FAQ: The expansion of Preemraff in Lysekil, Sweden

Why appeal against the expansion of the oil refinery Preemraff in Lysekil, Sweden? How is an expanded oil refinery consistent with the Paris Agreement? Below, the Swedish Society for Nature Conservation answers questions on the legal process and the possible expansion of Preemraff in Lysekil.

Update 2020-09-28 >> Preem has withdrawn its application to expand their oil refinery.

The Swedish Society for Nature Conservation (SSNC) and the environmental movement in Sweden has just won a huge victory as the oil company Preem has decided to withdraw its application to expand its oil refinery Preemraff in Lysekil. 

In 2018, SSNC  appealed against the ruling to grant a permit. We also sought to make the government try the case, and in August 2019 it was announced that it would do so. The main proceedings were held in the spring of 2020, and in June 2020 the government received the court’s opinion on the matter. After that.  it was   up to the government to make a decision on whether the refinery should be allowed to expand or not. Preem felt the pressure from society, and decided to withdraw its application before the government made its decision.

Here, we answer questions regarding the background for our appeal and what the process actually looked like, until now.

Why the expansion Preemraff must be stopped

1. Why has the Swedish Society for Nature Conservation appealed against Preem’s expansion of its Lysekil oil refinery?

The world is facing a very serious situation with regards to climate change. In order to limit global warming below 1.5 degrees Celsius and to avoid the  most disastrous climate impacts, greenhouse gas emissions need to go down drastically – this applies to all emissions in all sectors. 

A permit to expand Preemraff in Lysekil is a huge step in the wrong direction, as it will result in a substantial increase in the total amount of Swedish carbon dioxide emissions. The increase in emissions would make it substantially more difficult for Sweden to reach its nationl climate target, which is  to reach net zero emissions by 2045 the latest. The expansion also goes strictly    against Sweden’s ambition to become the first fossil free welfare nation in the world, as well as its commitments under the Paris Agreement. To reach any of these targets, fossil fuel production and consumption need to be fully phased out – not expanded.

 2. How much will emissions increase as a result of an expanded refinery?

According to the documentation submitted to the Land and Environment Court by Preem itself, carbon dioxide emissions are estimated to increase by 100 percent, from 1.7 million tons to 3.4 million tons annually. Since SSNC have appealed against the permit, Preem has revised its application, now stating that carbon dioxide emissions will increase by one million tons, thus resulting in a total of 2.7 tons annually. 

According to the Swedish Environmental Protection Agency database “Swedish Pollutant Release and Transfer Register”, Preemraff in Lysekil emitted more than 1.6 million tons of carbon dioxide in 2018. The largest single source of emissions in Sweden the same year emitted more than 2.1 million tons of carbon dioxide. Regardless of whether the original or revised version of the facility is given a permit by the government, Preemraff in Lysekil will thus become the single largest emitter in Sweden.

3. How is such an investment in fossil fuels consistent with the Paris Agreement?

It is not! The whole world is behind the Paris Agreement and have promised to implement it.  In Sweden, seven out of eight parties in the Swedish parliament have endorsed the legally binding Climate Act and the national climate target of reaching net zero emissions by 2045 the latest. Preem’s planned multi-billion investment in increased fossil emissions will seriously impede Sweden’s chances of achieving both its national climate targets and its international commitments. 

4. What happens if Preemraff is granted a permit?

In such a case, the government must ensure that emissions are radicallyreduced in other sectors and from other companies – however, it is still uncertain whether we will be able to meet our climate targets. Even without this expansion, Sweden is currently nowhere close to reducing emissions at the pace required to achieve its climate targets. 

5. What other environmental problems exist in relation to the expansion of Preemraff?

In addition to the increased emissions of carbon dioxide, the intended operations at Preemraff will also result in a 100 percent increase in emissions of sulphur oxides and an increase in nitrogen oxides in the air. The operation will at most emit 500 tons of sulphur annually. The expansion also results in increased emissions of both hydrocarbons and various substances in the water. In particular, the burning of surplus gases (flaring) using an open flame at the facility is problematic. This means that a lot of energy is wasted. 

Preems “climate commitments” are empty promises

6. Preem says that they are going to produce fuel from what is currently a residual product. Is that not a good thing?

The expansion of the Lysekil refinery is carried out in order to refineheavy fuel oil, a residual product originating in the production of petrol and diesel that is currently sold as shipping fuel. The company claims that the increase in carbon dioxide emissions at the Swedish refinery is partly offset by a reduction in emissions as a result of a cleanershipping fuel. The ships previously using bunker fuel from Preemraff would in the future emit less carbon dioxide per nautical mile using the new fuels, according to Preem. Preem estimates this to correspond to 0.4 million tons of carbon dioxide annually. However, according to Preem itself, it is highly unclear whether the new products will actually be sold for shipping. 

