenAs a result of the passing of the WFD, five RiverBasin District Authorities (RBAs) were set up inSweden in 2004. The new RBA administrative borderswere set in accordance with the five main river basinsin the country. The new authorities were located inconnection to already existing county administrativeboards. There are also advanced plans for a newnational Sea and Water Agency that will take over theresponsibilities relating to the sea and water from theSwedish Board of Fisheries (SBF) and the SwedishEnvironmental Protection Agency (SEPA). Thisincludes overall responsibility for national coordinationof the RBAs and national activities resulting from theWFD and other relevant EU directives concerning thewater environment (SOU, 2010:8).The overarching goal of the WFD is that no waterbody should experience a decrease in water qualityand that all water bodies should achieve a good statusby 2015, with the possibility of extension to 2027.A national monitoring program has been set up toclassify the status of each water body according to afive-class scale. The best status that is given to a waterbody is “high quality” while decreasing water qualityis given the status “good”, “moderate”, “poor” and“bad”. The initial results of the monitoring programthat are set up provide a baseline from which totrack the effectiveness of measures to improve waterquality. The status of surface water is measured interms of biological, chemical and hydromorphologicalcharacteristics and the overall status of the water isMain actors and agencies governing Swedish hydropowerSwedish hydropower is governedthrough a judicial systemin which concessions are grantedthat specify the conditions underwhich operations can take place.The concessions have legal forcesince they are granted by environmentalcourts and in addition tothis have no time limit.There are five regional environmentalcourts in Swedenwhich constitute the first instanceof hearing and decision regardingnew and revised concessions.Their rulings may be appealed tothe Environmental Court of Appealand in the final instance tothe Supreme Court after which thesentence becomes legally binding.Between 1918 and 1999 thefirst instance consisted of specialwater courts.The main consultation bodiesthat can provide input and considerproposed new or revisedconcessions are the relevant municipalitiesand individuals at thelocal level and the relevant countyadministrative boards at the regionallevel. At the national levelthe main referral agencies arethe Legal, Financial and AdministrativeServices Agency (LFASA),SEPA, and SBF. In the process ofrevising and granting new hydropowerconcessions the LFASAworks to ensure that the generalrules of consideration of the EnvironmentalCode are fulfilled andrepresent general environmentalinterests in concession trials. Thecurrent or future operator of thehydropower station participatesas the initiator of the proceedingsfor new concessions and eitheras the respondent or initiator inproceedings for a revision of anexisting concession. Operators,municipalities, county administrativeboards, the LFASA and SEPAcan initiate proceedings for areview of an existing concession.There are also several stakeholderorganizations that are activein the debate and governance ofSwedish hydropower such as thetrade organizations Swedenergyand the Confederation of SwedishEnterprises and the NGOsRiversavers, the Swedish Societyfor Nature Conservation and theSwedish Sport Fishing Association.The county administrativeboards are the main supervisingagencies of hydropower plantsand can inspect the facilities andissue injunctions and prohibitionson the operators to ensure thatthe concession and the SwedishEnvironmental Code is followed.Such injunctions and prohibitionscannot however restrict the originalautonomy granted to the operatorin the existing concession.River Basin Authorities (RBAs)were created in conjunction withthe implementation of the WFD inSweden. They function as regulatoryagencies and mainly have anindirect effect on the hydropowersector by applying environmentalquality standards and creatingprograms of measures. Thesedocuments are binding only onpublic authorities, such as countyadministrative boards and municipalities,who are responsible fortheir implementation.7


constant concessions under changing circumstancesgenerally determined by the indicators that show themost negative value. This means that a water bodywith good chemical status but poor biological statuswill be classified as having overall poor status. Atthe end of 2009, the RBA produced the first set ofRiver Basin Management Plans including programsof measures, which specifies the measures thatare needed within each water basin to reach theoverarching goal of good water. This managementprocess is adaptive in that it follows a six-year cyclewhereby progress is evaluated and the river basinwater management plans reviewed.The programs of measures specify a number of tasksthat should be completed during the first managementround by 2015. Most of them relate to more researchand information that different government agencieshave to carry out and provide. County administrativeboards are for example required to establish a plan ofmeasures prioritizing water bodies that are at a risk ofnot reaching good ecological status (GES) and assistthe LFASA in investigating and setting strategies toattend to bypass barriers and other physical alterationsaffecting water bodies. The WFD also introduces anumber of instruments designed to reduce potentialconflicts with other sectors and societal goals whentrying to reach GES in all waters. There is also thepossibility to designate water bodies as heavilymodified (HMW) or artificial, where the water qualityrequirement becomes “good ecological potential”(GEP) instead of “good ecological status” (GES). GEPis defined as the water quality that is achieved “afterall appropriate improvement measures have beentaken to improve the ecological status in the waterbody, without causing significant adverse effects onthe environment generally or on the activity for whichthe modification of the water body has been made.‘Appropriate improvement measures’ are understoodto be measures that have a significant ecologicaleffect” (Bothnian Sea, 2009). This designation couldbe given to infrastructure such as hydropower stationsand harbors where the aquatic environment is alreadyheavily modified and measures to achieve GES wouldhave significant adverse effects on the activity forwhich the modification has been created or wouldentail a disproportionate cost.In the initial round of river basin management inSweden all water bodies connected to large hydropowerstations with more than a 10 MW potential have beengiven the status HMW (Bothnian Sea, 2009). The 10MW limit is only a rule of thumb and in relation tomedium and small hydropower, with less than a 10MW potential, the first step of the RBA is to make amore thorough inventory to investigate which waterbodies adjacent to hydropower stations should bedesignated as HMW. This rule of thumb is based on theassessment by the SEA that the load balance potentialthat large hydropower stations provide to the electricgrid is crucial and provides an additional value tothe renewable energy produced (SEA, 2008c). Theprotection of load balancing potential has been deemedmore critical than that of renewable energy productionin general. Large-scale hydropower production hasconsequently been given priority for the designation asHMW since it is the largest hydropower dams – around10 per cent of the total amount – that supply roughly97 per cent of hydropower production (SEA, 2008c).Although the quality requirements for GEP are lessstringent than those of GES, quality-improving measureswill be needed in HMW as well. The designation ofHMW and the improvement measures that are neededare currently being discussed at both EU level (EI, 2009)and national level in Sweden. The general starting pointof the RBA in the first management round is that mostHMWs at present have moderate ecological potentialwhich means that there are improvements that shouldbe made to achieve GEP (Bothnian Sea, 2009). Frominterviews with one of the RBAs it appears that themeasures that are being discussed in Sweden in relationto hydropower are to create bypass channels for fish,increase or create minimum flows of water and somemeasures implemented in hydropower dams are toimprove the conditions for beach and river bottomvegetation. A more detailed investigation on a caseby-casebasis is necessary to decide on specific andappropriate measures for each HMW. The BothnianSea RBA has despite this specified that they expect thatrestoration of water bodies will result in the constructionof at least 55 new bypass channels in relation tohydropower dams and lake regulation dams in theirdistrict (Bothnian Sea, 2009).Hydromorphological changes, among other things dueto hydropower production, are specified as one of themain problems in all of the RBAs and particularly inthe two most northern water districts of Sweden. Theprograms also specify some general costs that theimplementation of the programs will incur. These costsare very rough and only an estimate on the part of theRBAs but they do give an indication of the extent ofactivities contemplated during the first managementround. There is a spread among the different RBAsof costs of between approximately six MSEK and 18MSEK per year for measures completely or partiallyrelated to hydropower dams, which indicates the levelof activity planned in order to reach GES and GEP inthe water bodies affected by hydropower production(for a complete list see appendix 2).8


