Sweden
Inclusion driving green ambition
It’s no surprise that Sweden has some of the most ambitious green economy policies in the world. It has the world’s first and most comprehensive carbon tax, introduced in 1991; has subsidised electric vehicles since 2006; and hit its 2020 target of 50% renewable electricity eight years early. And Sweden's response to COVID-19 was to redouble its efforts towards building a greener, more resilient and inclusive economy.
The real question therefore becomes – why does this small yet prosperous European nation find it apparently easy to implement bold and broad environmental legislation that has proved so contentious elsewhere?
Prosperity undoubtedly helps. Sweden has the world's eleventh-highest GDP per capita, with an export-orientated economy based around high-value trade in engineering, telecoms, automotive and pharmaceuticals. But wealth alone is a very poor predictor of environmental ambition: the United States and Qatar top GDP tables but are hardly world leaders in green policy.
Quality of life may be a factor: Sweden consistently leads the world in health, literacy, education, protection of civil liberties, gender equality, and human development. It also has one of the most comprehensive and progressive welfare states in the world, with free healthcare and university education for all. Yet other countries with similar social policies, such as Japan, Canada and Belgium, struggle to match Sweden’s environmental credentials.
Perhaps the answer lies in Sweden’s egalitarian culture, which has long prioritised inclusivity, equal rights and cooperative ownership of community assets. 70% of employees belong to a trade union, state pensions are generous and comprehensive, and Sweden is one of the most equal countries in the world in terms of income.1 It is noteworthy that the Swedish approach to governance reflects this egalitarian ethic, often achieving norms of gender inclusion and consultation voluntarily rather than via statutory requirements.
People in more equal and inclusive societies tend to be far more environmentally conscientious – consuming less, producing less waste and emitting less carbon.2 And evidence suggests that low inequality helps unlock more ambitious environmental policies: a strong and universal system of welfare helps to support communities at risk of “losing out” during economic transition; and the lack of a large gulf between rich and poor helps build a sense that the benefits and costs of disruptive new legislation (such as a carbon tax) is being borne fairly amongst the community.3 As an example of how social equality and inclusivity act as an accelerant towards true sustainability, there can be no better case study than Sweden.
At a time when some countries are wavering in their environmental commitments, Sweden's response to COVID-19 has been to double down on the green transition: directing stimulus spending towards decarbonisation, energy efficiency, green jobs and environmental restoration. Bailouts to polluting industries came with environmental conditions attached, several fossil fuel subsidies have been wound down, and new lines of credit extended to green industries.
Despite this positive outlook, the country is continuing to adapt to rising migration and a nascent nationalist backlash in its politics. Maintaining its inclusive approach for an increasingly diverse population will be politically challenging - but the environmental and social benefits for all Swedes should prove to be worth the effort.
Policy Scores
Last updated 23 Oct 2022
Green COVID-19 Recovery
Sweden has amongst the strongest commitments to green stimulus and recovery, having announced multiple cross-cutting measures with which to drive a structural transformation towards a green economy. Economic support totals USD$98 billion or 16% of GDP according to the IMF, and the government has dedicated approximately 12% or USD$3.5 billion of its recently released, three-year Budget Bill explicitly to green measures.
Spending focuses on direct emissions reduction, with the largest share targeting the transport sector (accounting for over a third of the countrys emissions) in the form of USD$970 million allocated to electrification, biofuels, railway development and maintenance. Further support is provided to energy efficiency renovation (USD$890 million), and green measures including USD$70 million in tax reductions for the installation of green technology, alongside introducing a vehicle fuel reduction obligation requiring increased mixing of biofuels with conventional fuels to support the clean transition prior to full electrification. Nature conservation also gets a boost with two streams of funding totalling USD$575 million supporting a range of measures including a ban on bottom trawling in Protected Areas, additional funds for sustainable fisheries, and the restoration of wetlands to provide climate and biodiversity benefits.
Multiple innovative structural measures with longer-term payoffs have been include in the recovery package. Sweden has committed USD$15 million to a green jobs programme, which provides the long-term unemployed with training and jobs in shortage occupations in green industries, while carrying out nature conservation and forest management activities. Conditionality has been applied to the bailout of Scandinavian Airlines, bringing forward the target of a 25% reduction in CO2 emissions from 2030 to 2025. Green credit guarantees (with an estimated worth of USD$6 billion by 2023) for industrial investments that contribute to green goals have been launched, as well as USD$1.2 billion for R&D focusing on societal challenges including climate and the environment. Several fossil fuel subsidies have been ended, including the energy tax reduction for heating fuel and the lower taxation rate for employee car benefits, saving an estimated USD$430 million in public finances over the next three years.
