At the beginning of the new year, the new climate law of Sweden was introduced. This law provides a framework that the country can follow to be climate-neutral by 2045. Sweden is one of the first countries to set the climate approach by law.
Climate Policy Gets Priority
This Climate Act obliges Sweden to pursue climate policy based on an independent committee's objectives, writes Business Green. The target is five years more ambitious than the country's original goal in the Climate Agreement.
"From now on, it is illegal to give climate policy no priority," says Isabella Lövin, Minister for International Development Cooperation, in a written response. According to Lövin, Swedish climate law is the most ambitious climate law in the world.
The Climate In The Budget
To become climate-neutral, Sweden has to reduce CO2 emissions by 85 percent up to 2045, compared to CO2 emissions in 1990. Every year, the country has to report on the progress in its budget. Besides, Sweden is expected to publish an action plan every four years in which the country indicates how it will meet its CO2 targets.
In June, the Swedish Parliament adopted the Climate Law with an overwhelming majority: 254 against 41. "Every country must actively demonstrate that it takes responsibility in the area of climate change," said Lövin.
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Sweden’s Carbon Tax
Climate change is one of the most pressing challenges facing the international community. A broad range of policy instruments can be used to curb carbon emissions, and economic instruments such as taxes and emissions trading are critical elements of any comprehensive mitigation strategy.
Graphic by the Government Offices of Sweden
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'Polluter Pays' Principle
Pricing carbon emissions is a way of applying the 'polluter pays' principle, in which the costs of pollution are borne by those who cause it. This ensures that emissions are reduced most cost-effectively while stimulating the development and deployment of new, clean technologies.
Energy sources were first taxed in Sweden in the 1920s. A carbon tax was instituted in 1991, alongside an already existing energy tax, and it remains a cornerstone of Swedish climate policy. Over time, the carbon tax has increased in importance, contributing to a broad range of environmental and climate objectives. For example, the carbon tax provides incentives to reduce energy consumption, improve energy efficiency, and increase renewable energy alternatives.
Carbon tax easy to implement
Swedish experience shows that a carbon tax can be easy to implement and administer at low costs to authorities and operators. This is particularly true if existing revenue collecting systems, such as systems for levying other excise taxes on fuels, are already in place. Another feature of the carbon tax that reduces costs associated with its administration is that tax rates in Swedish tax law are expressed in common trade units (volume or weight).
The carbon tax is levied on all fossil fuels in proportion to their carbon content. Carbon dioxide emissions released in burning any fossil fuel are proportional to the fuel's carbon content. It is therefore not necessary to measure actual emissions, which greatly simplifies the system. The combustion of sustainable biofuels doesn't result in a net increase of carbon in the atmosphere and is not subject to carbon taxation.
Swedish carbon tax rates
The carbon tax was introduced in 1991 at a rate corresponding to SEK 250 (EUR 24) per tonne fossil carbon dioxide emitted and has gradually been increased to SEK 1 180 (EUR 114) in 2019 (currency conversion based on an exchange rate of SEK 10.33 per EUR). By increasing the tax level gradually and in a stepwise manner, households and businesses have been given time to adapt, which has improved tax increases' political feasibility. A lower tax rate has historically been applied to the industry outside the EU Emissions Trading System (EU ETS). In contrast, the industry covered by the system is entirely exempt from the carbon tax. As of 2018, however, the industry rate outside the EU ETS is the same as the general rate.
Graphic by the Government Offices of Sweden
Sweden's carbon tax generates considerable revenues for the general budget (there is no 'earmarking' of tax revenues in Sweden). However, general budget funds may be used for specific purposes linked to the carbon tax, such as addressing undesirable distributional consequences of taxation or financing other climate-related measures.
Meanwhile In Germany
While Sweden is fully committed to climate, the German Conservative CDU / CSU of Chancellor Angela Merkel and the SPD's Social Democrats have just given up their climate goals for 2020. They wanted to reduce CO2 emissions by 40 percent by 2020 compared to 1990.
Now the parties want to focus on a climate target for 2030. In that year, CO2 emissions must have dropped by 55 percent compared to 1990. The government parties are still negotiating the priorities of the new government policy.
Source Rianne Lachmeijer
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