stockholm environment instituteEnvironmental “quality objectives” vs “quality standards”The Swedish EnvironmentalQuality Objectives form theoverarching framework for Swedishenvironmental policy. Theyare political goals that are nonbindingin nature. They consist ofa total of 16 environmental objectives,the majority of which areintended to be reached by 2020.These goals range from “naturalacidification only”, “a good builtenvironment” to “sustainableforests”. The general idea is thatthe environmental quality objectivesare to be reached throughvoluntary initiatives, economicand informative instruments andonly in the final instance throughlegislation. There is however nodirect mechanism that specifieshow this is to be done, nor amentioning of the environmentalquality objectives in the SwedishEnvironmental Code (Dalhammar2008). The implementationof the environmental quality objectivesis therefore rather unclearand incomplete. This canbe seen by the fact that currentlyonly one objective is expected tobe met in the set timeframe whilesix will require additional effortsand nine will be very difficult orimpossible to reach (EQO 2010).Objective number eight “flourishinglakes and streams” is of specialrelevance for hydropower. Itis however only a selection of riversand streams, roughly 700, ofhigh conservation value, that aredirectly affected by the environmentalquality objectives.Environmentalquality objectiveForecastfor 2020TrendEnvironmentalquality objectiveForecastfor 2020Trend1. Reduced climate impact*2. Clean air9. Good quality groundwater10. A balanced marine environment, flourishingcoastal areas and archipelagos3. Natural acidification only4. A non-toxic environment5. A protective ozone layer6. A safe radiation environment7. Zero eutrophication8. Flourishing lakes and streams11. Thriving wetlands12. Sustainable forests13. A varied agricultural landscape14. A magnificent mountain landscape15. A good built environment16. A rich diversity of plant and animal lifeFigure 2: All Environmental Quality Objectives and status forecast in 2007 (EOC 2007)Environmental quality standardsare a type of legally bindingpolicy instrument introduced bythe Swedish Environmental Codeof 1999. An environmental qualitystandard may, for example,lay down the maximum permittedconcentration of a substancein air, soil or water. Since they area binding policy instrument, thereare various avenues for ensuringtheir implementation. New enterprisescan for example be deniedconcessions if they contribute tothe contravention of an environmentalquality standard. The WFDhas been implemented in Swedishlaw in the form of environmentalquality standards where it is requiredto reach the environmentalquality standard “good ecologicalstatus” or “good ecologicalpotential” in all water bodies by2027. The judicial significanceof the WFD environmental qualitystandards is however unclearsince the government submitteda bill that differentiates between“limit value” and “other” environmentalquality standards whereonly “limit value” environmentalstandards allow for the mostforceful compliance tools (Govt.bill 2009/10:184).9


stockholm environment instituteThe present system directs future implementationThe main tool for ensuring that the environmentalquality standards are reached is through theprogram of measures that have been drawn up by theRBAs. These programs of measures are targeted atpublic authorities and have no direct effect on privateentities and persons. Private companies and persons areaffected by the programs of measures in the same wayand with the same tools as before the implementationof the WFD, for example by supervision and reviewof concessions and general regulations (SEPA, 2010).This means that the present judicial and administrativesystem regulating hydropower is the primary toolwith which the environmental quality standards are tobe fulfilled in Sweden. A closer look at the history ofhydropower and how the judicial and administrativesystem is constructed and functions is therefore neededto understand what the effects of the RES and WFDcould be in Sweden.The water law of 1918 can in many ways be seen asthe backbone of the current Swedish judicial andadministrative system regulating hydropower. In manyways it was a law that favored the rapid expansion ofhydropower production in the country (Vedung andBrandel, 2001). One of the main changes it introducedwas that it gave landowners owning the majority ofland along a river the right to expropriate the landof the remaining landowners when constructinghydropower plants. The law also shifted the discretionof hydropower concessions from local to national levelby creating special national water courts. The creationof water courts was also meant to make the process ofconcession treatment judicial and technical rather thanpolitical in nature. Vedung and Brandel note that duringthe first half of the 20th century, unlike many othermajor issues in Sweden, there was in essence completeagreement among the political parties regarding thenecessity and desirability of hydropower expansion(2001). The water courts were therefore constructedin such a way as to be able to grant concessions forhydropower production without political involvementin the majority of cases. The judicial nature ofconcession treatment also means that the concessionshave a binding effect that would normally requirejudicial proceedings to be altered.In the 1918 water law there were few generallimitations on the amount of water that could bediverted for hydropower production. It was possible togrant concessions which allowed for full appropriationof the water flow for electricity production. The mainexception referred to limited sections of 58 specificrivers, referred to as “Royal Arteries” (“Kungsådror”),where important shipping, fishing and timbertransportation activities were carried out. Up to athird of the natural water flow could be required forpreservation without compensation in these cases(Strömberg, 1983). Hydropower concessions were alsogranted with no time limit so proceedings for a reviewhad to be initiated either by the company in possessionof the concession or one of the public authorities withthe right to bring an action to the water court.The water law of 1918 was in force in Sweden until1983 when a new water law entered into force. Thenew water law introduced important changes suchas general limitations on the compensation thatowners of water power rights were entitled to whenpart of the water flow was diverted for shipping,fishing and timber transportation interests. Generalenvironmental interests were also included as alegitimate interest for which the same limitation oncompensation would be applied. The general rulewas that hydropower producers should accept a lossof between 5 and 20 per cent of the production valuewithout compensation. The main limitation howevercame from the transitional rules that limited theuncompensated loss to 5 per cent of production valuein all reviews of concessions given according to theold water law of 1918 (Strömberg, 1983). In 1999 theSwedish Environmental Code came into force whichgathered together a range of existing environmentallegislation. The water law was included and the watercourts changed their name to environmental courts.The limitations on compensation were not changedwith the passing of the Environmental Code.When the new water law of 1983 was introduced, the vastmajority of hydropower plants and dams currently in usehad been constructed. Of a total of 3,727 hydropowerstation and dam concessions that have been consideredby the water and environmental courts, 3,393 have beenconsidered according to the 1918 law or older legislation,261 according to the 1983 water law and 73 accordingto the Environmental Code. There are also a total of 78concessions that have been reviewed in accordance withthe Environmental Code (SOU, 2009:42). These figuresare presented in Figure 3.Some of the more important features of the Swedishconcession system are therefore that the vast majority ofconcessions in place today have been granted accordingto the 1918 water law where full appropriation of thewater flow of parts of rivers for power production was11


