The IPCC and other experts emphasize the need for extensive and rapid structural changes to achieve the global climate goals. The business sector plays a crucial role in the so-called green transition. What are the central goal conflicts, and what trade-offs need to be made in relation to other values when reducing global greenhouse gas emissions? How are Swedish companies affected by the EU’s tightened climate policies? And how can Swedish regulations, permit processes, and policy instruments be designed effectively and predictably to promote climate transition? In February 2023, SNS launched the three-year research project ‘The Green Transition and the Business Sector’ to contribute with knowledge and for discussion and potential actions.
Januari 2023 – December 2025.
Research director: Charlotte Paulie, charlotte.paulie@sns.se, + 46 73 987 19 11
Project manager: Anna Jahre, anna.jahre@sns.se, +46 76 724 43 45
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The Role of Forests in the Green Transition 2023.09.05
The role of forests in the energy and climate transition 2023.09.05
AMF, Swedish Waste Management, The Swedish Energy Markets Inspectorate, The Swedish Energy Agency, EIB, Ministry of Finance, Research Council Formas, Confederation of Swedish Enterprise, Första AP-fonden, H2 Green Steel, The Association of Swedish Engineering Industries, The Swedish Association of Industrial Employers, The Knowledge Foundation, Skandia, LKAB, Luleå Municipality, County Administrative Board Norrbotten, Mistra, Preem, SCA, Skellefteå
In 2021, the EU adopted the so-called Green Deal – a package of proposed changes in its climate, energy, transport and tax policies aimed at making the region climate neutral by 2050. The design of this package will be negotiated over the next few years according to the “Fit for 55” roadmap. The EU plans to tighten up and expand its emissions trading system, introduce climate tariffs (so-called border adjustment mechanisms) and adopt tougher directives concerning aspects such as how forests are to be utilized. Furthermore, the new industrial policy is meant to speed up the climate transition. This policy was adopted in 2020 and includes a set of measures aimed at supporting the industry’s green transition. How does the political process in the EU affect Swedish politics and the transition of Swedish companies?
Many believe that access to inputs such as fossil-free electricity and certain minerals is key to the industry’s climate transition. It is commonly said that significant investments in fossil-free electricity generation and mineral extraction are needed to meet future demand. At the same time, however, these investments are made more difficult by long processes for getting permits and uncertainty regarding future regulations. According to several reports, companies generally demand more efficient permit-granting processes, stable rules of the game and national coordination, rather than financial support. The ways in which courts, government agencies and municipalities organize themselves, implement and follow up regulations and processes have an impact on the climate transition. It is problematic if the rules are interpreted differently and working methods differ considerably between municipalities or within the same government agency. How are government agencies to work more efficiently, effectively and predictably in their decision-making processes?
Companies demand qualified workers in order to transform their production. This, in turn, highlights the need for investing in research and higher education. In addition, we likely need investments in electricity networks and transport infrastructure (aviation, roads, railways, ports) that companies depend on in their climate transition. Finally, new companies and establishments being launched across the country increase the need for housing and expanded local public services. What are the responsibilities of the state in terms of facilitating the supply of skilled employees for companies and securing infrastructures with regard to major energy-intensive and financially risky industrial initiatives? And how are municipalities to ensure an adequate supply of housing and good public services?
There are several conflicting goals that must be taken into account in the climate transition. For example, increasing the use of land and extraction of natural resources to produce clean electricity affects the local environment. The minerals currently used in battery manufacturing, for example, need to be mined. Forests contribute to biodiversity, while active forestry operations also result in jobs, welfare and a green transition. Which types of information do decision-makers need to make balanced decisions in cases of conflicting goals?
A climate policy entailing higher taxes, stricter regulations and climate tariffs may result in increased costs for both companies and households. If, for example, this policy leads to electricity and fuel prices increasing more than what is seen as justified, there is a risk that popular support for the climate transition goes down, thus making it more difficult to implement. The costs facing households, companies and municipalities are distributed differently based on aspects such as where you are located. Who are the potential losers in the climate transition and what represents the best ways of compensating them?
The covid pandemic and the war in Ukraine have altered the conditions for the business sector’s climate transition. These crises have delayed and weakened companies’ access to inputs. Global value chains have proved vulnerable as disturbances and non-deliveries have occurred when trading with other countries. Despite a stated ambition to make a transition, crises and other unexpected changes may force companies and countries to, at least temporarily, increase their use of fossil fuels. At the same time, the pandemic has affected travel habits, which reduces the use of fossil fuels. In addition, political leaders in several countries have emphasized that the pace of the climate transition must increase as a result of the war in Ukraine, as energy markets can no longer rely on Russian gas and oil. How do crises and unforeseen events affect the ability of companies to engage in transition efforts?
Carbon capture and negative carbon emissions are tools to achieve the goals of the Paris Agreement and attain net-zero emissions by 2050. Despite the significance of these measures in combating climate change, there are currently few economic incentives to implement carbon capture and storage (CCS) and bioenergy CCS (BECCS). The report discusses various models for creating incentives and financing for carbon capture and storage in Sweden. It also highlights the connection between BECCS and other uses of biofuels, as well as the potential goal conflicts that may arise.
Authors: Lars Zetterberg, IVL, Kenneth Möllersten, IVL and KTH, Filip Johnsson, Chalmers.
Launch: Autumn 2023.
The report focuses on EU’s climate policy and the shift from treating climate transition as a conventional environmental issue to viewing it as a developmental matter for the entire economy. The report describes past structural transformations and discusses the lessons that can be learned from them to achieve climate goals. The emphasis lies on the role of politics as an enabler and catalyst in the transition. It also highlights the risks and challenges associated with stronger political governance of societal development.
Authors: Fredrik N G Andersson, Associate Professor, Department of Economics, Lund University, Fredric Bauer, Associate Senior Lecturer in Technology and Society, Lund University, Lars J Nilsson, Professor, Department of Technology and Society, Lund University of Technology.
Launch: Spring 2024.