As countries around the world work toward their climate targets, the demand for innovations that both cut emissions and enhance Sweden’s competitiveness is increasing. Entrepreneurial firms are uniquely positioned to pioneer solutions, take risks, and disseminate new technologies. Yet, they remain underrepresented in cleantech, a field dominated by large, established firms that benefit from current systems and regulations. To unlock this untapped potential, policy must remove barriers and strengthen conditions for a more dynamic entrepreneurial ecosystem.
This report analyzes the role entrepreneurs can play in a climate-smart structural transformation, and how the conditions for entrepreneurship can be strengthened through policies that eliminate obstacles to innovation and the diffusion of new technologies.
Key Findings
- Sweden is a world leader in carbon pricing, both in terms of level and coverage, providing firms with strong incentives to develop and spread climate-smart technologies.
- Swedish industry performs well internationally in cleantech. Venture capital and private investments in cleantech have increased significantly, placing Sweden among the global leaders.
- Large firms dominate cleantech patenting, while entrepreneurial firms are underrepresented. This points to untapped potential and highlights the need to reduce barriers to building a stronger entrepreneurial ecosystem.
- Sweden’s historical experience of structural transformation, combined with strong institutions and high trust in new technologies, provides a solid foundation for a cleantech transition.
“Entrepreneurship can be the engine that drives climate-smart technologies – but only if policies remove the barriers to a dynamic entrepreneurial environment.” – Lars Persson
Recommendations
- Remove barriers preventing entrepreneurs and new firms from contributing innovations alongside large companies—for example, through regulatory sandboxes in cleantech and better coordination among public authorities.
- Design policy instruments that provide the right incentives for clean technologies and reduce market distortions – including a competition-neutral climate industrial policy and stronger oversight against anti-competitive practices.
- Ensure long-term rules and institutions that foster trust and stability in the transition, while adapting to an increasingly intangible economy with growing needs for risk capital.
- Strengthen EU cooperation on regulation, patents, and financing, and ensure that critical infrastructure – such as AI computing capacity and data – is made accessible to cleantech entrepreneurs on equal terms.
About the Authors
Pehr-Johan Norbäck, Associate Professor of Economics at the Research Institute of Industrial Economics (IFN).
Lars Persson, Professor of Economics at the Research Institute of Industrial Economics (IFN).