constant concessions under changing circumstanceshydropower plants. The LFASA has been the mostactive public authority and has, with the assistance ofthe SBF, mainly initiated reviews of concessions forfishing and general environmental interests.Figure 3: Status of concessions of hydropowerplants and dams in Sweden in 2009 (Source SOU 2009:42 p. 95)not uncommon. The concessions that are grantedhave no time limit and are binding in nature whichmeans they need to be reviewed in an environmentalcourt of law to be modified. With the new water lawof 1983 general environmental concerns became alegitimate interest for limiting the appropriation ofwater flow for hydropower production. A generallimit on compensation for loss of power productionwas also set at between 5 per cent and 20 per cent ofthe production value for new hydropower stations.For reviews of concessions given according to the1918 water law the hydropower owners only needto accept a loss of a maximum of 5 per cent of theproduction value without compensation when theirconcession is up for review.Judicial concession trialsConsidering the binding nature of hydropowerconcessions in Sweden, a judicial concession trialis usually the only way to carry out any significantchanges that deviate from the original concession.The claimant that initiates the proceedings isresponsible for carrying out the necessary trialsand investigations and has to pay the cost of theproceedings. It is normally the proprietor of the plantthat has to carry out and finance any changes to thehydropower plant resulting from a change to theconcession. During the last few decades there havebeen three main issues that have instigated judicialconcession trials. Concession change trials haveusually been initiated by the operators to increasedam safety and for refurbishments leading toincreased efficiency and power production of existingThe process of a judicial concession trial is oftenvery complex. There are a number of issues that cancomplicate and protract the process. There are variousdams that were constructed prior to 1918 and runaccording to prescription from time immemorial. It isin these cases unclear what part of the water activity isregulated or not. When a concession has been given,at times crucial information about the concessionis missing since parts of the original concessiondocumentation might have been lost. When there is achange to a hydropower station or dam, for examplethrough refurbishment, which requires a change tothe concession, there is often disagreement regardingthe extent of examination that is necessary in theconcession trial. The burden of evidence for theclaimant can also be very high and when providingevidence of for example the biological effects of achange, there are significant uncertainties in theresults that can be hard to eliminate. It can also takeyears before the verdict becomes legally binding,since the verdict from the Environmental Court canbe appealed to the Environmental Court of Appealand in the final instance to the Supreme Court. Forthe judicial concession trial, and in particular areview process, to be efficient it is therefore vitalto have some sort of prior agreement between theresponsible authority and operator before judicialdeliberations begin (LFASA, 2005; Bothnian Sea,2008). When there is disagreement between theinitiator and the respondent, the nature of the judicialconcession process opens up the possibility of a widerange of strategies that can be used to prolong theprocess if it is in the interest of either of the actors.Consequently, the administrative resources necessaryto carry through a review to improve the water statusare considerable, and it is estimated that currently 2/3of the total resources spent on restoration projectsare dedicated to administrative tasks (BothnianSea, 2008). One of the most protracted processes inSweden occurred due to litigation resulting from thedamage caused to fish stocks from the constructionof Stornorrfors hydropower station. The litigationprocess lasted 45 years, between 1962 and 2007,until the parties finally agreed on appropriatecompensatory measures in the form of a settlementout of court. This is an extreme example, but it is notrare for a concession process to be very complicated,resource-intensive and to require many years in caseswhen the appellant and defendant are in completedisagreement.12


stockholm environment instituteA typical hydropower judicial concession trial processThe concession process followsthe same rules of procedure as anormal court case following theCourt Matters Act (1996:242) andthe verdict is based on the considerationslaid down in the SwedishEnvironmental Code (1998:808),the Water Operations Ordinance(1998:1388) and the Act ContainingSpecial Provisions concerningWater Operations (1998:812).One of the main principles thatshould guide rulings, according tothe Environmental Code, is a costbenefitanalysis of the proposedproject.Changes to the water environmentrequired to build and run hydropowerstations – or importantchanges to current hydropowerstations – are considered wateroperations that will have significantenvironmental impact. Wateroperations with a significant environmentalimpact require a judicialconcession trial process in anenvironmental court according tothe Environmental Code.The initiator of proceedingshas to provide a written applicationto the court with the necessarybackground information tobe able to consider the request.In the case of new projects, anEnvironmental Impact Assessment(EIA), as laid down inchapter six of the EnvironmentalCode, is required, which includesconsultation with relevantauthorities, organizations andstakeholders that could be affectedby the change. In concessionreviews there is no requirementfor an EIA, but it is recommendedthat the consultations and documentationprovided should havedepth and quality similar to thatof an EIA (SEPA 2007).A public notice is made of therequest and the full applicationdocumentation is sent to the relevantauthorities and stakeholdersfor consideration. These bodiesand individuals are allowedto send written replies arguingfor their standpoints to the court.The initiator is allowed to reply tothese standpoints after which themain hearing is scheduled. Duringthe main hearing, the partiesconcerned can present and arguefor their positions. If deemed unnecessary,the court can choosenot to summon a main hearingand take a decision on the casebased on the written documentationprovided by the parties. Inimportant and contentious casesthe court can obtain a decisionfrom the government before averdict is given. The normal timefor a complete concession processranges between four monthsto several years depending uponthe complexity of the case andthe level of agreements betweenthe parties concerned. The rulingcan be appealed to the EnvironmentalCourt of Appeal and inthe final instance to the SupremeCourt after which the ruling becomeslegally binding.Apart from the passing of the Environmental code in1999, there have been several political statements infavor of improving the biodiversity of the regulatedwater ways in Sweden. One of the most importantis the Swedish environmental quality objective“Flourishing lakes and streams” (EnvironmentalObjectives, 2010). In 2004 a motion was passedin parliament which states the intention to thegovernment to prescribe that bypass channels for fishbe constructed in all regulated water ways (Motion2005). Despite this, there has been an extremelyslow process of review of concessions in Sweden,which can be seen in the number of concessions thathave been reviewed according to the EnvironmentalCode between 1999 and 2009 (Figure 3). Only 78concessions, out of a total of 3,727, were reviewedduring this time. Considering that 3,393 of theconcessions now in force have been granted accordingto the 1918 water law or older, it is unlikely that thislimited activity is due to a lack of cases in which areview would be granted in light of the requirementsof the Environmental Code.When trying to understand this slow pace, oneimportant clue is the history and setup of the Swedishconcession system and the diverging interests of theactors, which often prevents the achievement of evenminimum agreement prior to reviews. In practicethe reviews that have occurred have usually led to awater spill that translates to five per cent productionloss for bypass channels for fish and other biodiversityinterests in the revised concession (SOU, 2009:42).This loss has to be accepted by the operator accordingto the Environmental Code and is not compensatedfor by the State. By entering into a review process,the hydropower owner can therefore be certain thatthe result will be a loss of revenue if they are inpossession of a concession granting water spill thattranslates into less than 5 per cent of production value.In these cases, it is in the interest of operators to tryto limit the amount of reviews that are initiated andwhen they occur, to try to slow the process down asmuch as possible. This issue was explained by therepresentative of Riversavers when referring to a failedprocess of reaching an agreement that included various13


constant concessions under changing circumstancesOverview of the current status of concessions for water operationsKnowledge of the current status ofconcessions for water operationsin Sweden is only partial and veryfragmented. Information on concessionrulings is stored in paperform in the five environmentalcourts of Sweden. There is nocommon and accessible databasewhere the information is stored -nor are there general overviewsavailable that provide an overviewof the status of the currentconcessions in force in Sweden.As part of the research for thecurrent report the SBF, LFASA anddirectors of the five RBAs in Swedenwere contacted in order toget an overview of the amount ofhydropower concessions that allowfor 0 per cent water spill inSweden. A concession that grants0 per cent water spill gives theoperator the right to channel allthe water flow of the river throughturbines and in many casesleaves stretches of the river completelydry as the water is divertedthrough tunnels that can stretchup to several kilometers.Both the SBF and LFASA didnot have the required overviewto provide an answer. Three RBAswere able to give an expert judgmenton the amount of concessionsgranting full appropriationof water in their district.Bothnian Sea – Roughly80 per cent of 100 of hydropowerdams in the district.Northern Baltic Sea – Roughly10 per cent of 169 hydropowerdams in the district.Western Sea – Roughly20 per cent of 45 large-scale hydropowerdams (> 10 MW) andaround 7-10 per cent of smallerhydropower dams in the district.power stations in Ljusnan prior to reviews: “They havedelayed the process for ten years by ‘conducting adialogue’, so to speak. It is strategically brilliant; everyyear you can sit and talk in conferences without havingto spill 5 per cent, but only investigate what wouldhappen if you spilled 5 per cent you in fact earn those5 per cent in profit”. (Respondent G)The LFASA is the public authority that initiatesmost of the reviews in connection with fishing andenvironmental interests. It has a limited budget forreviews with only 3-4 members of staff working withthese issues and at present resources for initiating 5-10review processes per year (SEPA, 2009). There aretherefore only a very limited number of concessionsthat the LFASA can bring up for review with thecurrent resources at their disposal. If a review isinitiated without prior agreement with the operator,substantial administrative resources are in additionnecessary due to the nature of the process. Due tothese limitations, and as a result of their interpretationof the demands emanating from the EnvironmentalCode, the LFASA - apart from initiating reviews –seems to be following a strategy of petitioning foran extensive examination in court when an operatorinitiates a concession change trial. “As soon as weneed to change a concession, the LFASA appears…and with them the demand that we need to review thewhole concession.” (Respondent H). As laid down inchapter 25 of the Environmental Code, the initiatorof a concession trial process is responsible for thecosts of the process, for producing the necessarybackground material and usually has to pay the costsof the other involved parties. If the petition for anextensive examination is successful, the operatorwill, as the initiator of the process, pay the costsof the process, those of the involved parties andfor producing the necessary background materials.Such a strategy could greatly increase the amount ofconcessions in force that have been granted accordingto the Environmental Code, since the financialburden, and any extra costs resulting from delays inthe process, would fall on the operators.During the last few years, petitions of this sort have beenstandard both for concession change trials for safetyincreasingmeasures and extended refurbishments. In thecase of safety-increasing measures, the EnvironmentalCourt and higher instances have ruled consistentlyagainst the LFASA, arguing that a limited examinationis sufficient for safety improvements. 4 When it comesto concession change trials for refurbishments, thereare no clear and final verdicts that specify at whatlevel of refurbishment a concession change requiresa limited or extensive examination of the concession.Because of this, there are examples where measures toincrease the productivity of hydropower stations havenot been implemented in order to avoid the risk of anextensive examination: “We initiated some measuresfor increased dam security; we could also have raisedthe dam level 0.2 m and have raised the productivitya fair bit, but then we received these petitions [ofextensive examination] and did not follow it through.We do not want this process” (Respondent H).4 Ruling of the Environmental Court of Appeal of 7 May2009 in case M 5367-0814


