Obligations for Owners to Climate-Proof Buildings in Sweden

1. 150Introduction

In comparison with other countries in Europe, Sweden stands out as the country with the highest share of renewable energy for heating and cooling buildings. In Sweden, renewable energy accounts for a total of 66 percent of the energy consumption in buildings.^[9] The corresponding average for the EU is a mere 23 percent. District heating constitutes the primary heating method for apartment buildings and commercial premises in Sweden, contributing 90 percent of the energy usage in apartment buildings and 78 percent in commercial premises. In single-family houses some form of electric heating is the most common heating method, of which approximately 60 percent use a heat pump. Fossil fuel-based heating, such as oil, has been declining. As of 2019, oil-based energy usage for heating buildings and hot water in residential and commercial premises merely represented one percent of the total energy usage.^[10]

Sweden’s overall national energy policy goal is to attain 100 percent renewable energy by 2040 and to achieve a 50 percent increase in energy efficiency by 2030 compared to the 2005 baseline. However, this policy goal will presumably have to be revisited and revised to comply with the increased ambitions of zero-emission building by 2050 according to the Energy Performance of Buildings Directive (EPBD) and the Energy Efficiency Directive (EED).

151The challenge in meeting Sweden’s national energy policy goal and the forthcoming EU zero-emission goal lies in the significant proportion of older buildings, constructed between 1940 and 1980, which often lack energy-efficient features. The Swedish building stock consists of approximately eight million buildings, collectively accounting for nearly 40 percent of Sweden’s energy consumption. The majority of these buildings, encompassing apartment buildings and single-family houses, are over 40 years old and are presumed to require more or less extensive renovation to meet the current climate-proof standards and need for reduction in energy consumption.^[11]

This contribution explores the challenge that Sweden is facing and analyses the possibility of the State, under current institutional and legal frameworks, to impose obligations for real property owners to climate-proof existing buildings. The purpose is to describe the Swedish national policy approach and legal framework, and to discuss the extent to which the rules can be considered sufficient to reach both Sweden’s and the EU’s goals regarding energy efficiency of buildings. The contribution focuses on whether and to what extent the State has the authority to impose positive obligations to, for instance, install solar panels, change heating systems or improve energy efficiency through additional insulation. First, the Swedish national policy approach and institutional and legal framework regarding obligations to climate-proof buildings is described (Sections 2 and 3). Then, obligations to climate-proof existing buildings and relevant enforcement rules according to planning and building regulations (Section 4) and the Environmental Code (Section 5) are described and discussed. Section 6 concludes this contribution.

2. Sweden’s national energy policy approach

In order to achieve the energy policy goals for the building stock, Sweden adopts a multifaceted approach, which includes 1) building regulations, imposing stringent requirements for energy efficiency, enhanced insulation, and the integration of renewable energy sources in new and renovated buildings; 2) financial incentives, providing government grants and tax credits to incentivize property owners to undertake energy efficiency enhancements and invest in renewable energy sources for existing buildings; and 3) dissemination of information, promoting awareness of energy efficiency and climate adaptation among property owners, developers, 152and the general public to encourage energy-efficient practices within the construction sector and existing building stock.

The Swedish model for achieving improvements in the existing building stock is generally based more on supporting and encouraging improvements of energy efficiency than imposing obligations on property owners. State efforts are focused on supporting the spontaneous streamlining occurring in society and as a result of various policy instruments.^[12] Examples of such efforts and incentives include the following.

In 2016, support was introduced for renovation and energy efficiency in certain residential areas with socio-economic challenges, providing rental housing with discounted rent in renovated and energy-efficient apartment buildings. This support was partially funded by the EU recovery package, Next Generation EU (NGEU), and concluded in 2019.^[13]

In 2021, a public grant for building owners to support energy efficiency in apartment buildings, including rental apartment buildings, cooperative housing corporations, and condominiums, was introduced. This grant programme had a limited duration and ended in 2022. Grants under this scheme were awarded to cover additional costs resulting in at least an improvement of 20 percent in energy performance in apartment buildings with a primary energy rate above 100 kWh/m² per year.^[14]

Until 2020, property owners could apply for investment support for the installation of solar panels.^[15] This support was later replaced by a more general tax reduction for the cost of labour and materials when installing green technology in detached houses, cooperative housing corporation apartments, or condominiums. Tax reductions can now be granted for installing solar panels, systems for self-produced energy storage systems, and charging points for electric vehicles. The highest possible tax reduction amounts to EUR 4,430/person and year.^[16]

Currently, starting 3 July 2023, owners of detached houses heated with electricity or gas may apply for government subsidies to enhance energy efficiency.^[17] Grants can cover material costs for specific heating system measures, such as heat pump installations or district heating connections, and climate screen improve153ments. Grants can reach up to 50 percent of material costs, with maximum amounts of EUR 2,260 for heating system and climate screen measures respectively.

