The Nordic energy transition goes on despite the energy shock
Energy lawyers are truly at the centre of action. Europe’s energy shock, set off by the war in Ukraine, flung energy markets to the centre of the attention of citizens, policymakers and the media. At the same time, the global climate crisis is calling for an urgent transformation of the energy system all over the world. Nora Steiner-Forsberg, General Counsel and member of the Executive Management team at the Nordic energy company Fortum, and Partner Samuli Tarkiainen from our Energy service discussed the energy transition in the Nordic countries and the role of lawyers.
‘The energy transition is the best solution to the current crisis. It is a way to reduce our carbon footprint and the dependency of Europe on the import of fossil fuels,’ says Nora.
The Nordic energy system has shown resilience to the energy shock, thanks to favourable natural conditions, a balanced mix of energy sources and good transfer connections between the countries. Power production in the Nordics has been almost fully decarbonised, with hydro and nuclear as the backbone and wind power growing fast.
What’s more, decarbonisation is well on its way in heating. District heating, which is the dominant technology, is undergoing a fuel switch from fossil fuels to forest biomass and recovered waste heat streams.
However, for entire societies to become carbon neutral, industry and transport need to be decarbonised as well. This will require even more emissions-free power and fuels. New capacity must be accompanied by modifications to the market model. Smart regulation can help bring these changes about.
‘You need to have different layers of regulation,’ Nora says. Right now, we are in the middle of the energy shock, and lawmakers must respond. Governments are intervening in the energy markets to cut power bills, and energy companies are bringing back coal power plants to secure the supply of energy.
Despite this setback, European regulators must not be diverted from the path towards carbon neutrality. In the medium and long term, it requires not only building more renewable capacity but also investing in power grids, developing the import infrastructure and transforming the demand side of the energy market.
In regulation, the USA is ahead of the pack with the Inflation Reduction Act. European lawmakers should also grasp the moment to transform the energy system.
‘I hope that the EU can manage the classifications in hydrogen so that we can really be in par with the US, because there will be a lot of competition,’ Samuli says.
Energy lawyers can play their part in shaping regulation. Firstly, lawyers can spread knowledge on the types of rules that would work best for the energy transition. Secondly, lawyers put the rules to practice and impact the efficiency of the regulatory system. Finally, since the energy transition must happen quickly, Nora stresses the importance of cooperation:
‘It is really important to keep good contact with your stakeholders, whether it is regulators, municipalities or other stakeholders. This will make processes faster and smoother. Of course, you need to be able to earn trust first, with accountability, transparency and working together to achieve the joint goals.’
Listen to Nora and Samuli’s talk on Legal500’s Global Green Hub for views on facilitating the energy transition with regulation and the elements of a balanced decarbonised energy system for Finland.