Taken together, and combined with the countrys long standing carbon tax, these stimulus measures provide substantial incentives to transition towards a greener, more resilient and inclusive economic model. Yet there remains room for deeper commitment to structural interventions, through expended budgets for frontline green jobs and circular economy programmes, greater consistency in the application of conditionality to support for brown industry, and the continued phase-out of environmentally harmful subsidies.
Sweden has amongst the strongest commitments to green stimulus and recovery, having announced multiple cross-cutting measures with which to drive a structural transformation towards a green economy. Economic support totals USD$98 billion or 16% of GDP according to the IMF, and the government has dedicated approximately 12% or USD$3.5 billion of its recently released, three-year Budget Bill explicitly to green measures.
Spending focuses on direct emissions reduction, with the largest share targeting the transport sector (accounting for over a third of the countrys emissions) in the form of USD$970 million allocated to electrification, biofuels, railway development and maintenance. Further support is provided to energy efficiency renovation (USD$890 million), and green measures including USD$70 million in tax reductions for the installation of green technology, alongside introducing a vehicle fuel reduction obligation requiring increased mixing of biofuels with conventional fuels to support the clean transition prior to full electrification. Nature conservation also gets a boost with two streams of funding totalling USD$575 million supporting a range of measures including a ban on bottom trawling in Protected Areas, additional funds for sustainable fisheries, and the restoration of wetlands to provide climate and biodiversity benefits.
Multiple innovative structural measures with longer-term payoffs have been include in the recovery package. Sweden has committed USD$15 million to a green jobs programme, which provides the long-term unemployed with training and jobs in shortage occupations in green industries, while carrying out nature conservation and forest management activities. Conditionality has been applied to the bailout of Scandinavian Airlines, bringing forward the target of a 25% reduction in CO2 emissions from 2030 to 2025. Green credit guarantees (with an estimated worth of USD$6 billion by 2023) for industrial investments that contribute to green goals have been launched, as well as USD$1.2 billion for R&D focusing on societal challenges including climate and the environment. Several fossil fuel subsidies have been ended, including the energy tax reduction for heating fuel and the lower taxation rate for employee car benefits, saving an estimated USD$430 million in public finances over the next three years.
Taken together, and combined with the countrys long standing carbon tax, these stimulus measures provide substantial incentives to transition towards a greener, more resilient and inclusive economic model. Yet there remains room for deeper commitment to structural interventions, through expended budgets for frontline green jobs and circular economy programmes, greater consistency in the application of conditionality to support for brown industry, and the continued phase-out of environmentally harmful subsidies.
Governance
National green economy plan
Sweden has an ambitiousand comprehensive legislative superstructure for long-term sustainability, created iteratively since 1991. The Climate Act (2017) is the most important and ambitious recent addition to this frame, including a zero-carbon target for 2045 (including offsets), a Climate Council monitoring framework, and a generational target defining sustainability and living conditions for future generations in physical terms (health, noise environment etc.) rather than financial (GDP etc).
Sweden has an ambitiousand comprehensive legislative superstructure for long-term sustainability, created iteratively since 1991. The Climate Act (2017) is the most important and ambitious recent addition to this frame, including a zero-carbon target for 2045 (including offsets), a Climate Council monitoring framework, and a generational target defining sustainability and living conditions for future generations in physical terms (health, noise environment etc.) rather than financial (GDP etc).
Inclusive governance
Sweden ensures mandatory public consultation of every policy proposal, both with independent public bodies and NGOs/interest groups. There are long-standing and progressive gender equality policies in private and public governance; and employees are represented on the boards of almost all companies with more than 25 employees. Despite long term leadership, Swedens lack of statutory requirements for gender balanced corporate boards is beginning to see it superseded.
Sweden ensures mandatory public consultation of every policy proposal, both with independent public bodies and NGOs/interest groups. There are long-standing and progressive gender equality policies in private and public governance; and employees are represented on the boards of almost all companies with more than 25 employees. Despite long term leadership, Swedens lack of statutory requirements for gender balanced corporate boards is beginning to see it superseded.
SDG business strategy
Larger businesses required to report every year on their implementation of sustainability policies, although the focus of this reporting is more on general environmental impact rather than against specific SDGs. Strong government guidance and regulation on sustainability within business procurements and operations.
Larger businesses required to report every year on their implementation of sustainability policies, although the focus of this reporting is more on general environmental impact rather than against specific SDGs. Strong government guidance and regulation on sustainability within business procurements and operations.
Wealth accounting
Very detailed and up-to-date environmental accounts on natural capitals that complement economic accounts, although social capital and crosscutting wealth accounts are not yet developed. In addition, since 2017 all budget proposals must be evaluated for their impact on a series of 15 quality of life indicators (suggested by statistical and environmental agencies), including health, education, life satisfaction, air and water quality etc.
