31 January 2023

Legislation Regarding The Fast-Tracking Of Green Transition Projects Entered Into Force In January – How Will This Impact The Renewable Energy Sector In Finland?

Lengthy permit and appeal processes have generally been considered as one of the main factors undermining investments into large infrastructure projects, including renewable energy projects.
Finland Environment
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Lengthy permit and appeal processes have generally been considered as one of the main factors undermining investments into large infrastructure projects, including renewable energy projects. Attempting to address the challenge, the Finnish Government proposed legislation to create a temporary fast-track system for environmental and water permit procedures and certain appeal processes related to projects that benefit the green transition. The related laws entered into force on 1 January 2023. The fast-track process is envisaged to be backed up by a budget increase of EUR 37.3 million in total during 2022-2026 earmarked for permit authorities and administrative courts.

The fast-track system applies to permit processes that are pending in the national environmental and water permit authority (the Regional State Administrative Agency AVI) between 2023 and 2026, and to appeal processes that are pending in the administrative courts between 2023 and 2028. In order for the fast-track process to apply to a project, the project must concern at least one of the following activities:

  • Renewable energy plants (e.g. wind, solar PV, hydro, biomass etc.)
  • Industrial electrification projects to replace fossil fuels or fossil raw materials
  • Manufacturing and utilisation of green hydrogen
  • Carbon capture, storage, and utilisation; or
  • Battery factories or production, recycling and re-use of battery materials (excluding, however, extraction of battery minerals).

In addition, however, the applicant must also prove that the project is in line with the Do No Significant Harm principle (DNSH). The DNSH principle is new to the Finnish environmental legislation and derives from the EU's new sustainable finance framework. In order for a project to fulfill the DNSH criteria, it must not have significant adverse effects on the following six environmental objectives: (i) climate change mitigation and (ii) adaptation; (iii) the sustainable use and protection of water and marine resources; (iv) transition towards a circular economy; (v) pollution prevention and control; and (vi) the protection and restoration of biodiversity and ecosystems.

Environmental and water permit applications concerning projects that fall under the scope of the fast-track system are prioritised by permit authorities over other applications. Furthermore, administrative courts have an obligation to prioritise both appeals that have been filed against such permits, as well as appeals regarding local detailed plans for renewable energy plants and partial master plans concerning wind farms.

Key Takeaways for the Renewable Energy Sector

Although the fast-track system raises expectations of faster permitting timelines and will presumably shorten the timeline required for project development in some of the project types to which the fast-track applies, the potential positive impacts may vary significantly for different project types, depending on the extent and nature of the licensing required. Project developers and investors in the renewable energy sector should be mindful of certain features and conditions of the fast-track system, that may restrict, or in some cases even undermine, the desired positive effects of the proposed new system on the level of individual projects:

  • Environmental and water permits are often not required for renewable energy projects (such as onshore wind power projects and solar PV projects). Moreover, to the extent that a renewable energy project requires an environmental permit, the competent permit authority is often the municipal environmental authority (not AVI), to which the fast-track process does not apply. Consequently, the onshore wind and solar sector will only benefit from the fast-track system in connection with appeals against the relevant land use plan (detailed plan or local wind power master plan). Furthermore, if a solar PV project is carried out based on some other type of land use plan than a detailed plan, the fast-track process does not apply.
  • Will the application of the DNSH-principle create a new bottleneck in permit authorities and courts? The introduction of the DNSH-principle creates an entirely new layer of assessment in the permit and appeal processes, as it requires that whenever a permit applicant has demanded a fast-track process, before being able to start the actual evaluation of the matter, both permit authorities and courts will first have to determine, on a project-by-project basis, whether the matter qualifies for prioritised processing. As the DNSH-criteria are completely new in a permitting context, this assessment will, at least initially, most likely cause further delays in the processing times of all permits and related appeal processes – including those that will eventually qualify for the fast-track system. As it typically takes years before a standardised interpretation of a criterion is formed through administrative and court practice, the DNSH-principle therefore risks watering down at least a part of the positive impact of the fast-track system on the project timelines. The Ministry of the Environment is currently preparing guidelines for the application of the DNSH-principle in the fast-track process and the guidelines are expected to be published in January.
  • The fast-track does not extend to building permits regarding renewable energy plants or expropriation permits regarding high-voltage power lines. This means that an important (and due to appeal processes, often time-consuming) part of the development of renewable energy projects will not benefit from expedited handling times. On the contrary, as mentioned above, we can expect that the prioritisation of appeals against environmental and water permits in projects that fulfill the criteria listed above will likely increase the processing times of non-prioritised appeals, such as appeals against building permits and expropriation permits, in administrative courts. At the same time, the appeal right against building permits has recently been widened to encompass NGOs in cases where the building permit concerns a project that requires an Environmental Impact Assessment, which will likely increase the number of appeals against building permits, in particular in wind power projects.
  • Even in projects that could benefit from an expedited water permit process (such as offshore wind power projects), the building and water permit processes will likely be, to a large extent, overlapping. Since both a water permit and building permits are required in order to enable the construction of the project, this means that expediting the water permit process (and the related appeal process) alone may not significantly shorten the timeline required for project development if the building permit processes remain outside of the fast-track process.
  • Will the fast-track apply exclusively to appeals against the final approved land use plan? There have been some individual cases in Finland where landowners have filed appeals against non-appealable decisions in the early phases of the land use planning process of a wind power project (e.g. the decision of the municipality to initiate the land use planning process) with the presumed intention of delaying the project development. Based on the wordingl of the related laws, it is unclear whether the fast-track process can be applied also to such unfounded appeals filed during the phase preceding the actual land use plan decision.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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