stockholm environment instituteThe judicial battle of the extent of examination in concession change trialsDuring the last few years, and continuingup to the present, one of themost important judicial battles takingplace between operators andauthorities in concession trials hasbeen the question of establishingcommon practice regarding the extentof examination when operatorsrequest changes to their originalconcession. The main interest ofoperators in changing the originalconcession is to implement safetyincreasingmeasures and extendedrefurbishments of the plants. Theinitiator of a judicial concessiontrial has to pay the costs of all theinvolved parties, the court processand the necessary background materialto the court.If the changes are examinedand approved through a limitedexamination, the original concessionstays intact and the court onlyexamines the effects and legalityof the proposed changes to the hydropowerstation.If the changes require anextensive examination, thewater operations in question isevaluated and changed in light ofthe current demands emanatingfrom the Environmental Code andother legislation that did not existat the time of the original concessionprocess. This usually resultsin requirements for minimum levelsof flow and other measures toensure that the operations are inline with modern environmentaland safety requirements.The extent of examination thatis required is of strategic importancesince it determines the extentof biodiversity improvementmeasures that will result anddetermines whether operatorsshould bear the cost of a concessionreview or not. Practice wouldappear to have been set with theruling of the Environmental Courtof Appeal in 2009 with the effectthat a limited examinationis sufficient to bring about safetyimprovement measures. Regardingextended refurbishments toincrease the production of hydropowerplants, there is no clearpractice as yet, although there areseveral cases currently in courtdealing with this issue.Generally speaking, it is not in the interest of theoperator to initiate a judicial concession trial if theadministrative costs of the process, the costs ofbuilding and maintaining the necessary installationsand the water diversion for biodiversity run the riskof outweighing the additional efficiency gains thatan extended refurbishment – which would require achange to the concession – provides. As a result of thisrisk, there seem to be cases where the operators limitthe extent of refurbishment that is initiated in order tostay within the granted concession, which often meanschanging the turbines in the existing power stations.By doing this the full potential of efficiency gain fromrefurbishing a hydropower plant is not always reached.“If we put new equipment into an old power station,then we might get 5 per cent more production…if,on the other hand, we use a different technique, likeconstructing new waterways, maybe using more ofthe drop, then we can often get up to 20 per cent moreproduction” (Respondent D)Balancing biodiversity and renewable energyproduction objectives is often delicate and site-specificfor the various hydropower stations. In theory, theSwedish concession system based on the decisions ofenvironmental courts could be a good way to balancethe objectives and implement the WFD and RES inthe coming years. In practice, as we have seen, thelegacy and construction of the concession system issuch that the operators of hydropower plants oftenhave an inherent and intrinsic interest in limitingthe amount of reviews that are carried out. Due tothe many unclear aspects of the present concessionsand the judicial character of the process, there areample possibilities to protract the process and limitthe amount of concession reviews. At the same timethe strategy of the LFASA to constantly push for anextensive examination of the water operations whenan operator seeks a concession change trial alsomeans that the full potential of efficiency gains thatcan be achieved through refurbishments is not alwaysachieved. The actions of operators and regulatorsseem to have led to a partial breakdown in trust andcooperation which means that there are very fewhydropower concessions that can be taken to theenvironmental court with at least minimal agreementbetween the parties. Comments from both sidesillustrate this. A representative from the LFASA,during a presentation, responded to the question ofwhether preliminary voluntary agreements couldbe a way forward in concession trials: “They [oneof the studied energy companies] have stated thatthey do not intend to spill a single drop of water forenvironmental causes. I do not see why we shouldenter into negotiations with them”. In interviews,at a different time, the hydropower manager of thecompany concerned also had strong feelings onthe subject “My opinion is that what the LFASA is15


constant concessions under changing circumstancesdoing…appears to be some sort of vendetta againstthe energy companies in cooperation with the Swedishsport fishing association” (Respondent D).The Swedish concession system has an important taskahead, since almost 90 per cent of all concessionsrelated to hydropower production in force today, 3,393concessions, have been granted according to the 1918water law or earlier. It can be suspected that the levelof consideration given to the aquatic environment inmany of these concessions is not sufficient to reachthe environmental quality standards GES and GEPaccording to the WFD. It is likely that changes willbe necessary to concessions in force today in manycases. The current concession system in Swedenwith concessions that have legal force signifies that ajudicial concession trial is necessary for any significantchanges to a hydropower concession. A judicial trialprocess takes between four months and several yearsdepending upon the complexity of the case and the levelof agreement between the concerned parties. For theenvironmental courts in Sweden to have the slightestchance of addressing more than only a very limitedpart of the concessions in force up until 2027 – thefinal deadline of the WFD – a high level of agreementbetween the parties for quick trials is necessary. Aswe have seen, this is not the case, and at present thesystem is constructed in such a way that the operatorshave an inherent interest in limiting and protractingthe concession review process since a reviewedconcession usually leads to energy and revenue lossesfor the operator. The main public authority representingenvironmental issues at the same time has an intrinsicinterest in pushing for an extensive examination everytime an operator initiates a concession change trialprocess. The actions and strategies of both operatorsand public authorities have led to a situation of highdistrust and conflict between them, which greatlydecreases the effectiveness of the review process andmakes it very unlikely that any substantial changes thatcould be required from the WFD will be implementedin Sweden at a sufficient pace. It also appears that thefunctioning of the system leads to refurbishments ofhydropower stations that do not fulfill the full potentialof possible efficiency gains, which at present limits theimplementation of the RES as well.16


