Sweden enjoys a first mover advantage in green policy and technology and is a leader on efficient new buildings, but risks slipping in the NZRI if cutting-edge work by a few organizations is not widely adopted.
A comparatively low-carbon economy
Third-placed Sweden is ranked second on national preparedness and leads on performance in reducing emissions intensity of GDP. In 2017, it became the first country to set a legally-binding Net Zero target date of 2045, 5 years before the UN target.1
It is used to being an environmental pioneer, as the first country to pass an environmental protection act in 1967 and having led on issues including recycling and reducing acid rain.2 “The government is committed, and has been for a long time. Industry is also committed and the majority of people are starting to commit to this as well,” says Torbjörn Westman, Partner, KPMG in Sweden.
Sweden, which ranks fourth on electricity and heat, already generates all of its electricity from low-carbon sources, but will need to expand capacity and maturity of the grid to move to Net Zero, as much generation takes place in the north of the country while most people live in the south. “I’m pretty sure this will be solved, but it will be a huge investment to fix the infrastructure,” says Westman.
The country is placed second on transport owing to government action on electric vehicle charging legislation and low-carbon fuel mandates. The country aims to make its transport sector free of fossil fuels by 2030, ahead of its overall Net Zero target of 2045. Vehicle-makers Volvo and Scania are both involved in developing technologies, with Scania having launched its first fully electric truck in 2020.3
Innovative technologies
Sweden leads the NZRI’s buildings sector, with new construction increasingly using wood rather than concrete and focusing on energy efficiency, through the use of ecolabels. Westman says that it will be more difficult to refurbish existing buildings, including allowing them to be cooled as well as heated as outside temperatures rise.
The country is also pioneering the decarbonization of industry through the Hybrit research project which aims to make steel without using fossil fuels, a process currently responsible for 10 percent of national emissions. A pilot plant inaugurated by SSAB, LKAB and Vattenfall in 2020 will produce sponge iron (which is used to make steel) with larger facilities planned.4
However, Westman says that while Sweden has companies that are best in their class, others are moving more slowly: “It’s important to get the whole pack together, moving forward.”
Financial incentives
The increasing importance of green financing, where investment is dependent on projects and companies meeting environmental standards, should help achieve this. Again, Sweden has early experience with Vasakronan, a commercial property company owned by pension funds, having issued the world’s first green corporate bond in 2013.5
Private and public sector support for green technologies may also be needed to incentivize individual behavior, alongside education for both people and organizations. For example, previous attempts to shift drivers to using biofuel only succeeded when the option became cheaper than alternatives. “One thing we can’t forget is change management,” Westman says. “The country is getting there, but needs to continue that movement.”
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1 ‘Sweden’s Climate Act and Climate Policy Framework’, Swedish Environmental Protection Agency, accessed July 2021. https://www.swedishepa.se/Environmental-objectives-and-cooperation/Swedish-environmental-work/Work-areas/Climate/Climate-Act-and-Climate-policy-framework-/
2 ‘Lowering emissions is key to saving the climate. Find out how Sweden does it’, Swedish Institute, accessed July 2021. https://sweden.se/climate/sustainability/sweden-and-sustainability
3 ‘Scania launches fully electric truck with 250km range’, Scania, 15 September 2020. https://www.scania.com/group/en/home/newsroom/press-releases/press-release-detail-page.html/3768729-scania-launches-fully-electric-truck-with-250-km-range#
4 ‘HYBRIT: SSAB, LKAB and Vattenfall to begin industrialization of future fossil-free steelmaking by establishing the world’s first production plant for fossil-free sponge iron in Gällivare’, Vattenfall, 24 March 2021. https://group.vattenfall.com/press-and-media/pressreleases/2021/hybrit-ssab-lkab-and-vattenfall-to-begin-industrialization-of-future-fossil-free-steelmaking-by-establishing-the-worlds-first-production-plant-for-fossil-free-sponge-iron-in-gallivare
5 ‘Green financing’, Vasakronan, accessed July 2021. https://vasakronan.se/en/about-vasakronan/financial-information/green-financing/