3. The Constitutional and Human-Rights Protection of Property Against Obligations to Climate-Proof Buildings

The imposition of positive obligations on individuals to climate-proof buildings must consider two fundamental legal principles: the prohibition of retroactivity and the protection of property. These principles are enshrined in chapter 2 sections 10 and 15, respectively, in the 1974 Instrument of Government (the Constitution),^[18] and in Article 1 of the First Protocol (A1P1) to the European Convention on Human Rights (ECHR).

According to the wording of the Constitution, the principle of retroactivity only applies to taxes and State fees. The provision holds that no tax or State fee may be levied beyond the provisions in force when the event triggering the tax or contribution obligation occurred. However, through various legislative measures, the principle is considered generally applicable to all State impositions on private citizens and businesses. For instance, on municipal level the rule is widened to include all decisions that might be detrimental to the residents of the municipality.^[19]

Chapter 2 section 15 of the Constitution stipulates that everyone’s property is secured by the fact that no one can be forced to give up their property to the public or to any individual through expropriation or any other such disposal or endure that the public restricts the use of the land or building except when it is required to meet urgent public interests. This constitutional right to protection of property is parallelly regulated with A1P1. Since 1995, the European Convention has had status as Swedish law, which means that Swedish laws or other regulations may not be promulgated or applied in conflict with Sweden’s commitments due to the Convention. The unusual choice of parallel regulation on two levels does not affect the application of the law, since the Supreme Court in several cases has stated that chapter 2 sections 15 of the Constitution and A1P1 have the same meaning.^[20]

154The Supreme Court’s judgment in ‘Parkfastigheten’^[21] offers an illustrative example of how the constitutional and human-rights protection of property has been applied in practice. The Supreme court case Parkfastigheten establishes the requirement of an independent proportionality assessment whenever a public entity restricts the use of a building or a piece of land. This proportionality assessment must examine the proportionality between the public interest of a compulsory disposition and the individual’s property interest.^[22] The assessment must be done in three stages and consider the effectiveness, necessity, and proportionality (fair balance) of the measure. The meaning of the test is that even if there is a public interest that can justify an intervention, it must always be weighed against the individual’s interest and the measure must be implemented in such a way that it does not entail an disproportionate burden on the individual. A proportionality assessment in three steps in accordance with chapter 2 section 15 of the Constitution and the Supreme Court case Parkfastigheten must be carried out even if a balancing of interests or another type of reasonableness assessment of the restriction is formulated in other acts or regulations.

From these fundamental principles it follows that State impositions for property owners to take positive measures to climate-proof existing buildings, such as replacing an existing oil-fired boiler with heat from sources with little or no non-renewable energy or the installation of solar panels, cannot be enforced if they 1) impose a burden on the property owner that goes beyond the obligations that were in force when the building was built, and 2) constitute an undue burden on the property owner and a violation of the right of protection of property.

4. Obligations to Climate-Proof Existing Buildings – Planning and Building regulations

The Swedish institutional and legal framework concerning climate-proofing of buildings primarily relies on the general requirements and technical standards for energy efficiency in buildings outlined in the Planning and Building Act (Plan- och bygglag) (2010:900) (PBA), the Planning and Building Regulation (Plan- och byggförordning) (2011:338) (BBR), and the prescriptions and the general directions of the 155National Board of Housing (Boverkets byggregler – föreskrifter och allmänna råd) (2011:6 and 2018:4) (NBGD). These legislative instruments establish the foundation for energy management and thermal insulation mandates in buildings. Irrespective of the building’s intended use, and whether the owner is the State, a private organization, or an individual, the PBL, the BBR, and the NBGD apply to all new buildings.

