11/06/2014 - Sweden has shown a longstanding commitment to the environment, significantly reducing greenhouse gas emissions, air pollution and nitrogen leaching. Renewables supply more than a third of its energy needs. Sweden has set itself tough targets for the future, however, and must continue to innovate if it is to meet them, according to a new OECD report.

 

The OECD’s third Environmental Performance Review of Sweden says the country will need to find new ways of making its environmental policies affordable to keep public support behind ambitious goals such as having zero net greenhouse gas emissions by 2050 and having a vehicle fleet free of fossil fuels by 2030.

 

Sweden is one of the few countries to have successfully used taxes to reduce environmental damage. This has encouraged eco-innovation and spurred the use of green technologies. Yet most of the country’s advances in green taxes date back to a decade or more ago.

 

“Sweden is a frontrunner in using market instruments like green taxes to discourage environmentally harmful activities and foster new technologies,” said OECD Environment Director Simon Upton, presenting the Review’s main findings and recommendations in Stockholm. “But the better one does, the harder it is to improve. Sweden will need more cost-effective policies and a fairer sharing of compliance costs to meet future goals.”

 

Sweden was one of the first countries to introduce a carbon tax but big differences in how carbon is priced across the economy have reduced the cost effectiveness of this policy. Much of the tax burden falls on households, small businesses and public services while sectors like farming, forestry, fishery and shipping enjoy exemptions. Power plants and large factories pay very little for what they emit.

 

The Review also notes that while more marine areas are now protected in Sweden, there is increasing evidence of the surrounding sea’s vulnerability to overfishing and pollution, including from fertilisers and sewage, making co-ordinated marine management vital.

 

Recommendations include:

 

• Apply environmental taxes and pricing to more products and activities, especially in areas other than energy use such as fertilisers and hazardous chemicals.

 

• Routinely evaluate the incentive mix in the transport sector, including taxation of fuel, vehicles and company cars. Diesel taxes should be raised to the level of petrol taxes.

 

• Remove remaining exemptions from carbon and energy taxes that are not justified on environmental, economic and social grounds.

 

• Further expand protected marine areas and establish effective management plans and resources.

 

• Further develop payments for ecosystem service programmes and expand the use of market-based approaches for reducing sea pollution.

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The Review’s Assessment and Recommendations chapter is available here ahead of its publication in full in September. For further information, or to arrange an interview with the author, please contact Catherine Bremer in the OECD Media Office on +33 1 45 24 97 00.