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Energinet estimates cost of Baltic Pipe delay at 80 million euros

Published 2.7.2021 13.45
The repeal of the Baltic Pipe environmental permit means that construction is progressing in parts of the project while other parts await a new permit. The cost of the gas pipeline connecting Norway, Denmark and Poland will increase, since construction in some parts will have to be postponed to 2022.

On 31 May 2021, The Danish Environmental and Food Appeals Board repealed the 2 year old permit for the Baltic Pipe project on land in Denmark. This means that construction on the project is limited to certain areas of the 210-kilometer landline across Denmark.

This will delay the project and add an estimated cost to the project of 80 million euros. The figure is an estimate based on the current knowledge, since there are still several issues regarding contracts, time schedules etc. that need clarification. Given this, the financial estimate is still subject to considerable uncertainty.

“Construction across the western part of Funen and in the southeastern part of Jutland between the Little Belt strait and Egtved has been stopped. We expect to be able to resume next spring on the two parts – a very costly delay on a project of this magnitude”, says Torben Brabo, director of international relations in Energinet.

A large part of the 1,000-man strong workforce on the project will have to stay on longer than originally planned in order to complete the project.

Annex 4 species

The Environmental and Food Appeals Board temporarily stopped Baltic Pipe a month ago, when it ruled that the permit from the Danish Environmental Protection Agency (DEPA) did not sufficiently detail the protection of the so-called Annex-4 species, e.g. dormice, Nordic birch mice and bats, during construction. The species are protected under the European Habitat Directive.

When DEPA issued the permit, it was common practice that permits were given on basis of several thorough preliminary studies and descriptions of remedial measures in the Environmental Impact Assessment Report. Since then, the Baltic Pipe project has done several studies and put in place remedial measures - among others planting of bushes and establishing temporary habitats for the species.

The Environmental and Food Appeals Board has since 2019, when the permit was issued, changed its practice and is now saying that all remedial actions must be described in advance of issuing an environmental permit.

 

Danish surplus of 275 million euros

The Baltic Pipe Project was decided in 2018 because the project would create a financial benefit of 275 million euros for Denmark. Furthermore, Poland and Central- and Eastern Europe will get better access to the European gas market and decrease dependency on Russian gas. With secure access to gas, the countries can phase out coal and create substantial carbon emission reductions.

It is not yet clear how the additional cost will be covered. Energinet is examining its legal options.

“We believe that we have acted in good faith, because the requirements for the Environmental Impact Assessment Report have been tightened after we received the permit for the project. It will have very substantial financial consequences that construction will have to be postponed in certain parts of the project”, says Torben Brabo.

For Energinet it is not a question of protecting the Annex 4 species or not:

“Nobody can disagree with our obligation to protect dormice, Nordic birch mice and bats - or other species for that matter. We feel that we have done so and will continue to do so in the future. The appeals board has not ruled that we have not been protecting these species, but that we did not sufficiently describe the actions taken in advance”, says Torben Brabo.

ABOUT BALTIC PIPE AND THE REPEAL

The decision by The Danish Environmental and Food Appeals Board covers the so-called Annex 4 species – vulnerable and protected animals that are protected by the European Habitats Directive. For Baltic Pipe the species in question are dormice, Nordic birch mice, bats, Desmoulin's whorl snail and Narrow-mouthed Whorl Snail.

 

Timeline

12 July 2019:

The Danish Environmental Protection Agency grants the Baltic Pipe project an environmental permit based on a 520-page environmental impact assessment report, that among many other things describes the protection of the Annex 4 species. It is a condition in the permit that additional surveys will be conducted and that remedial actions put in place to secure breeding and feeding grounds for the protected animals – a standard practices in environmental impact assessments.

 

August 2019:

Several complaints over the environmental permit are submitted. The appeals board decides to process with four complaints. The complaints are not given stopping effect.

 

September 2020:

The appeals board receives a report from the National Center on Environment and Energy at Aarhus University (DCE) on protection of Annex 4 species. Afterwards the appeals board adopts a stricter practice on protection of Annex 4 species.

 

31 May 2021:

The Danish Environmental and Food Appeals Board repeals the permit given by The Danish Environmental Protection Agency almost two years prior. According to the appeals board, all remedial actions should have been taken prior to the permit was issued. The appeals board have not considered if any of the remedial measures taken after the permit was issued will protect the breeding and feeding grounds of the annex 4 species.

 

18 June 2021:

The Danish Environmental Protection Agency has now stated that it has no objections to Energinet’s plans to resume construction on parts of the project. The agency also says that construction on the landline on the western part of Funen and landline in the southeastern part of Jutland between the Little Belt Strait and Egtved will have to await a new permit.