Policy priorities for mobilizing investment in Swedish green industrial transitions

In its latest assessment reports, the Intergovernmental Panel on Climate Change stresses that there is a rapidly closing window of opportunity for global action to prevent and adapt to climate change and that mitigation and adaptation is needed now. The Swedish Climate Policy Council has stated that a transition has been initiated in Sweden, and national emissions have been cut by about 35% since 1990. Still an acceleration of this transition is needed to reach the national target of net-zero emissions by 2045. Industry is responsible for about a third of Sweden’s greenhouse gas emissions, and investments in deep emissions cuts in this sector are key for reaching the national target. This involves investments in innovative technologies that enable increased efficiency in the use of materials and energy, increased circularity, and fuel and feedstock switches. For most industrial sectors several pathways are being implemented, although there remain large uncertainties and risks associated with the options they are pursuing.The implementation of new technologies will often increase both capital needs and operating costs and there might be periods of elevated working capital as investments in new technologies have to overlap old production processes while verifying new solutions. Moreover, industrial sites have long lifetimes and long investment cycles. As a result, investments in technological and production changes that bring deep emissions cuts in heavy industry risk older assets having to be written off prematurely. Details are scarce on the extent to which capital investment entails a challenge for industrial transition and if so how to handle these challenges. The aim of this report is to better understand the key challenges for investments in technological and production changes that bring deep emissions cuts in heavy industry in Sweden. We investigate this matter from the perspective of both industry actors and actors from the financial sector. Our key research questions are: • Is the size of the capital ...