The Swedish experience of carbon taxation: Get a fossil free beer or carton of milk!
Welcome to Sweden. We can serve you a beer or a glass of milk with a very low carbon footprint—thanks to our carbon tax.
This tax dates back to 1991. It was one of the world’s earliest carbon taxes, and today, it is the highest imposed by any government. The price is 1150 SEK/tonne CO2, or 130 USD/tonne CO2 and is paid by all sectors except for companies included in EU-ETS, the common European emission trading scheme. A consequence is that the biggest emitters pay the lowest cost for carbon emissions, whereas households and small-scale industry pay much more for each emitted kilo CO2. In a way this is clever, we have been able to reduce carbon emissions very efficiently in the household sector and in industries that are not energy intensive or in international competition.
Despite the record high carbon tax, the Swedish economy is thriving. This may in part be due to the carbon tax, as a major result is reduced imports of fossil fuels and better use of domestic renewable energy sources. The share of renewable energy in the Swedish final energy use is 54%, of which bioenergy accounts for 36%.
Since a year ago, food industries and other “non-heavy” industries pay a full carbon tax (these industries previously had a rebate, but it has been eliminated). We see many good projects and investments in the industry as a result of this carbon price.
Here are a few examples:
A couple of weeks ago, Frödinge, a company in southern Sweden producing frozen desserts and baked goods, inaugurated its new pellet steam boiler and scrapped the old, oil boiler to become fossil-free. Even before this, the Frödinge factory bought residual hot water from a nearby sawmill. The sawmill boiler, using wood residues like bark and sawdust, supplies heat to its own wood dryer, to the factory, and to the local heating grid. The shavings from the sawmill are then converted to pellets by a local pellet plant, which supplies Frödinge with fuel for the new boiler. It is a true circular economy where the energy is produced locally from the surrounding forests.
Several years ago, in the nearby town, Vimmerby, the Åbro brewery converted from fossil oil to energy from the city’s biomass-fueled heat plant. Since then, almost all major breweries in Sweden have thrown out their fossil boilers. Some, like Spendrups in Grängesberg, primarily use their own by-products. Spendrups dries the digest-ate and other waste to make its own pellets. Carlsberg’s west coast brewery has converted to biogas. Kopparberg brewery uses wood pellets.
Arla is the largest Swedish dairy company—a farmer owned co-operative. Arla has converted several of its dairies to biomass fuels. In Linköping, a woodchip-fueled boiler was built in co-operation with the local utility company. In Jönköping, the solution was a pellet boiler. Additionally, Arla’s new trucks collecting milk from the farms use ethanol (ED95) or biodiesel (HVO100). Even the packaging of the milk is made fossil free. The milk comes in paper cartons made of recycled paper with inside bio-plastic coating and with screw lids also made of sugarcane bio-plastics. The carbon footprint of these milk cartons is 35% less than the conventional paper cartons. Milk has never come in plastic containers in Sweden.
These three cases are good examples showing how companies respond to the high carbon tax. It is just not possible to use fossil oil, gas or coal when the tax is as high as it is in Sweden. The first step for companies is usually to reduce the energy use by efficiency measures. The second is to make use of waste, residues and by-products for energy. A third possibility is to co-operate with local utilities or other companies. Finally, converting to renewable energy is a fourth option. In all cases above, the companies also buy renewable electricity. Some companies even invest in their own wind-power or install solar collectors to supplement their electricity use.
Exactly what measures to take depends on the specific conditions for each company including the technologies available and the cost. The carbon tax does not favour specific solutions. This is the cost-efficient market economy at work. The purpose of the tax is to penalise the emissions of fossil CO2 and make it more profitable to avoid fossil carbon emissions.
Svebio, the Swedish Bioenergy Association, joins CPLC to promote carbon pricing with focus on carbon taxes. A carbon tax has the advantage that it is a stable instrument with a fixed level for years ahead. This gives the companies certainty when calculating costs. Also, the carbon tax has low administrative costs and gives income to the state budget, whereas subsidies are costs governments often cut when there is need for budget reform.
Svebio will work with Swedish global companies and institutions to influence governments around the world to introduce carbon taxes and learn from the Swedish example. We will also work through our international organisations like World Bioenergy Association and Bioenergy Europe. CPLC gives us access to a global network.
Svebio is a politically independent association of some 250 Swedish companies engaged in the bioenergy supply chain. Their aim is to promote bioenergy use in an economically and environmentally sustainable way. Besides policy work and information about bioenergy, they publish two magazines, Bioenergi in Swedish and Bioenergy International in English. They also organize conferences, both Swedish and international.
Svebio actively promotes carbon taxation in all fora where they are active, e.g. in Bioenergy Europe, in World Bioenergy Association and in other organisations, at climate summits and meetings, etc.
Svebio was founded in 1980. See more information about Svebio on www.svebio.se.