Report 2022

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Report of the Swedish Policy Council 2022 (pdf)

Summary

In its sixth assessment report, the UN Intergovernmental Panel on Climate Change (IPCC) states that global warming now stands at 1.1 degrees Celsius which has caused tangible effects in several regions of the world. Warming could increase to 1.5 degrees as early as the 2030s, which would further increase risks to ecosystems and humans. Global greenhouse gas emissions have continued to rise instead of starting to rapidly reduce as would be needed to achieve the goals of the
Paris Agreement.

Opportunities to accelerate

Greater emission reductions are also needed in Sweden. Sweden has good opportunities for achieving this, and Sweden can and should be at the forefront of accelerating progress towards a fossil-free society. In its 2021 report, the Swedish Climate Policy Council noted that the climate transition has reached a new level of maturity. In more and more applications, renewable energy costs less than fossil-fuel energy sources, business and industry are seeing ever-more opportunities in green competitiveness, there is broad public support for the transition, and a stronger institutional framework exists for the climate at the national, European and global levels.

The past year has reinforced this picture in many ways. The EU is working on a reform agenda for implementing the Green Deal and achieving its climate goals, its biggest legislative package ever. Increased activity by business and industry is apparent, particularly in northern Sweden which has some of Europe’s largest industrial investments in clean energy sources and industrial processes. Over 100 countries have set targets for net-zero emissions, and at the UN’s 2021 climate change conference in Glasgow, new agreements were concluded that improve the chances of achieving the Paris Agreement’s goals.

But there are also obvious challenges. War in Europe, geopolitical uncertainties, the decline of democracy and weakened international cooperation risk hampering global collaboration, necessary political decisions and key investments. Major fluctuations in energy prices are putting pressure on companies and individuals alike, which risks weakening support for the climate transition. The parliamentary situation in Sweden is making long-term decisions and collective responsibility difficult.

The path to net-zero emissions is largely already known

Although no one knows exactly what the path to net-zero emissions will look like, we can identify areas that will be pivotal for the transition. In both Swedish and international studies, with some variations, four key areas recur:

• More efficient use of energy and resources
• Zero-emissions electrification
• Biomass from forestry and agriculture
• Carbon Capture and Storage.

The vast majority of individual measures that are bringing us closer to net-zero emissions can be attributed to any of these four key areas. Although they involve shifts in technology, they are as much about changing institutions, business models and behaviours.

The visualisation tool Panorama, which the Climate Policy Council has developed in collaboration with the Swedish Environmental Protection Agency and the Swedish Energy Agency, contains one possible target scenario in which these four key areas collectively contribute to achieving net-zero emissions by 2045. Although the major features can be assumed to be quite robust, this is just one of several possible scenarios. In practice, the size and content of the contributions will depend on both technological and economic developments and the choice of policy strategies and instruments. The four key areas should not be viewed as isolated from each other but constitute a systems perspective. There are many linkages among them, for example in terms of the role forests play in the natural uptake of carbon dioxide and biomass production.

Policy plays a key role

Phasing out all fossil fuels and reducing greenhouse gas emissions to net-zero represents a major shift in society. We use the phrase “climate transition” to denote that shift. The climate transition is a transformation – away from an economy driven by fossil fuels to one that no longer contributes to global warming but can lay the foundations for sustained prosperity and sustainable welfare.

The world has undergone major transformations in the past, such as industrialisation and the digitalisation taking place right now. Common features of the climate transition are its grounding in joint political decisions, a sense of urgency and the need for broad adoption, and an understanding of the global ramifications of taking or not taking action. The UN Framework Convention on Climate Change and the Paris Agreement set out a common overarching goal, while implementation rests mainly with the world’s countries through domestic policies. The EU has a common contribution under the Paris Agreement. With the reforms now underway in the EU, more policy decisions that are relevant for achieving the climate goals will be taken jointly within the EU than has previously been the case.

Policies play a crucial role in the climate transition, not only in supporting the necessary advances in technology and pricing of greenhouse gas emissions, but in facilitating and supporting behavioural change and building legitimacy for the climate transition in different parts of society. In order to implement the transformation to a net-zero-carbon society, it is crucial that the goals and transition have broad support from the general public and that the policies pursued are perceived as legitimate and fair to citizens. Overall policy is not just the sum total of laws, rules and budget items. It is about the many aspects of leadership, formulating common goals, and making the path towards these goals understandable and a matter of urgency.

The Swedish Government’s leadership needs to be strengthened

Although the climate transition currently has momentum in Sweden, many policies must be strengthened in order to accelerate the transition and achieve the climate goals. This is especially true of how the Government utilises its agencies.

The four key areas cut across all areas of society, illustrating the need for policies to be coordinated between different levels, policy areas, ministries and government agencies. The Ministerial Working Group has improved the conditions for the Government’s internal coordination of policies for achieving the climate goals. However, there is no corresponding coordination mechanism covering Sweden’s central government agencies. The Climate Policy Council’s analysis shows that the agencies see a need for better coordination between the ministries and consistent governance from the Government Offices. The analysis further shows that the government agencies do not perceive that the climate goals and Sweden’s Climate Act are generally being prioritised by the Government.