Nevertheless, if we are to reduce emissions as quickly as necessary, we do  not have a choice between “better” or “worse” fossil fuels. We need to invest all our resources into entirely dismantling the fossil fuel economy. Quickly. We cannot look upon heavy fuel oil as a residual product when we know that this oil needs to remain in the ground.

 7. Isn’t there a risk that if Sweden does not refine this oil, someone else will, most likely a country with dirtier technology? What does it matter whether emissions occur here or in another country? 

Preem claims that they will produce better fuels as a result of this expansion. But there are no good and bad fossil fuels. In order for Sweden and the world to become fossil free, we must stop granting permits for these kinds of activities. Period. We know that all emissions need to be reduced quickly and radically or we will not be able to achieve our own targets or to live up to the Paris Agreement and limit climate change. The Paris Agreement is built on a “bottom up approach” where the success of the global effort is dependent on all countries reducing their emissions , including Sweden. How could Sweden ask other countries to reduce emissions if it allows its own industry to increase their emissions? 

8. Preem is  saying that the expansion of Preemraff is positive from an environmental perspective. In particular, the facility will produce cleaner shipping fuel containing less sulphur. Sounds good, doesn’t it? 

Cleaner shipping fuel is obviously a good thing, but this improvement simply corresponds to new requirements in international conventions and is not unique to Preemraff. Preem already offers bunker oil only containing 0.1 percent sulphur. This is fully in accordance with the rules in place since 2015 regarding ships operating in the Baltic Sea and the North Sea. Starting in 2020, the maximum permitted level of sulphur in bunker oil is 0.5 percent. Preem’s shipping fuels are already today adapted to these sulphur limits. The new facility will primarily be used for producing petrol and diesel from heavy fuel oil and will thus likely to be used for land vehicles (i.e., not at sea). Hence, the effect on the new shipping fuels is limited, meaning that the argument that Preemraff would be good from an environmental perspective is quite weak. After all, carbon dioxide emissions are the result of using fossil fuels. Regardless of where and how they are used, fossil fuels are never good for the environment.

9. Preem says  the Lysekil refinery will be producing renewable fuels, isn’t that a good thing?

Yes, that sounds good. Currently, however, Preem has primarily applied for a permit to produce fossil fuels, as well as using fossil energy in this process. All promises regarding biofuels and reduced emissions are vague promises not included in the application we have appealed against and what the government is to decide upon. So, it is important that we distinguish between these two issues. If Preem is granted the permit they have applied for, they are entitled to enormous fossil emissions for all eternity. This is something we cannot accept. In addition, potential biofuels will also be produced using fossil energy and either way, Preem has clearly stated that their promises only apply if they are “financially profitable”.

10. If Preem’s facility is part of the EU emissions trading system, surely emissions need to be reduced somewhere else if they increase at Preemraff?

Preem argues that since the facility is part of the EU emissions trading system, increased emissions in Sweden do not result in increased emissions globally, since there is a common ceiling in the EU. However, this is only the case in theory. In practice, there is such a large surplus of emission permits that it is possible to increase emissions without someone else having to reduce theirs, at least in the short term. 

11. Doesn’t Preem pay for its emissions?

Preem has received substantial discounts from its obligation to purchase emission permits to cover its emissions. The company has even applied for and been granted free emission permits equivalent to 99.8 percent of its 2017 emissions for Preemraff in Lysekil.

In practice, it is thus difficult to see that the emissions trading system has any effect whatsoever on the facility. Preem’s parent company has estimated the value of the free allocation of emission permits at EUR 19.5 million in 2017 alone. These discounts exist to protect companies in the union in cases where it is believed that production may otherwise relocate overseas, but they help undermine the effectiveness of the system.

 Sweden needs fossil free & sustainable jobs

12. Preem claim that the expansion  will create a large number of new jobs, something Lysekil truly needs. What is your view on these jobs being lost if you have it your way?

