Paris, 12 March 2025
Abstract
Sweden successfully decoupled major environmental pressures from economic growth over the past decade. The country ranks well on many environmental indicators. However, a number of environmental targets are not expected to be met by 2030. Despite significant reductions in greenhouse gas emissions, recent policy shifts have created uncertainty.
This is the fourth Environmental Performance Review of Sweden. It provides an evidence-based assessment of the country’s progress towards its environmental goals in the last decade. The 28 recommendations aim to help Sweden improve its environmental performance, giving special focus to climate change mitigation and negative emissions promotion.
Executive Summary
Sweden has made progress on decoupling but has some way to go to achieve its environmental quality objectives.
Sweden has an open, knowledge-based economy that grew faster than the OECD average between 2010 and 2022. Following a relatively strong performance during and after the COVID-19 pandemic, gross domestic product (GDP) shrank marginally in 2023 but signs of recovery are emerging. Sweden has successfully decoupled major environmental pressures from economic growth. However, 12 national environmental quality objectives out of 16 and the generational goal – to pass on to the next generation a society in which major environmental problems have been solved – are not expected to be met by 2030.
The country needs an action plan to halt and reverse biodiversity loss by 2030…
The National Biodiversity Strategy and Action Plan should be updated, with a long-term vision and measurable milestone targets aligned with the Kunming-Montreal Global Biodiversity Framework, the EU Biodiversity Strategy for 2030 and the EU Nature Restoration Law. More than three-quarters of habitats and half of species of conservation importance are in poor or bad states. With 15% of land and marine areas protected, Sweden is not on track to meet the 2030 target of 30%. New protected areas should be designated to create an ecologically representative, coherent and functional network. The 2024 law on marine environment aims to strengthen the protection of marine areas.
…and to better mainstream biodiversity in forestry and agriculture
Agriculture and forestry are the main pressures on terrestrial habitats. Nearly 70% of the land area is covered by forests and 7% by agricultural area. Longstanding intensive forestry and standard clear-cutting practices have adversely affected forest habitats. Sweden is not on track to meet its objective on sustainable forest for 2030. It should encourage forestry practices that better support biodiversity, particularly in areas of high conservation values. The Common Agricultural Policy (CAP) 2014-22 has helped prevent land abandonment – a key threat to biodiversity – but has also contributed to further intensification in areas already subject to intensive agriculture. Sweden should ensure the CAP 2023‑27 encourages biodiversity-friendly farming practices, particularly in semi-natural grasslands, including in the Natura 2000 network, and adapt support to the geographical context.
Reaching ambitious water quality objectives requires more cost-effective policies and faster progress
Only 40% of surface water bodies have good ecological status and none have good chemical status, when considering mercury and other widespread persistent toxic substances. Eutrophication, caused by excess nutrients from agriculture, wastewater and atmospheric deposition, remains a major challenge. Sweden should consider implementing an emissions trading system for diffuse pollution and continue efforts to co-ordinate measures at catchment level to address water quality. Hydropower exerts extensive pressure on lakes and rivers. Most hydropower concessions were granted decades before adoption of modern environmental legislation. Sweden should speed up consideration of environmental provisions in hydropower permits, balancing the benefits of improved freshwater ecosystems with hydropower production. Reviewing the system of water abstraction permits would also be timely. Despite abundant water resources and low water stress at national level, water scarcity is a recurring issue in southeastern Sweden and emerging in other regions.
The green tax shift has reversed
The green tax shift – reallocating the tax burden from labour to environmentally harmful activities –was implemented in the first half of the 2000s but has reversed in recent years. Revenue from environmentally related taxes decreased from 2.5% of GDP in 2010 to 1.6% in 2023. This is partly explained by lower fuel consumption and increased electrification of vehicles but also by the drastic cut in fuel tax rates. Sweden continues to have one of the highest effective carbon rates in the world. However, this rate has dropped significantly over 2021-23, weakening incentives to reduce emissions. The country should revert to a green tax shift with a view to applying the polluter pays principle more consistently. This also involves screening support measures, including tax provisions to identify those that are potentially harmful to the environment, and developing a plan to phase them out.