The current governance, including the climate policy action plan and the Ministerial Working Group on Climate Policy, cannot yet be said to constitute the common strategic framework that many government agencies would like to see and need in order to take more proactive, innovative steps as drivers in the climate transition. A number of government agency representatives are therefore calling for a more clearly defined responsibility, long-term remits, and resources for skills development and implementation. In the Climate Policy Council’s assessment, there is an untapped potential in the Government’s leadership to improve goal achievement.

The next climate policy action plan must be a plan for acceleration

According to the Climate Act, the government that takes office after the autumn parliamentary elections must present a climate policy action plan for its upcoming term of office. An overwhelming majority of the Swedish Riksdag currently supports the Climate Act and the climate goals. This broad political consensus in the Riksdag is one of Sweden’s greatest assets in its ongoing climate transition. All parties involved share a responsibility to nurture and build on this common foundation. Regardless of which government takes office, it will face the question of not if but how the climate transition is going to accelerate.

There is no time to lose in achieving this. After the current plan, only six action plans remain before Sweden is to have reached net-zero greenhouse gas emissions. Greenhouse gas emissions have so far fallen by about a third since 1990. Two-thirds remain in the period leading up to 2045, and emissions need be reduced more rapidly. The next climate policy action plan must be a plan for acceleration – an acceleration of efforts that can help reduce near-term emissions and thus reach the 2030 targets, and of strategic efforts that must be implemented now to enable continued emissions reductions beyond 2030.

Recommendations

Based on analyses in this and previous reports, the Climate Policy Council presents five overarching recommendations concerning the direction and content of the next climate policy action plan. They are formulated as five overarching priorities, which are concretised and exemplified in a number of points of a broader nature and which also link to one or more of
the four key areas.

Improve governance of government agencies and coordination between different policy areas and decision-making levels.

The climate policy framework aims to inform the Government’s and the Riksdag’s policies in all areas. This stated ambition has not yet had a sufficient impact on the Government’s leadership
in this area.

• Conduct a review of the societal goals most relevant to the climate transition.
• Strengthen the coordination of government agencies’ contributions to the climate transition.
• Give a standing remit to relevant government agencies to contribute to the climate policy action plan.
• Introduce a clear administrative responsibility for resource efficiency and the circular economy.

Strengthen goals and policy instruments in key areas.

The Climate Policy Council’s follow-up of the current climate policy action plan has identified several vital individual initiatives and appointed commissions of inquiry. But the pace of implementing more sweeping reforms is slow. The analysis of the transition’s key areas shows a number of sub-areas where policy needs to be strengthened.

• Strengthen governance to achieve a transport-efficient society.
• Make policy instruments for energy efficiency more stringent.
• Create a clearer roadmap and strive for greater consensus on the role of forests and agriculture in climate policy.
• Raise the level of ambition from fossil-fuel-free to climate-neutral agriculture.

Create better conditions for investments that contribute to achieving the climate goals.

It is crucial for the climate transition that both public and private investments focus on zero-carbon solutions and do not lock society into a continued dependence on fossil fuels. This requires policy to steer public investment in the right direction and to provide favourable conditions for private investment that will lead to a fossil-free future.

• Ensure that the fiscal framework does not get in the way of the necessary climate investments.
• Reform the tax system with a view to reducing climate impact and boosting resource efficiency.
• Ensure that the ambitions for faster and more efficient permitting processes have an effect.
• Review electricity grid regulation and the regulations for Svenska kraftnät, the authority responsible for Sweden’s transmission system for electricity.
• Expand financing opportunities for investments that mean negative emissions.
• Create workable systems for sharing risk with private investors.
• Use public procurement to create markets for new technologies.

Implement a broad knowledge and upskilling initiative for the climate transition.

An accelerated climate transition requires new knowledge and skills across a variety of areas and levels in the society. This applies to specific occupational skills in growing industries, in particular as relates to comprehensive electrification, as well as transition expertise in central government agencies. A broader knowledge boost is also important for strengthening support for and driving the climate transition.

• Boost the skills and capacity of government agencies and ministries.
• Develop a dialogue with higher education institutions around supplying skills for the climate transition.
• Increase opportunities and resources for vocational education and training and continuing professional development in areas critical to the transition.
• Use public education and other resources to boost knowledge about the climate transition on a broad front.

Take proactive, coordinated and decisive action in the EU.

The Swedish Government and government agencies must have sufficient capacity to actively influence and implement decisions in the EU. This involves coordinating national policies with the EU’s new goals and policy instruments and implementing all new EU directives in a timely and effective manner in Swedish legislation. Furthermore, Sweden and Swedish companies, regions and municipalities need to be given a solid foundation for leveraging the opportunities that EU cooperation offers for the climate transition, for example through various funds and investment aid. In addition, the Swedish Presidency of the EU during the first half of 2023 presents a special challenge and opportunity to contribute to the implementation of the EU’s climate ambitions through the Green Deal.

• Ensure that the Government Offices and relevant agencies have sufficient capacity to influence and implement the EU’s green reform agenda.
• Prepare and utilise the Swedish Presidency to push for reforms that provide the foundations achieving the EU’s climate goals.
• Work to scale down the emissions pathways within the EU’s current and future emissions trading systems quickly enough for the EU to successfully reach net-zero emissions by 2050.