The report by the SEI Centre SSFC (Stockholm Sustainable Finance Centre) , IVL (Swedish Environmental Research Institute) and RISE (Research institutes of Sweden) , concentrates on Sweden and the heavy industries that account for the largest share of greenhouse gas emissions: iron and steel, cement, refining and chemicals. The authors also includes the pulp and paper industry in this study given that it is a large industrial point source of biogenic CO2 emissions (through the combustion of bio-fuels) and has the potential to contribute to meeting the national net-zero target with so-called “negative emissions”.

The study focused on technological alternatives that can lead to radical reductions of direct emissions. This means that incremental energy efficiency measures and reduced demand, although important, are not considered. The results are based on interviews with representatives from key industrial firms and financial firms and institutions.

The key research questions are:

  • Is the size of the capital investments needed for green industrial production a significant challenge for bringing about these transitions in Sweden?
  • What are the most important challenges for actors’ willingness to invest in deep green industrial transitions and investors’ willingness to provide financing for those investments?
  • What policies do industrial and financial actors think can best support the willingness to invest in and provide financing for deep green industrial transitions in Sweden?

Results and recommendations

“Neither the scope of investments nor access to financing are significant obstacles to the green transformation of Swedish heavy industry. According to our survey, what the industry demands is policy focus on issues related to creating market demand and ensuring that the necessary infrastructure is in place, says lead author Aaron Maltais, Program Director of SSFC and Senior Research Fellow at SEI.

Some of the authors´ recommendations are:

  • Policymakers should focus on market formation efforts. Particularly important are efforts at the European Union level to ensure that carbon price signals are high enough to create business cases for green industrial products and that efforts to prevent carbon leakage maintain fair competition.
  • Both investors and policymakers should continue to push for companies to deliver transparency and target setting with respect to their scope 3 emissions. Working with value chains to create demand for green industrial products is crucial for accelerating the pace of transitions.
  • The Swedish government should pay attention to how public support for industrial transitions may impact fair competition. As many countries strive to stimulate deep green industrial transitions, several industry respondents stressed that national direct support should be formed so that it does not undermine fair competition.
  • As industrial transitions can evolve over decades, it is crucial that policymakers can deliver a stable and predictable framework that is credible over mandate periods.