During this year’s Spring Budget press conference, measures and reforms were introduced with a total value of SEK 45 billion. Just over 30 billion of these are going into measures to mitigate the consequences of the pandemic, and about 1.6 billion could be considered as investments in the environment and climate.
Under the chapter “Continuing the Resumption of the Green Economy” in the Spring Budget, there are proposals for additional funds to support solar cells, boosting environmental compensation for freight transport by rail and additional funds for developing public transport. Measures are important, but to achieve the goal of becoming a fossil-free leading nation, more consistent actions and clear rules of the game are required.
Recently, it has become evident that the Swedish economic efforts during the year of the epidemic have been moderate from an international perspective. For the entire OECD region, the stimulus corresponds to roughly 5 percent of GDP in 2020, with the US and UK ending up slightly higher than this. For Sweden, the corresponding figure appears to have remained at around 2% of GDP.
“With risk appearing to be biased, the fact remains that the financial sector in particular is one of the most important tools for increasing the pace of sustainable societal change.”
Given Sweden’s inherent fiscal strength before and during the pandemic, there is scope for more offensive climate initiatives in the restart policy. At the same time, it is important to highlight that the rules of the game and incentives are just as important as budget investments – perhaps even more. An example of a rule of the game playing a role in the future is the climate policy framework and how it should be implemented.
The purpose of the Swedish climate policy framework is to create a long-term perspective and resilience in both the economy and society. The Climate Policy Framework was adopted in 2017 and consists of the Climate Act, Climate Targets, and the Climate Policy Board. The long-term goal of the framework is that Sweden will not have net emissions of greenhouse gases by 2045. It is a target that remains in place, despite the pandemic.
To achieve this goal, we need greater investments in energy conversion, green cities, and a sustainable financial sector. With risk appearing to be biased, the fact remains that the financial sector in particular is one of the most important tools for increasing the pace of sustainable societal change.
The financial sector is a major player in the transition to a fossil free economy. But for it to be able to do its job, more clear game rules and incentives are required. The current lack of consistency regarding how this tool is used as a climate tool is instead leading to increased costs and systemic risks for current and future generations.
Therefore, the government must do its utmost to include emissions from Swedish investment and lending in Sweden’s overall national climate goals. It would provide clear incentives for the financial sector to contribute to the net zero emissions target in 2045. Through this initiative, the government will clarify the climate policy game plan and the severity of specific climate targets, which can contribute to increasing the desire for investment from private actors in the green economic recovery. .
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