stockholm environment instituteDegree of policy coherencePolicy coherence is a relatively new focus of researchwhich centers on the outputs, implementationand outcomes of different policies and the way theyinteract. When analyzing the policy coherence ofenvironmental policy, it could be viewed as similar tothe relatively well studied field of environmental policyintegration. There are, however, some differences.Environmental policy integration focuses mainly on theintegration of environmental protection into policiesand activities with a view to promoting sustainabledevelopment. This should be carried out by insertingenvironmental requirements broadly into policymakingand policy implementation. 5 The focus is thusmainly on the process of policy-making, while policycoherence analyzes the measures used to implementvarious sets of policy objectives and their outcomes.A useful definition of the concept policy coherence is“the property of two or more sets of policy objectives,instruments and implementation practices being freefrom contradiction, having logical order, clarity andintelligibility” (Nilsson et al., 2010).In interviews with the respondents, the perceivedconflict between the objectives of the WFD and RESwas often mentioned: “There is also a conflict betweentwo environmental issues, the local biodiversity and[global] climate issues” (Respondent E). The mainissue in the debate is that water used for improvingbiodiversity in the water ways, one of the objectivesof the WFD, means losing water for renewable energyproduction, which conflicts with the objectives of theRES. As we have seen, the main policy instrumentto fulfill the Swedish commitments in the RES is therenewable electricity certificate scheme where thegoal is to produce an additional 25 TWh of renewableenergy by 2020 compared to 2002. This expansionis meant to come primarily from combined heat andpower production together with biofuels and windpower development and to some extent from increasedefficiency in existing renewable energy power plants.A national planning frame of 30 TWh has also beenset for wind power development for 2020. There aretwo important implications that come from theseproduction goals.The first relates to the balance between electricityproduction and consumption in Sweden. Theconsumption of electricity in Sweden has beenrelatively stable during the last three years and since5 Definition taken from article 6 of the EC treaty1987 it has, on average, only increased by 0.3 per centeach year (This is illustrated in Figure 4). There are nosigns that the consumption pattern of electricity willchange significantly by 2020. There are, however,forecasts of significant increases in electricityproduction during the same time due to the additionof new renewable production capacity and increasedefficiency in the existing power plants. In the SEA’slong-term prognosis it is calculated that Sweden willhave a surplus in electricity production of 23 TWh in2020 (SEA, 2008b). This is when we take into accountan expansion of renewable energy production farbelow the target of 25 TWh. Wind power productionis for example only estimated to increase by six TWhbetween 2002 and 2020. Sweden is therefore headingtowards a significant energy surplus created almostexclusively from renewable sources. If realized thereare many possible ways that this surplus could beused. The electricity surplus could be exported toother countries, provide the necessary capacity todismantle nuclear power plants and/or to improvethe biodiversity of our streams. This is ultimatelya political decision, but the possible existence ofsurplus electricity production in the coming decadeshows that in terms of total electricity production andconsumption in Sweden, there is a limited overallcontradiction between the implementation of theWFD and RES.The second implication relates to plans for introducingrelatively large quantities of wind power productioninto the electric grid. One of the main problems withwind power is that it is a variable energy source,which means that it cannot be regulated to produce inaccordance with the fluctuating demand for electricity.There is therefore a need for additional power sourceswhich can be regulated to balance the power grid.Storage hydropower is one of the most efficientregulated power sources since it both stores energy andcan be turned on and off at very short notice. The hightargets of wind power production set in Sweden havecreated a significant discussion relating to the ability ofthe electric grid, and electricity production in general,to accommodate production of this new variable powersource. The SNG, the state utility responsible for thenational electric grid, was in 2008 commissioned toinvestigate the effects of a large-scale introductionof wind power production into the Swedish electricgrid (SNG, 2008). One of the main conclusions wasthe calculation that an expansion of wind power of10 TWh would require an additional 1,400-1,800MW of regulating capacity, while an expansion of 3017


constant concessions under changing circumstancesFigure 4: Sweden’s electricity consumption in TWh divided into sectors for the years 1970-2006 (Source: SEA 2008a)TWh would require an additional 4,300-5,300 MW ofregulating capacity. This has been interpreted by someactors to mean that new regulated power sources wouldbe needed for a large-scale introduction of wind poweror, at a minimum level, no regulating capacity may belost in Sweden to enable the large-scale introductionof wind power planned for the fulfillment of the RES(SE, 2010; SEA, 2008c). If this were true, there wouldbe an implicit contradiction between the objectivesof the WFD and RES since the necessary expansionof wind power to fulfill the RES objectives requiresthe preservation of the current levels of hydropowerproduction capacity, which would not leave any scopefor the environmental improvements required in theWFD since they could lead to loss of energy productionand balancing capacity for the electric grid.However, there are calculations that show that theestimated amount of balancing capacity necessaryaccording to the SNG is overestimated (Holttinen etal., 2009) and the more important conclusion is thata need for additional balancing capacity due to theinclusion of wind power is not the same as a needfor an expansion of dispatchable energy productioncapacity. The reason for this is that additionalproduction from wind power means that reservecapacity opens up in the existing energy productionfacilities, in the Swedish case to a large extent fromhydropower. During periods of high wind powerproduction, hydropower stations that were previouslyneeded for base load production in the electric gridwill automatically be turned off and work as reserveand balancing power in cases where wind powerproduction decreases. This means that adding windpower creates reserve power capacity in the existingenergy system (Söder, 2010). A recent study has alsocalculated the effect of adding 30TWh of wind powerproduction to a part of the electric grid and shows thatthe existing hydropower stations in northern Sweden,providing 80 per cent of the hydropower production,have sufficient regulating capacity to balance such anexpansion (Amelin et al., 2009).The Swedish power grid is connected to a larger Nordicelectric grid – with plans to increase transfer capacity inthe coming decades – where balancing services can betraded between countries. This means that Norwegianhydropower can be used to balance the grid in Swedenor that Danish grid operators could purchase Swedishhydropower electricity to balance their grid fluctuations.There are therefore many different factors that interplayboth nationally and internationally and influence thelevel of balance capacity that would be desirable inSweden. More research is necessary to more fullyunderstand the balance capacity necessary to cater forthe planned changes in the Nordic electric grid such asthe construction of nuclear plants in Finland and thelarge-scale integration of wind power in Sweden. Ona national scale, however, the Swedish hydropowercapacity to balance the 30 TWh wind power productiongoal does not appear to be a limitation, nor would itcreate a situation of structural deficit in grid balancecapacity nationally. Therefore, there do not seem to beany serious contradictions between the objectives of theRES and WFD in Sweden and the two policies have ahigh degree of coherence overall.18