In accordance with current technical building standards, buildings must be designed to minimize energy consumption by reducing heat losses, cooling requirements, and ensuring efficient heating, cooling, and electricity use.^[23] Section 9 of the NBGD sets an overarching requirement for energy management, obliging building owners to limit energy consumption by minimizing heat losses, cooling needs, and optimizing heating, cooling, and electricity utilization. Additional detailed requirements cover thermal insulation, heating, cooling, air treatment systems, electricity usage efficiency, and energy monitoring system installation. The requirements are goal-oriented rather than prescriptive, which means that there are no technical standards mandating specific climate-proofing measures, such as installing solar panels or specific types of heating systems. Instead, energy requirements are expressed as limits on energy use per square metre and year, measured in kilowatt-hours of primary energy, which must not be exceeded.

Municipal building committees have the authority, as per chapter 11 section 19 of the PBA, to compel property owners to rectify deficiencies concerning technical standards. Owners of buildings are responsible for ensuring that their buildings comply with the technical standards applicable during the time of construction. Whether the owner of the building will be able to recoup the investment is irrelevant. The principle of non-retroactivity underpins these legislative acts, meaning that technical building standards cannot have retroactive effect.^[24] Therefore, municipal building committees cannot compel property owners to undertake climate-proofing measures that go beyond the technical building standards and energy efficiency requirements that were applicable when the building was built.^[25]

Since municipal building committees have no authority to compel owners of existing buildings to undertake renovations to a greater extent than is required by the standards that were applicable at the time the building was built, a municipal building committee cannot, for instance, require the owner of an existing building constructed before the 1987 PBA^[26] to enhance energy efficiency, such as installing triple-glazed windows or insulating the roof of the building. Municipal building 156committees do not have the authority to make such decisions as the 1959 Building statute,^[27] preceding modern technical building standards regarding insulation or windows, did not establish such requirements.

If, however, the owner of an older existing building intends to extensively renovate the building, exceeding a quarter of the building’s value, the municipal building committee may have the right to impose specific energy efficiency measures. According to chapter 8 sections 4 a and 5 of the PBA, municipal building committees can oblige property owners to ensure that the parts of the building that are affected by the renovations meet the energy efficiency requirements that apply at the time of the renovation.^[28] Such measures may include insulation of the facade, floor or roof, and the installation of energy-efficient windows.

It is important to note that certain modern energy efficiency measures, like facade insulation, may not always be imposed on the owner. The assessment of whether the building must comply with current technical building standards will depend on how easily they fit with the building’s original character. If, for instance, the insulation of the facade has a substantial impact on the building’s character, it might not be deemed reasonable and proportionate to impose such obligations. Modern technical building standards should be applied to preserve the building’s cultural and aesthetic values without damaging its architectural significance.^[29]

Failure to comply with a committee’s decision may result in the issuance of a correction order, compelling the owner to take action within a specified timeframe, as per chapter 11 section 20 of the PBA. Both decisions and correction orders may be accompanied by fines, chapter 11 section 37 of the PBA. Dissatisfied parties may appeal against the committee’s decisions. Decisions by municipal building committees are appealed with the County Administrative Board, and decisions by the County Administrative Board can be appealed with specific Land and Environmental Courts.^[30]

5. 157Obligations to Climate-Proof Existing Buildings – The Environmental Code

Another exception to the general rule that the government cannot retrospectively oblige property owners to climate-proof existing buildings, can arise from the application of the Environmental Code (Miljöbalk) (1998:808). Although the Environmental Code does not explicitly address buildings and technical building requirements, virtually all human activities can in some way affect the environment, and some of the provisions are also formulated in such a way that they can be directly applicable to buildings.^[31]

An example of such provisions, relevant and applicable regarding energy efficiency and climate-proof buildings, are the general housekeeping rules in chapter 2 of the Environmental Code, sections 1–7. According to these rules, all business activities and measures must be conducted in such a way that raw materials and energy are used as efficiently as possible while minimizing consumption and making use of opportunities for reuse and recycling.^[32] Since these rules apply universally to all businesses, if any form of business activity takes place within a building, the owner or operator is responsible for ensuring compliance with these rules. Compliance with the general rules of the Environmental Code is monitored by supervisory authorities at county or municipal level. These authorities can independently verify compliance with the Environmental Code and take necessary measures to enforce compliance under chapter 26 section 1 of the Environmental Code.

