New siting permit for clean energy transition projects proposed for inclusion in the Building Act

However, in accordance with the current government programme, certain parts of the new Building Act are to be amended before the Act enters into force. On 19 September 2024, the Government submitted the government proposal for an act amending the Building Act and for certain related acts. The amended provisions would mainly enter into force at the same time as the new Building Act.

This blog is the third in our blog series focusing on the new Building Act. In the first part we discussed changes in building permits, while the second part concerned incorporating climate change mitigation into the Building Act. This part deals with the new siting permit for clean energy transition projects proposed to be included in the Building Act.

Streamlining industrial clean energy transition projects

The government proposal proposes that the Building Act provide for a new siting permit for clean energy transition projects. The siting permit would allow bypassing land use planning in industrial clean energy transition projects as long as the requirements provided for the siting permit are met. At best, the possibility to bypass land use planning will likely speed up project development significantly.

By utilising this separate siting permit for clean energy transition projects, the examination of the conditions for the siting of such industrial projects could be done without the need for a local detailed plan or a local master plan that sets out its use as a basis for granting a building permit. A siting permit would therefore not require that the project be built in a location allowed by the local detailed plan or local master plan or that a special permit be granted for deviating from the plan. However, exceptions to this are projects where hazardous chemicals or explosives (including hydrogen) are prepared, handled or stored. These projects must be sited in such a manner that the siting is appropriate when considering planning regulations and the purpose of use designated in a legally binding local master plan.

Once a siting permit is granted for an industrial clean energy transition project, granting a building permit would still require examining relevant technical requirements, in other words the conditions for implementation. The conditions for implementation would be determined by a separate implementation permit. The examination of the conditions relating to land use (conditions for siting) included in the building permit consideration would be conducted in connection with deciding on the siting permit for a clean energy transition project. A building permit would therefore be granted in two stages: the siting permit and the implementation permit.

The municipality should decide on the siting permit within six months and on the implementation permit within three months of the date on which the application and the appendices that enable the application to be processed were filed. The implementation permit can only be granted after the siting permit has been granted. Construction work cannot start until both permits are legally valid or the permit authority has granted the right to start construction work before a permit is legally valid. Legislation concerning the time limit would only enter into force at the start of 2026.

Permits could be applied for hydrogen or battery factories but not for wind or solar power plants

In accordance with the government proposal, industrial clean energy transition projects would mean the following (the list is exhaustive):

1. an energy production plant that produces energy from renewable energy sources, excluding wind and solar power plants;
2. an industrial project that is based on renewable energy or electrification and that replaces the use of fossil fuels or raw materials;
3. the production and use of hydrogen, excluding the production of hydrogen from fossil fuels;
4. the capture, use and storage of carbon dioxide;
5. a battery factory and the manufacture, recovery and reuse of battery materials;
6. a clean energy transition investment in the manufacturing industry located in areas pursuant to Articles 17 and 18 of the Regulation of the European Parliament and of the Council on establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem.
   
   

   Edit 19 December 2024:

   The Parliament also added the following projects to the law, which can also be granted a siting permit for a clean energy transition project:

7. a project implemented in a renewable energy acceleration area as referred to in Article 2, second paragraph, point 9(a) and Article 15(c) of the European Parliament and Council Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources, provided that the conditions set for the area are met, excluding wind and solar power plants;

8. a data center where the majority of the waste heat produced is utilized.

An essential restriction in the siting permit for industrial clean energy transition projects would be that it may not be granted to wind or solar power projects. In these projects, the conditions relating to land use would continue to be decided either by land use planning or by a decision concerning the need for planning, depending on the size of the project. However, the new Land Use Act that is currently being revised is expected to introduce new regulations on land use planning for solar power projects in particular.

A siting permit for a clean energy transition project should not significantly deteriorate the quality of the living environment of any person if it is not justified when considering the purpose of the permit. This requirement is in line with the requirement for a local detailed plan set forth in the Land Use Act. Furthermore, a siting permit should not impose an unreasonable restriction on or cause an unreasonable inconvenience to the landowner or other right holder if it can be avoided without superseding the objectives or requirements of the siting permit.

Conditions for granting the permit and impact assessment

The conditions for granting a siting permit for a clean energy transition project would have to be met before a siting permit can be granted. For example, the building should be compatible with the built environment and landscape and should not cause nuisance to neighbours, affect the development of neighbouring properties or hinder preserving specific values of the natural or cultural environment. In addition, the construction must be appropriate in relation to the implementation of infrastructure networks and transport routes, road safety and the accessibility of services.

It is noteworthy that the conditions for granting a siting permit do not include, as is the case of areas requiring planning and areas not covered by a detailed plan, a requirement that the construction does not adversely affect the drawing up of a local master plan or local detailed plan or the implementation of the provisions of a regional plan, local master plan or building code. The reasoning of the government proposal also states that the siting permit can bypass land use planning. The reasoning does not, however, clarify whether this applies in every situation or if planning regulations in force should be followed unless the siting permit specifically deviates from them. In any case, it seems unlikely that the municipality would grant a siting permit if the location is in total violation of the existing plan.

Particularly in the early stages of applying the siting permit regulation, the siting permit for clean transition projects can increase the risk of an appeal in a project. On appeal, the administrative court may find that the project does not meet the conditions for granting a siting permit. As a result, the project will have to assess whether the conditions for siting imposed by a building permit can be met in case a land use plan is drawn up for the area or whether the project should be relocated. Project developers should therefore evaluate carefully in advance whether the project meets the conditions for granting a siting permit for clean energy transition projects or whether land use planning includes less risks in terms of timetables. Project developers can also try to manage the timetable risk by preparing for the start of land use planning as soon as the siting permit has been appealed.

The impacts of the siting permit should be identified in the same way as the impacts of the local detailed plan. The environmental, socio-economic, social, cultural and other impacts of implementing the planned project would therefore have to be assessed. The environmental impact assessment procedure could be carried out in connection with the siting permit in the same way as for a land use plan. If the procedures are not combined, it seems that, unlike in the case of land use planning, the environmental impact assessment would still have to be carried out or the need for it would have to be decided before the siting permit could be granted.

The right of appeal is proposed for a wide range of parties

The government proposal would give a wide range of parties the statutory right to appeal against a siting permit for a clean energy transition project. 

In addition to neighbours, the right to appeal would be granted to the owners or titleholders of properties whose construction or other use could be materially affected by the decision and to any party whose rights, obligations or interests would be affected by the decision. The right of appeal would also be available to the municipality and the neighbouring municipality whose plans for land use would be directly affected by the decision, the Centre for Economic Development, Transport and the Environment, other public authorities in matters within their competence and registered associations within their jurisdiction whose purpose is to promote the protection of the environment, health and nature. However, residents of the municipality would not be able to appeal against a siting permit for a clean energy transition project. In this respect, the right of appeal is more restricted than in matters of land use planning. In projects that require an environmental impact assessment procedure, residents must in any case be reserved the opportunity to be heard with respect to the permit application.

Edit 19 December 2024:

The Parliament limited the right of appeal of the aforementioned registered associations so that they only have the right to appeal in projects to which the environmental impact assessment procedure applies.

The implementation permit, which is the second stage of the building permit, is also subject to appeal but associations, neighbouring municipalities as well as Centres for Economic Development, Transport and the Environment do not have the right to appeal against it. It remains to be resolved in case law and administrative practice whether it is possible to grant an implementation permit before the siting permit for a clean energy transition project is legally valid.

Our experts in the Environment, Energy & Green Transition and Real Estate Investment & Transactions teams are happy to answer any questions about the Building Act and the impact of the new regulations on construction projects.