Field: Grön omställning
Business climate transition – basis for the climate policy action plan
Tillväxtanalys was instructed by the Government to produce supporting information on the climate transition of businesses in Sweden prior to the forthcoming climate policy action plan. This document is the resulting report.
This assignment has been carried out with the support of the Swedish Environmental Protection Agency, the Swedish Energy Agency, the Swedish Board of Agriculture, the National Board of Housing, Building and Planning and the Swedish Forest Agency. Our work has also been supported by other government agencies and the business community. The report is based on the assignment description decided by the Government on 23 March 2021 (Regeringskansliet 2021a).
The main purpose of this report is to:
- Uutline barriers fulfilling the national and global climate targets regarding the climate change transition of the businesses.
- The report provides proposals and recommendations for new or changed steering instruments, measures or any compensatory measures necessary to more effectively contribute to the reduction of greenhouse gases. At the same time, they need to allow the businesses to transform to net-zero emissions, while maintaining and strengthen their competitiveness.
The Swedish climate goal is that by 2045 Sweden shall have net zero emissions of greenhouse gases. The follow-ups of the goal show that current instruments are insufficient and that additional efforts will be required. The proposals and recommendations in this report are mainly investigations that needs to be realized to speed-up the climate transition. It is thus important that the government handle them swiftly. Each proposal and recommendation will contribute to the climate transition of the businesses, but for greater impact of the actions the majority of them will need to be implemented.
Complex mix of barriers
The analysis of barriers shows a complex mix of impediments that the businesses face. Electrification of the society will have significant consequences for the climate targets as well as for the climate transition of the economy. Increasing ambitions within the EU will have consequences for Sweden. EU’s climate policy, that provides the frame for the Swedish climate policy, are currently undergoing significant revisions and fine-tuning, within the parameters of the Fit for 55 climate package. Sweden is in the midst of this process of change which has resulted in some ambiguity surrounding Swedish climate policies and climate transition for businesses. One thing we can say with certainty, however, is that the EU’s energy and climate policy will play an increasingly larger role.
Extensive changes are in progress
Several of the proposals and recommendations in this report take into account the current processes of change within the EU climate policy. For example, a proposal to adjust current rules for free allocation of emission trading permits is given. The implementation of the proposal can have a significant effect on the Swedish economy. Another proposal is to ensure long term goals for EU ETS after 2030. Implementing the proposal will be an important base to review and adjust the national climate targets so that they are clearly connected to and contribute to EU climate policy.
Tighter regulations and other instruments at the EU level mean that the national policy for the climate transition of the economy will take on a somewhat new role. It can now, more than before, focus on actions that enable and drive the transition itself. A change of perspective, consisting of a greater focus on the international competitiveness of businesses, the side benefits of the climate transition, and a wide acceptance for the transition, will become key issues for the Government to address.
As such, in the report an investigation is proposed for a two-part compensation system when establishing new electricity production for the purposes of gaining local acceptance. To contribute towards a focus on transition within the agricultural sector a recommendation is placed to investigate a package of economic instruments for long-term sustainable agriculture as well as an investigation about the targets related to circular economy and agriculture.
Many proposals in this report focus on actions to enable technological shifts. Among others, proposals are made to increase energy efficiency in the real estate sector, as well as within the energy- and industry sectors. Regarding off-road vehicles, for example, proposals are put forward to define zero-emission and low-emission vehicles. A proposal is also given to facilitate production processes and technology shifts via a supporting infrastructure on climate action in the forestry.
Stepping up innovation rate
The analysis made by the supporting authorities jointly highlight the need to increase the rate of innovation, as innovation is a central driver for the transition process itself. Thus, several proposals are put forward to contribute to an increased supply of innovative technologies and products. Partially through government support, but also through an increased demand for these innovative ideas. Continued support for the Strategic Vehicle Research and Innovation programme is one proposal put forward in the report. Another proposal is to create demand through public procurement via a group of government authorities for the public procurement of cement, concrete and other alternative materials. Increased efforts in methodological development to monitor and improve the opportunities to reduce the emissions of methane and nitrous oxides is also proposed. It is seen that the enhanced methodologies can provide new opportunities for technical solutions and agriculture measure can be given.
Variations in maturity of sectors
A recurring question relates to the financing of the climate transition of the economy. The government can facilitate this via state aid, but also through incentives using the taxation system or offering credit guarantees. Even institutional investors have an interest to partake in the opportunities that the transition provides, by lending, through shares, other contributions or risk capital. The investment needs of the real economy vary between sectors and have different maturities, but there are opportunities in all sectors. Therefore, a proposal is placed to conduct a national pilot for the financial instrument Carbon Contracts for Difference. Another proposal is to investigate reversed auctions to increase the carbon sink. Additional proposals are to investigate an adjusted investment support for the agriculture with focus on measures that reduce air- and climate emissions, as well as an investigation of a dedicated support for an infrastructure of battery charging for off-road vehicles. Within the taxations system this report gives a proposal to phase out the reduction of diesel tax and instead investigate an agriculture deduction as well as investigate a green tax reform within the fishery industry. A proposal is also given to remove the tax deduction on energy tax today given to the server halls.
Skills development is a classical measure in all types of structural changes with special focus on climate change. It is not only about the access to labour but at least as much about the development of c new and added skills and across sectors. The skills supply is an instrument used to create synergies between different business areas. A recommendation is thus placed in the report to develop a national strategy to attract and maintain international and domestic talents.
47 proposals and recommendations
All together, 47 proposals and recommendations with descriptions and analysis are provided in the report. Through innovation the increased rate of transition is supported and with it new potential business opportunities. However, innovation takes time from experimental stages to full implementation. It is thus important with a political long-term view that focuses on the climate target of 2045.
The underlying reports used for this report are either available on the website of Growth Analysis, or from the respective supporting authority.
Tillväxtanalys presents the report in connection with a seminar, September 15, at 1:00–2:00 p.m. Here you can see the seminar in Swedish: 47 proposals for business climate change
Business climate transition – basis for the climate policy action plan
Serial number: PM 2022:10
Reference number: 2021/54
Download report in Swedish Pdf, 6 MB.
Download report in Swedish: Mål och medel i klimatpolitiken av Runar Brännlund, Bengt Kriström, Tommy Lundgren Pdf, 2.2 MB.
Download report in Swedish: Ett samhällsekonomiskt perspektiv på hinder för näringslivets klimatomställning av Åsa Lindman Pdf, 369.2 kB.
Download in Swedish: Beskrivning av förslag och rekommendationer Pdf, 3.7 MB.
Download in Swedish: Diarieförda handlingar Pdf, 285.8 kB.
Read the government assignment in Swedish External link.
Read the press release in Swedish