stockholm environment instituteIn the RES there are articles dealing with statisticaltransfers of renewable energy and joint projectsbetween member states dealing with the fulfillmentof the requirements in the RES . In the governmentbill on the implementation of the RES, there is alsoan argument that the Swedish state should look intothe possibilities of using these mechanisms to aid otherEU countries in achieving their RES targets (Govt. bill2009/10:128). The production and export of renewableenergy from Sweden could in theory reduce CO 2emissions in other EU countries with more carbonintenseelectricity production. Since climate change is aglobal problem, this would be in the interest of Swedenas it does not matter where in the world CO 2 emissionsare released. This issue also surfaced in one way oranother during the interviews where it was mentionedthat the Swedish Environmental Code and politiciansput much weight on local conservation issues while notgiving enough importance to global climate problems:“Local politicians do not take responsibility forglobal issues in the same way [as local issues] - thatis a problem” (Respondent D). In an EU perspective,some contradiction could therefore exist between theRES and WFD since renewable energy productionloss in Sweden in theory could lead to increased CO 2emissions in other EU countries, as they would notbe able to import as much renewable energy fromSweden. Considering climate change to be a globalenvironmental problem that is more urgent than localbiodiversity loss, it could be argued that Sweden shoulduse all its renewable energy resources to the maximumand export the surplus energy – and provide balancingservices to the electric grid of neighboring countries– to limit climate change as far as possible. With anincreasing interconnection of power grids and the NordPool electricity exchange, it could be envisaged thatthe possibilities of exporting renewable electricity andbalancing services will increase in the coming decades.The biodiversity loss that is occurring simultaneouslyon a global scale is however adding up to a significantglobal environmental problem in the same way aslocal CO 2 emissions are causing global climate change(Rockstrom et al. 2009; Reid et al. 2005; SBD 2010).During the global Millennium Ecosystem Assessment,researchers found evidence that 60 per cent of studiedecosystem services globally are being degraded orused unsustainably due to ecosystem and biodiversitydegradation (Reid et al., 2005). We are also at presentreaching extinction rates of species that are onethousand times higher than the average historic rates,creating significant risks for human well-being andmonetary loss (TEEB, 2010). Habitat destructionand fragmentation is one of the major drivers ofthis biodiversity loss, which is precisely one of themain effects of hydropower production. The globalbiodiversity outlook argues that biodiversity lossand climate change are twin challenges that must beaddressed with equal priority and in close coordination(SBD, 2010). There is even research that suggests thatbiodiversity loss at present is occurring at a rate that iseven more alarming than the pace of climate change(Rockstrom et al., 2009). We are therefore in essencedealing with two important global environmentalproblems, which means that reduction of CO 2emissions without regard to biodiversity loss does notappear to be a viable alternative.Overall there therefore seem to be few seriouscontradictions between the implementation of theWFD and the RES in Sweden. In relation to new smallscalehydropower production, there are however somecontradictory signals. The certificate system, whichis part of the implementation of the RES, providesencouragement for new small-scale hydropowerdevelopments since all stations with a productioncapacity of less than 1.5 MW receive support fromthe certificate system. In a recent review by the sportfishing association, a number of new and plannedhydropower projects in Sweden were identified(SSFA, 2010). Most of these projects are hydropowerstations in existing dams and some completely newprojects. It could be expected that some water flowinto existing small hydropower dams would berequired to reach good ecological status and that thecreation of completely new hydropower dams could berestricted due to the non-deterioration requirement inthe WFD. It is therefore questionable to what extentthe policies are coordinated in this regard since part ofthe RES implementation fuels an expansion of smallhydropower plants which could be hard to combinewith the requirements of the WFD.19


constant concessions under changing circumstancesPolicy implications and suggestionsIn interviews with both operators and authoritiesthere was often agreement that it would be desirableto work with a concession system that allowed for abalance between measures for biodiversity in somerivers with a high environmental potential while beingable to increase the production of hydropower energyin other rivers for example by means of more extendedrefurbishments of existing plants. This often commondesire for a smoothly functioning and effectiveconcession system capable of making balanced caseto-casedecisions within a broader drainage basinand national context is far from the way the Swedishconcession system works at present. Part of the reasonfor this is that there is no comprehensive overviewof the current status and extent of water works andhydropower concessions in Sweden. One of the maintasks of the RBAs is to deal with this lack of coherentinformation at a national scale so it is likely thatknowledge of the hydropower sector and its currentconcessions will improve within the following years.A more significant barrier to an effective and timelyimplementation and balancing of the objectives inWFD and RES is the set-up and functioning of theSwedish concession system. Operators normallylose energy production and revenue from a review oftheir concession. This means that there is an inherentinterest on the part of the operators to limit the extent ofconcession reviews since each additional year with theold concession means an additional year with higherrevenues. A review initiated for general environmentaland fishing interests is therefore often initiated withoutprior agreement. This means that the judicial reviewprocess is usually slow and protracted. At the sametime, the strategy adopted by the LFASA to push for aan extensive examination when an operator initiates aconcession change trial for hydropower refurbishmentshas also led to extended judicial processes concerninghow comprehensive the concession trial should be whena hydropower station is refurbished. There are examplesof operators limiting the extent of refurbishment, andthereby limiting the amount of increased efficiencythat is gained from the refurbishment, in order to staywithin the existing concession and avoid the risk of ajudicial concession trial.Considering the way the current system functions andthe restraints and interests of the concerned actors,these actions and strategies are logical but lead to abreakdown of trust and cooperation between the actorsand decrease the efficiency of the current concessionsystem. Important resources are invested in complexand prolonged judicial processes with limited positiveresults. With its current performance the concessionstrial system is working at a speed that is insufficientfor the implementation of the WFD – in cases whereany substantial changes to the Swedish hydropowerstations are required – and in addition it limits the shareof hydropower in the implementation of the RES. Apersonal reflection of a representative of an RBA onthe slow process of concession reviews is that a generalregulation breaking through the legal force of theexisting concessions would most likely be necessary toreach the requirements of the WFD within the set timelimit. Such regulations could contain a minimum levelof flow and could possibly include bypass channelsas a standard with the possibility of exemption fromthis requirement in special cases. A general rule of a5 per cent flow, for example, that should be conservedfor biodiversity, would in some cases not be sufficientto improve the biodiversity of the river, and in othercases less flow could be sufficient to reach criticalvolumes of water for biological processes and to reachGES or GEP of the water body concerned. A generalregulation would therefore not always be the best wayof reaching a reasonable balance between biodiversityand renewable energy interests in the hydropowersector.It is however possible to remove the most significantbarrier identified for the effective functioning of thecurrent concession trial system. This can be doneby changing the incentives of the involved actors toimprove their cooperation in the review process.This would be achieved by creating a generalenvironmental compensation scheme from whichthe necessary resources would be taken to fullycompensate the operator concerned for changesemanating from a reviewed concession. Operatorswould in this case not risk losing revenue from anupdated concession and would not have an incentiveto protract the judicial process nor limit the amountof concession reviews that are carried out. The reviewprocess would with such a change be able to proceedmuch more efficiently and balance biodiversity andrenewable electricity production objectives on acase-to-case basis. The available resources createdby the general compensation scheme could also beused much more flexibly based on where the greatestbiodiversity gains could be achieved. The size of sucha scheme would, of course, be a political decision, butcould have as a reference point the 5 per cent of theproduction value that operators are required to bearwithout compensation in a review process accordingto the Environmental Code. With such a change the20