Road pricing would help address transport externalities
Increased congestion charges in Gothenburg and Stockholm have yielded positive environmental and mobility outcomes. There is potential for other cities such as in Malmö and Uppsala to implement congestion charges or parking charges to internalise externalities and shift to other transport modes. Sweden should also modify road tolls for heavy goods vehicles to consider the distance travelled and better reflect the climate and air pollution costs of their use. The coherence of economic instruments that apply to transport needs to be improved. Over 2010-22, investment in roads increased much faster than investment in rail infrastructure. New applications for urban environment agreements for the development of cycling and public transport are no longer being signed.
Sweden is a leader on many climate-related indicators
In 2022, Sweden’s greenhouse gas (GHG) emission intensities per capita and per unit of GDP were the lowest in the European Union. Over 2010-22, GHG emissions, excluding land use, land-use change and forestry, fell by 29%, faster than the EU average of 19%. A large share of Sweden’s emission reductions can be attributed to a practical phase-out of fossil fuels to produce electricity and heating. A shift to renewable energy and large-scale nuclear power development have played a prominent role in reducing dependence on fossil fuels. In 2022, renewable energy accounted for over two-thirds of electricity generation.
Sweden should maintain its climate ambition as recent policy shifts have created uncertainty
Sweden’s 2017 Climate Act and the associated governance system guide action on climate. Sweden aims to reach net-zero emissions by 2045, followed by negative emissions thereafter. At least 85% of emissions must be reduced within Sweden’s borders. Supplementary measures can compensate for the remaining 15%. Sweden’s climate policy is also shaped by EU obligations. The country fulfilled its commitments under the Kyoto Protocol (2008-12 and 2013-20) and met its 2020 target for sectors outside the EU Emissions Trading System. However, recent policy shifts, particularly in the transport sector, have put into question Sweden’s ability to meet EU and domestic climate targets, with emissions projected to increase in 2024. Further, they have contributed to a less predictable framework for action. The budget bill for 2025 aims to reverse the increase in emissions. If adopted, it would improve the conditions for achieving the 2030 target and narrow the gap to the 2045 target.
Creating an enabling environment will be key for achieving the transition to net zero
As Sweden enters the next phase of the climate transition, the role of government in defining priorities, establishing the enabling environment and managing inevitable trade-offs becomes increasingly important. Transformations of the scale foreseen entail both economic benefits (e.g. new industries) and costs (e.g. loss of employment). The government also plays an important role in supporting regions in meeting the changing demand for social infrastructure and services. It has only recently focused on the labour market needs of the transition. The central government is also well placed to co‑ordinate the numerous actors in assessing skill needs and developing training for the climate transition. Further, the strong reliance of Sweden’s climate strategy on the electrification of sectors hinges on a potential doubling of fossil-free electricity use by 2045, as well as access to the electricity grid.
The potential contribution of supplementary measures in meeting climate targets remains uncertain
Sweden’s Climate Act specifies the role supplementary measures (increased carbon sinks in forests and land, carbon capture and storage from biogenic emissions [BECCS], verified emission reductions abroad) can play to offset emissions that are difficult or costly to mitigate. Sweden is pioneering technology developments for carbon capture use and storage, especially BECCS, and has played an active role in the climate negotiations on Article 6 of the Paris Agreement. However, all three groups of supplementary measures are complex and characterised by long lead times, highlighting the importance of demonstrating their potential contributions towards climate targets in the near term. For example, the sequestration of carbon by forests in a changing climate is uncertain, as is the scale of mitigation outcomes that can be sourced from abroad due to stringent EU targets and the relatively immature Article 6 market.
Further information
Source – OECD