“A carbon tax affects a lot more emissions than the carbon trading scheme does,” affirms Andreas Carlgren, Swedish environment minister. “But never fear,” adds ministry spokesman Mattias Johansson, “it’s not a European tax. Each country would retain control. There would be a minimum rate, and the tax would be charged by each State, the way VAT works.”
It’s all of 18 years since the Swedes established a carbon tax on energy consumption. Whenever sceptics claim the tax kills growth, its proponents whip out its track record: since the tax was introduced, Swedish greenhouse gas emissions have dropped 9%, while the economy has grown 48% since then. “So this tax doesn’t slow growth in the least,” concludes Mr Johansson. What is more, the carbon tax annually puts 15 billion Swedish crowns (€1.4bn) in the public coffers. When it was first launched back in 1991, the rate was €27 per metric ton of CO2. Now it is €108/ton.
The successive tax hikes on fossil fuels have driven down CO2 emissions due to transport, for the most part private cars. Each year from 1990 to 2005 saw a reduction of between 1.5 and 3.2 million metric tons. The government stresses the fact that Swedes are among the Europeans who produce the least CO2 (6.7 metric tons p.a. per inhabitant, as against the EU average 9.3 t).
A carbon tax, Stockholm argues, sends a clear-cut political signal: the polluter pays. And the tax is easy to administer, insist the Swedes. “We’ve always suggested lowering payroll taxes and increasing taxes on CO2 emissions instead. That’s what we’ve been doing progressively. But we still think the carbon tax is too low in Sweden,” says Anders Grönvall, spokesman for the Swedish Environmental Protection Association, one of the most powerful ecology organisations in the country. He points out that the current centre-right government only quite recently came round to the carbon tax cause.
Sweden is in a better position than many other countries: first of all because less heavily dependent on oil thanks to its nuclear and hydroelectric power plants, which together generate almost all of Sweden’s electricity; but also because, along with Finland, it is the country that uses the most non-fossil fuels, for the most part forest biomass. Fuels derived from renewable resources, such as ethanol, methane, biofuels, peat and compost, are carbon tax-exempt. Hence the widespread use of biomass for heating and industry. Since the tax was put in place, homeowners heating with fossil fuels have grown few and far between.
A few years ago the governing Social Democrats proposed a plan for Sweden to become the first country in the world to be entirely oil-independent by 2020. The current government has not gone so far as to take up that banner.