Editorial articleSören Wibe, Ola Carlén
The Swedish forest industry faces many regulations. In many cases they are used to eliminate, or diminish, negative external effects on the environment. The aims of most regulations are well accepted among decisions makers in the industry and in society. However, in many cases the implementation can present problems, the reason being bureaucracy.
The Ortviken paper mill is located just north of Sundsvall, which is a middle-sized town in the northern part of Sweden. SCA, one of the world's largest forest companies, owns and operates the mill. In the beginning of the 1990s, Ortviken planned for an expansion, which was considered necessary for the company's strategy and potentially profitable. But in order to build a larger plant, SCA first needed a licence from the local authorities which showed that conditions laid down in the Law of Planning and Building were met. After that, the project needed approval by the environmental authorities according to their specific laws and requirements.
SCA finally succeeded in getting all the permissions needed. But the whole process took more than 10 years, despite the fact that it was carried out in close co-operation with the local authorities.
While waiting for the final approvals, SCA applied for permission to expand production without changing the present emission levels. The existing permit also included a ceiling on production since emissions usually are proportional to production. However, in this case SCA wanted to increase production by only 5 %, and emissions would not exceed allowed levels. But the application was refused. The company was not allowed to increase production above the existing ceiling without a completely new application to the environmental board. The processing time for such an application would cover about two years and cost an unknown amount of money.
Recently, the same company decided to analyse the possibilities of expanding production at the Tunadal sawmill, which is located in the same area. One of the alternatives was to build a completely new mill with new technology at a new and suitable site. However, a pilot study showed that the handling time just for the local planning process would be seven years and cost around 10-15 million SEK (approximately 1.5 million Euro).
In addition, two years would be required for the environmental approval, so that the whole process from planning to actual start of the investment would require about 10 years.
These long handling periods are of course an effective obstacle to investment. No board of directors dares to decide on an investment costing hundreds of millions of Euro if the time span of uncertainty from decision to actual start of the factory is 10-15 years.
Not only has the time span necessary to fulfil the new requirements caused problems. An enormous amount of detail is needed to fulfil the requirements of an environmental impact assessment for an investment. For instance, a temporary pile of soil requires a separate analysis of the consequences for the environment, and companies are required to specify the kind of fuel used in trucks that (an unspecified number of years ahead) will drive the garbage from the building site. All these problems are particular troublesome for heavy industries like the forest industry and other industries (e. g. the steel industry and the chemical industry) that deal with material processing.
What this Swedish example shows is that it is perhaps not environmental regulation per se that can make an obstacle to industrial expansion. There is no problem for the Swedish forest industry in fulfilling the technical conditions on emission levels. The crucial factor is time. The example also shows that it is not the core content of environmental regulations that is troublesome, but how these regulations are handled and formulated. It is not the environment that is the enemy, but the bureaucracy around it.
Department of Forest Economics
Department of Forest Economics