Press releases | 10/6/2025
Sweden faces two interconnected challenges: addressing climate change swiftly while simultaneously strengthening competitiveness. Many therefore call for grand climate and industrial policy initiatives. Yet in many major technological shifts, entrepreneurs have been the driving force. Policy should therefore focus on removing barriers for them. This is the argument put forward by economists Pehr-Johan Norbäck and Lars Persson in a new SNS report.
The report How Can Entrepreneurship Help Reduce Carbon Emissions? analyzes the role of entrepreneurial firms in the green transition and how carbon taxes, industrial policy, and the patent system affect the incentives to invest in climate-friendly technology, so-called cleantech.
The results show that although Sweden is at the forefront in terms of emission reductions and cleantech patents, the Swedish innovation market is heavily dominated by large, established corporations.
- Entrepreneurial firms have historically delivered groundbreaking innovations in previous technological transitions, but in our report we find that they are underrepresented in cleantech patenting compared to other innovation-intensive sectors, says Lars Persson.
- To fully harness the potential of business in the green transition, reforms should be implemented to remove barriers preventing entrepreneurial firms from commercializing and growing, he continues.
The dominance of large firms can be explained by their capacity to conduct research on a larger scale. Large companies also have greater ability to handle complex regulations and pursue lengthy patent processes. This makes it difficult for small innovative players to compete on fair terms.
- If institutions and regulations stifle the incentives for new revolutionary technologies, we risk delaying the green transition. Therefore, we propose a series of reforms to strengthen the entrepreneurial ecosystem in cleantech, says Pehr-Johan Norbäck.
The report’s authors propose
- Broad tax incentives for cleantech investments
- Stronger protection for small companies within the EU patent system
- Establishment of AI learning centers for entrepreneurial firms in cleantech with access to data and computational resources
- Expanded powers for the Swedish Competition Authority to safeguard competitive neutrality in industrial policy
About the Report
How Can Entrepreneurship Help Reduce Carbon Emissions? is part of SNS’s research project The Green Transition and Business. The project provides knowledge and input for discussions on potential measures to ensure that the business sector’s potential in the green transition can be fully utilized.
About the Authors
Pehr-Johan Norbäck is Associate Professor and researcher in economics at the Research Institute of Industrial Economics (IFN).
Lars Persson is Professor of Economics at IFN and affiliated with CEPR and CESifo.
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