Preem has approximately 1,400 employees in Sweden, 950 of whom are employed at the refineries in Lysekil and Gothenburg. The expansion of Preemraff in Lysekil is said to result in an additional 250 jobs. It is true that these jobs will not materialise if Preem does not receive a permit for its expansion. However, this issue is greater than these 250 jobs and greater than the issue of the expansion of Preemraff. In fact, it relates to how we transform into a sustainable society in general. Defending jobs created in the fossil fuel industry today, in the 2020s, is misguided. In Sweden, as well as in the world as a whole, the new jobs created need to be sustainable and fossil free. We cannot go on keeping jobs that maintain emissions at a high rate. There is a term for this particular notion – just transformation – which concerns how jobs are to be both sustainable and with fair working conditions. 

13. If Preem is unable to expand, they may shut down their entire operations in Lysekil. Wouldn’t that would be a disaster for the local workforce?

In the short term, the current facility will not be threatened if an expansion does not occur. Soon, however, the use of fossil fuels will need to cease completely in Sweden. With a ban on fossil fuels, the market for these fuels will obviously disappear as well. So, in other words, we certainly understand that the future may be uncertain for the employees in Lysekil. However, a transformation to a fossil free society will result in completely new jobs. Politicians have a great responsibility in terms of creating conditions for sustainable livelihoods for people currently working in sectors where climate change mitigation will result in job losses. Carrying on allowing investments in old technologies that increase emissions is unacceptable as a job policy and it is really a disservice to us all.

The legal and political process

14. You think that it is a good thing that the government has taken over the case from the court. Why?

” According to the Environmental Code, chapter 17, section 5, an organisation can give a “notification” to to government which involves informing the government of a certain type of activity with a significant environmental impact, so that the government may exercise its ability to try whether the given activity should be permitted. We believe that Preemraff’s activities can definitely be assumed to have a “substantial impact” and made a notification to the government in 2019 After the SSNC, as well as the Swedish Environmental Agency and the County Administrative Board of Västra Götaland, the region where Preemraff is located, handed in a notification to the government in accordance with the Environmental Code, chapter 17, the government agreed to review the case.

The Swedish  Climate Act obliges the government to take responsibility for emission sources of this magnitude. Since the government is responsible for realising the climate targets decided by parliament, we believe it is rightful that it is now in the hands of the government to decide on Preemraff’s future.

15. Some people say that the court and the government cannot impose requirements on carbon dioxide emissions from the facility as it is part of the European emissions trading system. What is the situation here?

It is true that they are prevented by law from deciding on terms limiting carbon dioxide emissions in permits when it comes to facilities belonging to the EU emissions trading system (which refineries do). However, we believe that this does not prevent courts and government agencies from being able to reject applications in their entirety when it comes to having a major impact on the climate. On the contrary, we consider it a prerequisite for realising the climate targets.

16. So both the government and the Land and the Environmental Court of Appeal are involved. What has happened so far?

Before the government took over the case, the Land and Environmental Court of Appeal issued an opinion. The court basically conducted an “ordinary trial”, but instead of delivering a ruling, it stated its opinion, after which it handed the case to the government for a decision. The court found that the expansion of the refinery may be permitted. What the government now has to decide is the so-called “admissibility” regarding the expansion of Preemraff; in other words, the question of whether they can give a yes or no. The government’s trial began after 15 June 2020 when the court delivered its opinion. 

The court hearing in the Land and Environment Court of Appeal was held on location in Lysekil in mid-April. Both the local association (Lysekil-Munkedal) and the main office of the Swedish Society for Nature Conservation participated during the three days of the hearing. The two environmental lawyers working for the Swedish Society for Nature Conservation offered a comprehensive presentation of the case, in addition to referring to two expert opinions by professor Kevin Anderson and meteorologist Martin Hedberg. The expert opinions were cited as evidence that climate change causes major damage and problems for the environment and that increased emissions of fossil carbon dioxide are not compatible with Sweden’s international commitments and national climate and environmental targets. 

 17. When will it be decided whether or not Preemraff is allowed to expand?

Until 28 September, when Preem decided to withdraw its application, we thought this may take a while. Even though the hearing in the Land and Environmental Court of Appeal has been completed, the government’s proceedings would have  taken some time. In addition, one may expect that either Preem or environmental groups like SSNC would not be satisfied with the government’s decision, thus petitioning for a so-called judicial review by the Supreme Administrative Court. Depending on the outcome, this may have taken two to three years.

18. How do you rate your chances of winning the Preemraff case?

We believe that we have a chance of winning the case. Courts and governments in the EU are prevented from deciding on terms limiting carbon dioxide emissions for operations participating in the EU emissions trading system, but the possibility of rejecting  an entire application for climate reasons should be entirely possible. Since the Swedish government is bound by the Swedish climate act and the Paris Agreement, there are all the legal reasons for a rejection.