Reducing Swedish Carbon Dioxide Emissions from the Basic Industry and Energy Utilities : An Actor and Policy Analysis

Abstract: The aim of the thesis is to analyze the design of the present climate and energy policies. The main focus is on how the policy instruments affect the Swedish stakeholders who are included in the European Union’s Emission Trading Scheme (EU-ETS). In-depth interviews have been carried out with representatives from the basic industry, energy utilities as well as industrial and green organizations. The purpose is to illustrate have how these stakeholders view the current policy framework and what amendments that they view as necessary.Suggestions to the Government are given regarding the design of national policies and policy instruments to provide for an improved policy framework. The information and synthesis have furthermore been collected through extensive literature studies as well as participating at conferences and seminars.The thesis is written as a monograph in order to address a larger group of readers interested in the transition of energy systems towards sustainability as well as policy makers and Swedish stakeholders. The common understanding that the global energy systems have to undergo a transition to renewables and higher energy efficiency due to the earth’s finite sources of fossil fuels and uranium presents large challenges for policy makers and business sectors as well as the society in general.Global greenhouse gas (GHG) emissions have to be drastically reduced and the work to achieve this has started through international negotiations such as the Kyoto Protocol. As the present commitment levels are low, an important issue in a short-term perspective is to develop a more comprehensive and efficient system with a much wider participation and more stringent emission targets.In order to achieve current national policy goals and international GHG emission commitments the Swedish Government utilizes a number of policy instruments that are either nationally self-assumed or called for by international agreements or the European Union. The Swedish stakeholders that are included in the EU-ETS face a broad policy framework that has a large impact on their daily operations and future investment strategies. It is imperative for the policymakers, i.e. the Government, to act in accordance with the long-term perspective that the climate change issue and the transition of the energy system require. It is likewise important that any actions are in accordance with the operational and investment climate that the business sector faces. It is argued that these aspects are not fully considered as the success of the next national budget or term of public office seems to overshadow these issues. A long-term perspective is required to provide the business sector with stable and reliable incentives. This is needed to provide the economic conditions under which the businesses can realize investments that will result in emission reductions. Short-term policies reinforce the view of environmental investments as a form of risk investments. This negatively affects the possibility of the policy instruments to effectively achieve established policy goals.Paying attention to these requirements is however not a simple task for policy makers as it will require agreements between the political parties. This demonstrates the main political difficulty with climate change – the requirement of a long-term and full commitment by all state authorities. It should be noted that the thesis does not attempt to describe the Swedish policy makers as neglecting the urgency of acting to mitigate climate change. The national agenda is far to advanced from an international perspective for such statements. The thesis however pinpoints some important issues highlighted by stakeholders, within the business sector and other organizations, who are concerned with the present climate and energy policy framework.Some of the findings are as follows:• Reducing GHG emissions in order to combat climate change must include a long-term perspective• The design of policy instruments should consequently be long-term to increase the support for investments in GHG emission reducing technologies• The design of policies that promote low GHG production alternatives within the energy utilities should be improved• The large potential for reduced GHG emission available through fuel switching and energy efficiency improvements in the Swedish basic industry should be promoted by amended policies• Reformulate or abandon the national GHG emissions target goal with the current formulation• Strive for an emission rights allocation system that is as transparent, fair and predictable as possible• The policy framework should aim for a high level of stability through interaction with the affected stakeholders• These factors are inherently important for the overall efficiency of the policy framework