However, the requirements that follow from the housekeeping rules are not rigidly enforced. For example, the general requirements apply only to the extent that compliance cannot be deemed unreasonable or disproportionate. According to chapter 2 section 7 and chapter 26 section 9 of the Environmental Code, decisions regarding compliance with the housekeeping rules can only be made insofar as the measures do not place a disproportionate burden on the individual in comparison to the public interests the measures aim to serve.^[33] Of importance for the assessment of whether the requirements are met is whether the benefits of the safeguarding or precautionary measures that need to be taken in order to comply with the general rules are reasonable and proportionate compared to the associated costs of 158the measure. Further more, the scope of the supervision of compliance with the Environmental Code also needs to be limited to what is necessary according to chapter 26 section 1 of the Environmental Code.^[34] For small business activities that have little impact on the environment the requirement of ‘necessary extent’ is usually interpreted as limiting the supervision to a selection of the business activities.

There are no available statistics showing how often the housekeeping rules have been used to impose positive obligations on businesses that conduct activities in building. However, there is one example of a case from the Land and Environmental Court of Appeal from 2015^[35] where such a decision from a municipal committee was tried. In this case a municipal committee had decided to require an operator to change the heat source of an industrial building from oil-fired boilers to heating with little or no non-renewable fuel. The decision came about after a supervisory visit by the environmental authority in 2013, when it was found that the heating of the buildings on the property consisted of oil-fired boilers with an annual consumption of approximately 35 m³ of oil per year. The municipal environment committee justified the decision by the general societal need to reduce the use of oil as a heat source in order to achieve more sustainable development. The operator appealed against the committee’s decision and requested that it be declared void.

The Court of Appeal found against the appellant that the municipal environment committee was justified in requiring the operator to replace existing oil-fired boilers with a heat source with little or no non-renewable energy. Despite the fact that it was a minor business activity and impact, the environmental benefit of the measure was considered to be noteworthy and that it therefore could be deemed a necessary measure. The court also found that the measure would not be unreasonable or disproportionate. The change of heating source from an oil-fired boiler would reduce the cost of heating the building and the investment was calculated to be recouped within a reasonable period of time. Further more, the building’s technical standard and pipelines would not raise any particular difficulties or concerns, and it was also found that switching the boiler would not cause other problem for the business activities.

Whether the housekeeping rules and principles of chapter 2 of the Environmental Code can be used to compel owners or operators of buildings in which business activities are conducted to take other energy efficiency-enhancing measures, such as to install triple-glazed windows or insulate buildings, is unclear. There is currently no established case law in this area to support such broader application of the housekeeping rules. Hence, it is not possible to say with certainty whether 159such measures could meet the necessity and proportionality requirements. Nonetheless, according to the reasoning in the above-mentioned case from the court of appeal, it cannot be excluded that a decision that compels the owner or operator of a building in which business activities are conducted to install triple-glazed windows or insulate the building would be justified. Such decisions could, for example, be justified if the benefit of the measure would be noteworthy and the reduction in heating costs for the property in question would mean that the investment would be recouped within a reasonable timeframe.

It is clear though, since the housekeeping rules do not apply to individuals and their residences, that owners of private residential buildings cannot be obliged to enhance the energy efficiency of their buildings under the general provisions of chapter 2 of the Environmental Code. Also, for the application of the housekeeping rules, it does not matter whether it is the owner of the building who lives in the building, or if he or she temporarily lets the dwelling to another person or family. Letting one, or even two, dwellings is generally not considered a business activity, and since there is no established buy-to-let market in Sweden,^[36] the majority of all privately owned residential buildings are not affected by the housekeeping rules and requirements.

6. Conclusion

The political landscape of energy and climate policy is rapidly evolving in Sweden and the EU with increased ambitions and revisions to key directives, including for example the Energy Performance of Buildings Directive (EPBD) and the Energy Efficiency Directive (EED). According to what has been noted and discussed in this contribution, this evolving context may necessitate a shift from Sweden’s current policy model, which emphasizes financial incentives and the dissemination of information, to a stricter approach that to a broader extent, imposes positive obligations on property owners to climate-proof existing buildings.

Whether the Swedish regulatory framework will be compatible with the new requirements that come with the EU Directives and sufficient to reach the high climate-proofing ambitions for all buildings remains to be seen. It will depend on how far-reaching the obligations to climate-proof existing buildings are formulated in the final revision of the Directives. It is clear though that the current Swedish legal framework does not provide general powers for the State to impose positive obliga160tions for owners of existing buildings to, for instance, install solar panels, change heating systems or improve energy efficiency through additional insulation. In Sweden, very few exceptions to the fundamental rule of retroactivity applies, concerning owners of existing buildings who intend to extensively renovate their buildings, and building owners or operators that are responsible for any form of business activity within a building.