Very detailed and up-to-date environmental accounts on natural capitals that complement economic accounts, although social capital and crosscutting wealth accounts are not yet developed. In addition, since 2017 all budget proposals must be evaluated for their impact on a series of 15 quality of life indicators (suggested by statistical and environmental agencies), including health, education, life satisfaction, air and water quality etc.
Finance
Green finance plan
Strong and widespread commitment to green investments across the central bank, institutional investors, pension funds, and private banks, and a government green bond strategy. Movement towards private banks accounting for climate risks under Task Force on Climate-related Financial Disclosures guidelines, although this yet to be rolled out. However, there are no state policies to disincentive brown investments and almost all Swedish banks remain heavily exposed to fossil fuel investments and climate risk.
Strong and widespread commitment to green investments across the central bank, institutional investors, pension funds, and private banks, and a government green bond strategy. Movement towards private banks accounting for climate risks under Task Force on Climate-related Financial Disclosures guidelines, although this yet to be rolled out. However, there are no state policies to disincentive brown investments and almost all Swedish banks remain heavily exposed to fossil fuel investments and climate risk.
Green fiscal & monetary policy
Sweden is a leader in green bond financing, and fiscal support for the green economy is strong thanks to a comprehensive carbon tax and Climate Council review of government spending. Sustainability criteria have been introduced for corporate bond purchases under the central banks' quantitative easing programme, screening out investments in fossil-based industry to reduce finanical risk. However, broader monetary incentives and decarbonisation commitments are lacking, and the bank has contined to buy coal assets as recently as 2018.
Sweden is a leader in green bond financing, and fiscal support for the green economy is strong thanks to a comprehensive carbon tax and Climate Council review of government spending. Sustainability criteria have been introduced for corporate bond purchases under the central banks' quantitative easing programme, screening out investments in fossil-based industry to reduce finanical risk. However, broader monetary incentives and decarbonisation commitments are lacking, and the bank has contined to buy coal assets as recently as 2018.
Safe & accountable banks
Stress testing is a core component of banking sector risk management regulation, but limited to financial indicators. Increasing interest in adding environmental and/or social factors into stress tests since 2015, but yet to be implemented. In January 2020, the Swedish government asked its financial regulator, Finansinspektionen, to monitor the Paris agreement alignment of its loan books and investment portfolios, and it has "opened an investigation" into the use of climate scenario analysis and stress testing.
Stress testing is a core component of banking sector risk management regulation, but limited to financial indicators. Increasing interest in adding environmental and/or social factors into stress tests since 2015, but yet to be implemented. In January 2020, the Swedish government asked its financial regulator, Finansinspektionen, to monitor the Paris agreement alignment of its loan books and investment portfolios, and it has "opened an investigation" into the use of climate scenario analysis and stress testing.
Pricing carbon
Pioneering carbon tax introduced in 1991, currently the most ambitious in the world at EUR 114 per tonne of CO2e, with high predictability, transparency, and public support. Sweden is also part of the European Union Emissions Trading Scheme (ETS); 90% of the countrys domestic emissions are covered under these two schemes.
Pioneering carbon tax introduced in 1991, currently the most ambitious in the world at EUR 114 per tonne of CO2e, with high predictability, transparency, and public support. Sweden is also part of the European Union Emissions Trading Scheme (ETS); 90% of the countrys domestic emissions are covered under these two schemes.
Sectors
Green sectoral policy plan
Lacking an inter-sectoral body on transition, national policies towards a green transition are nevertheless reasonably well integrated at the government level, with good inter-ministry coordination and several strategic plans covering rural economy, industrial competitiveness, the energy sector and so on.
Lacking an inter-sectoral body on transition, national policies towards a green transition are nevertheless reasonably well integrated at the government level, with good inter-ministry coordination and several strategic plans covering rural economy, industrial competitiveness, the energy sector and so on.
Small business support
Sweden lacks a separate legal definition for social enterprises but has a history of social business linked to cooperatives and not-for-profits. New policies and support for small businesses and start-ups are emerging thanks to new EU social funding, and there are subsidies and training for SMEs to improve energy efficiency.
Sweden lacks a separate legal definition for social enterprises but has a history of social business linked to cooperatives and not-for-profits. New policies and support for small businesses and start-ups are emerging thanks to new EU social funding, and there are subsidies and training for SMEs to improve energy efficiency.
Carbon budgeting
A national greenhouse gas inventory has been established as a first step towards a country-wide carbon budget; an EU-level carbon budget is also under development. No legally binding legislation as yet. Pilot scheme run by the University of Uppsala is running local carbon budgets for 15 municipalities and counties.
A national greenhouse gas inventory has been established as a first step towards a country-wide carbon budget; an EU-level carbon budget is also under development. No legally binding legislation as yet. Pilot scheme run by the University of Uppsala is running local carbon budgets for 15 municipalities and counties.