stockholm environment institutecurrent system would be able to take a more holisticapproach since agreements between operators andauthorities, covering several hydropower stations ina river, prior to actual concession reviews would bemuch more likely. So far this has only happened in onecase, Harmangersån, and was attempted but failed inLjusnan. This would greatly improve the possibilitiesof working on a river basin scale and increase theeffectiveness of the review process.This possibility has been discussed in the SwedishGovernment Official Report “Water Activities” theconclusion of which was that they could not proposesuch a change since a more effective concession trialsystem would lead to hydropower production lossesdue to increased reviews in the interests of biodiversity.This would not be in accordance with the initialguidelines of the inquiry that focused on measures thatwould promote a high hydropower production capacity(SOU, 2009:42). A relative, or even actual, increase inhydropower production could however be a possibleresult of such a change. With more efficient functioningof the concession system – and with the operators fullycompensated for any production losses for biodiversityinterests with updated concessions – operators wouldbe more inclined to realize extended refurbishments,requiring changes to the concessions, which would yieldhigher efficiency gains in the refurbished hydropowerplants and increased renewable electricity production.An significant part of the energy loss that resultsfrom diverting water for biodiversity requirements toachieve good ecological potential could in this casebe compensated for by increased efficiency gainsfrom extended refurbishments of the hydropowerstations. The total loss of potential renewable energyproduction in Sweden would with such a solution be ata significantly lower level than what could be expectedfrom the water spill necessary for the improvement ofthe ecological status and potential of the Swedish waterbodies. As we have seen, there are calculations of a5 per cent potential increase in production from basicrefurbishments – such as replacing existing turbinesand generators – while extended refurbishments, inwhich the water intake capacity of the station and dropis increased, could lead to even higher efficiency gains.It is for example projected that the refurbishment ofBlankaström, Knislinge, and Rundbacken will leadto electricity production increases of 50 per cent,75 per cent and 114 per cent respectively (E.ON2011). There is therefore an important potential forwin-win projects where the increased efficiency of therefurbished hydropower plants would provide scopefor both biodiversity improvements and increasedenergy production. In Norway there are examples ofsuch win-win projects that have been successfullycarried out (Thaulow, et al. 2008). The creation of acommon environmental compensation scheme wouldgreatly increase the possibilities of the present systemto implement the objectives of the WFD in time andensure that the full potential for the hydropower sectorto contribute to the fulfillment of the RES throughextended refurbishment of its current plants is realized.The overall effect could even be an increase in bothrenewable electricity production from hydropower andan improved aquatic environment.There is also an additional source of finance possiblefor the additional costs that the operators have to bearfrom the review of concessions which comes fromrenewable electricity certificates. The overarching goalof the renewable electricity certificate is to “establisha more ecologically sustainable energy system inSweden” (SEA, 2009a). At present this seems to focussolely on reducing CO 2 emissions but with only slightchanges it could also work in favor of the biodiversityconservation dimension required for an ecologicallysustainable energy system. The regulations from theSwedish Energy Agency (STEMFS, 2009:3) set outthe conditions that hydropower plants have to fulfillin order to be granted certificates. “New plants”are entitled to certificate assignment for their fullproduction and are defined as new solely on the basisof changes to the physical structure and productionequipment of the power plant. There have been reportsof operators tearing down existing hydropower plantsand building new ones in order to receive certificatesfor the whole electricity production and therebyreceiving up to three times the initial investment inrenewable certificate subsidies (Uppdrag Granskning2010). There are signs that there will be a change tothe regulations to avoid this type of situation in thefuture (SEA 2010). These “new plants” are howeverworking with old concessions and the same applies tomany smaller production units of up to 1.5 MW thatare also automatically entitled to renewable electricitycertificates for full production. In both these cases abasic requirement could be that the hydropower plantneeds to possess a reviewed concession according tothe Environmental Code and WFD requirements tobe entitled to support from the renewable electricitycertificates scheme. Such a modification wouldincrease the coordination between the WFD and RESin relation to small hydropower production facilitiesidentified earlier and work towards the fulfillment ofthe twin environmental objectives of CO 2 reductionand biodiversity conservation necessary for a moreecologically sustainable energy system.21


constant concessions under changing circumstancesConclusionsSince 2001, with the passing of the RES-E and itssuccessor the RES in 2009, Sweden has launchedimportant policy instruments to encourage theexpansion of renewable energy production in Sweden.The introduction of the renewable electricity certificatesystem is the clearest example of this policy and hasbeen instrumental in the expansion of renewable energyproduction in Sweden of 8.5 TWh between 2003 and2008. Due to this successful expansion, the governmentgoal of 25 TWh additional renewable energy productionby 2020, compared to 2002, does seem to be withinreach. The main part of this expansion has taken place– and the rest is expected to take place – throughcombined heat and power production and wind power.Hydropower is not identified as an important sourceof growth for renewable energy production sincethe increases are mainly envisaged to originate fromincreased efficiency of current hydropower plants.The implementation of the WFD is underway inSweden and the River Basin District Authorities havestarted working on identifying the necessary changesin order to achieve GES and GEP in all identifiedSwedish water bodies. It appears that adjustmentswill be required in hydropower stations and dams inorder to improve the hydromorphological status ofthe rivers affected by hydropower production. Theextent of water quality improvement necessary ishowever still rather unclear since the final designationof HMW and the requirements for reaching GES andGEP are not established. The judicial strength of theenvironmental quality standards established fromthe implementation of the WFD will also have to betested before a better understanding of their impact onhydropower production can be discerned. Either way,the implementation of the WFD in Sweden createsfew changes to the administrative and judicial systemgoverning hydropower at present. The programs ofmeasures created by the RBAs have no direct effect onoperators but are intended to be implemented by publicauthorities using the same tools that existed prior to theimplementation of the WFD. The main tools availableto the public authorities are general regulations andsupervision and review of concessions.In many cases the required way of implementing thechanges necessary to achieve GES and GEP will mostlikely be through concession reviews since generalregulations, at present, are not allowed to infringeon the rights granted the operator in the originalconcession. Many concessions in force in Swedenalso grant ample rights to the operator to use the waterflow, allowing for up to full appropriation of the waterflow of the river for energy production. In these casessupervision of the given concession will presumablynot be sufficient to reach GES or GEP. The process ofgranting and reviewing concessions is very centralizedand judicial with a process that is conducted accordingto the Environmental Code and in one of five regionalenvironmental courts. Concerned authorities and actorsfrom local to national level intervene in the processprincipally by considering the proposed changes andsubmitting their opinions to the Environmental Court,which pronounces the final verdict.The complexities of the judicial concession trialsystem and often incomplete information and overviewregarding the current status of concessions mean thatfor the process to function effectively it is vital tohave some sort of agreement between operator andsupervising authority prior to judicial deliberations.This is usually not the case since a review of aconcession usually means loss of energy and revenue forthe operator compared to present conditions. Operatorstherefore normally have an intrinsic interest in limitingthe amount of concessions that are reviewed andprolonging the process of reviews when it is initiatedfor biodiversity and fishing interests. One of the clearestindications of the slow functioning of the concessionreview system is that only just over 2 per cent of allhydropower concessions were reviewed according tothe Environmental Code between 1999 and 2009. Thisis despite the fact that 89 per cent of all hydropowerstation and dam concessions now in force have beengranted according to the Swedish 1918 water law orolder legislation where, in a number of cases, a reviewwould most likely be granted today. With the currentfunctioning and speed of the concession review process,necessary changes to hydropower concessions to reachgood ecological status and potential will only havebeen implemented in a fraction of all the hydropowerstations and adjacent water bodies in Sweden by 2027,the final deadline for achieving the objectives in theWFD.There are also clear signs that the full potential ofhydropower of fulfilling the RES is not always reachedfrom refurbishments of existing hydropower stations.The main reason for this is that extended refurbishments– which would lead to higher efficiency gains – requirea judicial concession trial. Operators filing for aconcession change trial risk having to embark on anextensive examination of its water operations due tothe LFASA’s strategy of always pushing for a full22


stockholm environment instituteexamination in concession change trails. The LFASAhas adopted this strategy due to their interpretation ofthe requirements emanating from the EnvironmentalCode and to maximize the amount of concessionsin force that have been granted according to theEnvironmental Code. However, it also has the effect ofmaking operators try to make changes that stay withinthe current concessions since they risk higher costs forbiodiversity restoration with an updated concessionthan what is gained from the added efficiency of anextended refurbishment.By changing the incentives of the actors involved inthe concession system it would be possible to ensurea more effective fulfillment and implementation ofthe RES and WFD in the hydropower sector. Thiscould be done by creating a general environmentalcompensation scheme from which resources wouldbe taken to finance energy and revenue loss for waterimprovement measures from specific concessionreviews. This scheme could consist of an establishedpart of the production value from hydropower that alloperators are required to contribute. With this changethe main incentive to protract the review process – therisk of revenue loss for operators from concessionreviews – would be eliminated and the review processwould be able to proceed more effectively withimplementing and coordinating both the WFD andRES objectives in Sweden. There is even the potentialfor win-win projects where the increased efficiencyof refurbished hydropower plants would create scopefor both biodiversity gains and increased energyproduction. The renewable electricity certificates couldalso work as an incentive and resource for necessarychanges to fulfill the WFD requirements if one of thebasic obligations for a hydropower plant to receivesupport would be to possess a reviewed concessionaccording to the Environmental Code.Measures to increase the renewable energy productionand biodiversity conservation and restoration oftenappear to be in conflict since the flowing water of a rivercannot be used for both purposes at the same time. Aneffective and smoothly functioning concession reviewsystem that manages to implement the WFD objectivescould, for this reason, potentially make it more difficultfor renewable energy production to expand to theextent required in the RES. In the case of Sweden, acloser look, however, shows that the two policies aresurprisingly coherent. The main reason for this is thathydropower is only expected to contribute marginallyto the fulfillment of the RES, mainly through increasedefficiency of existing plants that are refurbished.The main bulk of expansion of renewable electricityproduction in Sweden is planned to come fromcombined heat and power production with biofuels andwind power. Even concerns regarding the inclusion oflarge amounts of variable wind power into the Swedishelectrical system also appear to be overstated. Thesignificant expansion of renewable energy plannedalso means that Sweden is projected to face a surplusin production of 23 TWh of electricity by 2020, whichamong other things could be used to improve thewater environment. In the debate it is often arguedthat the projected surplus of renewable energy – andbalancing potential of hydropower production – shouldbe used as far as possible for export and to decreaseCO 2 -emitting electricity production in neighboringcountries. Mitigating the global environmentalproblem of climate change should, according to thisargument, be given higher priority than that given towhat is perceived as local biodiversity issues. However,international research indicates that global biodiversityloss, to a large extent due to habitat destruction andfragmentation, is turning into an environmental crisisthat is just as important, urgent and global as climatechange, which leaves us with little option but to tacklethe two problems simultaneously.23


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stockholm environment instituteSEPA (2009) Bedömda behov av åtgärder ochmedel för restaurering av sjöar och vattendrag[Estimated requirement of measures andresources for restoration of lakes and rivers].Swedish Environmental Protection Agency(Naturvårdsverket).SEPA (2010) Introduktion till miljökvalitetsnormer ochåtgärdsprogram för vatten och deras tillämpning[Introduction to environmental quality normsand program of measures for water and theirapplication] Reg.no. 190-2850-10 Rv.SFS (Swedish Code of Statutes) (1987:12) Lag(1987:12) om hushållning med naturresurser m.m.[Law (Swedish Code of Statutes 1987:12) on theconservation of natural resources etc.].SFS (2003:113) Lag (2003:113) om elcertifikat [Law(2003:113) concerning the renewable electricitycertificates].SNG (Swedish National Grid). (2008) Storskaligutbyggnad av vindkraft–några förutsättningar ochkonsekvenser [Large-scale expansion of windpower - some prerequisites and consequences].Svenska KraftnätSöder, L. (2010) Möjligheterna att balanseravindkraftens variationer [The possibilities tobalance the variations of wind power] [cited 27.082010]. Available from http://www.kth.se/ees/forskning/publikationer/modules/publications_polopoly/reports/2010/TRITA-EE_2010_003.pdf.SOU (Swedish Government Official Reports)(2009:42) Vattenverksamhet [water operations],edited by the Ministry of the Environment.STEMFS. (2009:3) Statens energimyndighetsförfattningssamling: Föreskrifter och allmännaråd om elcertifikat [The Swedish energy agency’sregulation collection: Regulations and adviceconcerning renewable electricity certificates].Strömberg, R. (1983) Vattenlagen med kommentar[The water law with comments]. Stockholm: LiberFörlag.TEEB (The Economics of Ecosystems andBiodiversity) (2010) The Economics ofEcosystems and Biodiversity: Mainstreaming theEconomics of Nature: A synthesis of the approach,conclusions and recommendations.Thaulow, H., Skarbövik, E. and Selvig, E. (2008)Vinn-vinn for kraft og miljö: Vannkraft ogvassdragsforvaltning - både bedre miljö og mervannkraft? [win-win for energy and environment:hydropower and river basin management - bothbetter environment and more hydropower?].Rapport L.NR 5671-2008.Uppdrag Granskning. (2010) Miljonbidrag till gamlakraftverk [Subsidies of millions for old powerstations]. Swedish Television.Vedung, E., and Brandel, M. (2001) Vattenkraften,staten och de politiska partierna [Hydropower, thestate and the political parties]. Falun: Nya Doxa.Vorosmarty, C. J., McIntyre, P. B., Gessner, M. O.,Dudgeon, D., Prusevich, A., Green, P., Glidden, S.,Bunn, S. E., Sullivan, C. A., Reidy Liermann, C.and Davies, P. M. (2010) Global threats to humanwater security and river biodiversity. Nature 467(7315):555-561.SOU (2010:8) En myndighet för havs- ochvattenmiljö, SOU 2010:8 [One agency for sea andwater environment, SOU 2010:8] edited by theMinistry of the Environment.SSFA (Swedish Sport Fishing Association).(2010) Kraftverksplaner – planer påvattenkraftsutbyggnad, effektivisering,återupptagen drift eller nyproduktion [Hydropowerplans - plans for hydropower expansion, efficiencyincrease, resumed operation or new production]2010 [cited 06.07 2010]. Sportfiskarna. Availablefrom http://www.sportfiskarna.se/LinkClick.aspx?fileticket=RyBeoGgELAk=&tabid=162.27


constant concessions under changing circumstancesAppendix 1: Interview guideInterviews of roughly one hour were conductedwith a total of ten interviewees with insight into theimplementation of the RES and WFD and the judicialand administrative system regulating hydropowerproduction in Sweden. The interviews wereconducted between the 6 March and 27 May 2010.The interviewees were from the Bothnian Sea RBA,E.ON, SEA, Fortum, SEPA, Statkraft, Vattenfall andRiversavers.An interview was requested but not granted with theLFASA. The author did however have the possibility toassist with a presentation given by the LFASA entitled“Review of water operations” on 15 April 2010, whichwas directly related to the issues investigated.Since the questions were directed to different authoritieswith different responsibilities, the questions wereslightly modified to suit the interviewees. There washowever an overall interview guide that was emailedto the participants prior to the interview.• What are the most important areas, in youropinion, where the implementation of the RESand WFD could influence each other negativelyor positively?• What are or could be the most important effectsof the implementation of the WFD in relation tohydropower?• What role do you see hydropower having in theimplementation of the RES in Sweden?• What avenues exist in relation to the currentjudicial and administrative system for theregulation of hydropower to:□ □ Implement programs of measures from theRBA to improve water quality in relation tothe hydropower stations?□ □ Implement measures to improve the efficiencyof current hydropower stations?□ □ Is the system suited for its purpose and howcould if from your point of view be improved?There was also additional communication by email andphone regarding specific questions with a representativefrom the SBF, a representative of an EnvironmentalCourt and the directors of four RBAs.28


stockholm environment instituteAppendix 2: Spending for improved hydromorphologySpecified costs for measures to improve thehydromorphology of the water bodies of the fiveRiver Basin District Authorities of Sweden as specifiedin the program of measures.A direct comparison is not possible since the differentRBAs have presented the costs in different ways and itis at times unclear what is included in the terms. Coststhat are related to hydropower production have beenincluded and the figures give an indication of the extentof improvements contemplated.Bothnian Bay program of measures (p. 78) Thousand SEK/year Thousand SEK totalAttend to bypass barriers, unspecified 1,857 32,118Build bypass channels for fish 58 1,000Build smolt diverter 5,783 10,000Reviews of concessions 2,417 14,500Bothnian Sea program of measures (p. 80)Measures in relation to dams 7,950 137,500Review of concessions 5,500 27,500Northern Baltic Sea program of measures (p. 78)Dams that are now bypass barriers 15,000 Not specifiedIncreased minimum flow 1,000 Not specifiedSouthern Baltic Sea program of measures (p. 93)Measures for bypass barriers,Minimum flow energy sector 8,200 - 19,200 Not specifiedReviews of concessions 4,300 Not specifiedWestern Sea program of measures (p. 86)Bypass channelsAttend to culvertsDemolition of dam 5,740 Not specifiedMinimum flowChanged short-time water regulation 780 Not specified29


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