Clean energy policy
Sweden has one of the most ambitious renewable electricity targets in the industrialised world 100% RE by 2040 and hit its 2020 target of 50% eight years early, largely through hydropower and bioenergy for heating. However, national policy is lacking a detailed breakdown of energy consumption, and ambitions for the transport sector are relatively low only 10% RE by 2020.
Sweden has one of the most ambitious renewable electricity targets in the industrialised world 100% RE by 2040 and hit its 2020 target of 50% eight years early, largely through hydropower and bioenergy for heating. However, national policy is lacking a detailed breakdown of energy consumption, and ambitions for the transport sector are relatively low only 10% RE by 2020.
People
Green jobs
Labour legislation offers good social protection for all categories, with new project aiming to provide 5000 new green jobs for recent migrants and long-term unemployed, mainly in forestry. However, a cross-cutting green jobs strategy for the whole economy is lacking.
Labour legislation offers good social protection for all categories, with new project aiming to provide 5000 new green jobs for recent migrants and long-term unemployed, mainly in forestry. However, a cross-cutting green jobs strategy for the whole economy is lacking.
Pro-poor policy
National welfare system is strong and progressive, with recent efforts to prioritise reducing income inequality (including gender inequality) and increasing disposable income for the disabled, recent migrants, and low-income households. Several social policies also include targeted green measures, such as collective housing heating and energy efficiency.
National welfare system is strong and progressive, with recent efforts to prioritise reducing income inequality (including gender inequality) and increasing disposable income for the disabled, recent migrants, and low-income households. Several social policies also include targeted green measures, such as collective housing heating and energy efficiency.
Participatory policymaking
Mandatory consultations for legislation under the dialogue principle, including public agencies, civil society and interest groups, with impact assessments pursued in support of broader gender equality policies carried out after the fact on an ad hoc basis. No consistent policy governing policy impact assessments as of yet.
Mandatory consultations for legislation under the dialogue principle, including public agencies, civil society and interest groups, with impact assessments pursued in support of broader gender equality policies carried out after the fact on an ad hoc basis. No consistent policy governing policy impact assessments as of yet.
Innovative social protection
Many innovative approaches to social protection and policy such as cooperative ownership are already common and mainstream in Sweden; the social protection system is one of the most comprehensive in the world and so has not prioritised different approaches, other than some pilots on working time reduction covering the city of Goteborg.
Many innovative approaches to social protection and policy such as cooperative ownership are already common and mainstream in Sweden; the social protection system is one of the most comprehensive in the world and so has not prioritised different approaches, other than some pilots on working time reduction covering the city of Goteborg.
Nature
Ocean & land conservation
Specific mention of SDGs 14 and 15 in the governments voluntary national review, with some examples of policies. All SDGs are integrated into national policy planning and targets, and thus are evaluated regularly.
Specific mention of SDGs 14 and 15 in the governments voluntary national review, with some examples of policies. All SDGs are integrated into national policy planning and targets, and thus are evaluated regularly.
Natural capital accounts
Long-standing, comprehensive and accessible natural capital accounts, with clear reporting and well-established relationships between government bodies responsible for producing them. Effectively integrated into policy-making process.
Long-standing, comprehensive and accessible natural capital accounts, with clear reporting and well-established relationships between government bodies responsible for producing them. Effectively integrated into policy-making process.
Natural capital committee
All public agencies are de facto independent from the government, with no direct ministerial authority over public agencies. This includes the Swedish Environmental Protection Agency, which acts as an expert agency responsible for producing natural capital accounts, evaluating government proposals, and developing ecosystem services policy.
All public agencies are de facto independent from the government, with no direct ministerial authority over public agencies. This includes the Swedish Environmental Protection Agency, which acts as an expert agency responsible for producing natural capital accounts, evaluating government proposals, and developing ecosystem services policy.
Nature-based fiscal reform
Comprehensive carbon tax covers almost the entire Swedish economy, although earmarking of tax revenue is not possible under the Swedish system. Some proposals to increase tax on pesticides, transport fuel, harmful chemicals etc. and phase out of some exceptions to the carbon tax. Despite this, the flight levy policy is under threat and budget for environmental protection has seen cuts (2018/19) rather than growth.
Comprehensive carbon tax covers almost the entire Swedish economy, although earmarking of tax revenue is not possible under the Swedish system. Some proposals to increase tax on pesticides, transport fuel, harmful chemicals etc. and phase out of some exceptions to the carbon tax. Despite this, the flight levy policy is under threat and budget for environmental protection has seen cuts (2018/19) rather than growth.
References
- European Trade Union Institute, "Worker participation across EU member states"; OECD Data Analysis, "Income inequality across selected countries", 2018
- Annual of Public Health, "The Relationship Between Social Inequality and Environmental Quality", 2015
- The RSA, "Is inequality harming the environment?", December 2017; Our World in Data, "Why is carbon pricing in some countries more successful than in others?", August 2018