Successful Climate Policies A Swedish Perspective

1. Successful Climate Policies � A Swedish Perspective Your Majesty, your excellencies, ladies and gentlemen, My name is � and I represent the Swedish Energy Agency � one of the sponsors of the SPI-Flint project. First of all I would like to thank the Michigan state ... for organizing this event. It is an honor and a pleasure to be here today. I am convinced that this day is an important step in our common goal to solve one of the major challenges of our time � climate change. A few words about the Swedish Energy Agency: The Swedish Energy Agency has the task to implement Government policy towards a sustainable energy system. In doing this we execute national energy policy and implement major part of energy policy programmes. Sweden�s industrial development was built on a heavy exploitation of natural resources and dependency on oil. The price for our welfare was environmental damage such as climate change. Today I will try to show you how Sweden is meeting this challenge, and that it is possible to combine welfare development with climate care. Your Majesty, your excellencies, ladies and gentlemen, My name is � and I represent the Swedish Energy Agency � one of the sponsors of the SPI-Flint project. First of all I would like to thank the Michigan state ... for organizing this event. It is an honor and a pleasure to be here today. I am convinced that this day is an important step in our common goal to solve one of the major challenges of our time � climate change. A few words about the Swedish Energy Agency: The Swedish Energy Agency has the task to implement Government policy towards a sustainable energy system. In doing this we execute national energy policy and implement major part of energy policy programmes. Sweden�s industrial development was built on a heavy exploitation of natural resources and dependency on oil. The price for our welfare was environmental damage such as climate change. Today I will try to show you how Sweden is meeting this challenge, and that it is possible to combine welfare development with climate care.

2. Total energy supply in Sweden 2007 At the time Sweden was industrialized - around 1870 � the main energy source was wood biomass. Since then we have transformed our energy systen 4 -5 times. Today, we work to replace nuclear and fossil fuels with several renewables ( such as biomass, wind, solar and wave energy) and increased energy efficiency. This is only possible if one applies a long-term perspective. The dotted bars include losses within the system. Electric power: 45 % nuclear 45% large scale hydro 9 % from CHP biomass 1% from wind Oil products are mailny consumed by trsp & industry sectors. Loss is marine bunkers etc Note very low Natural gas.At the time Sweden was industrialized - around 1870 � the main energy source was wood biomass. Since then we have transformed our energy systen 4 -5 times. Today, we work to replace nuclear and fossil fuels with several renewables ( such as biomass, wind, solar and wave energy) and increased energy efficiency. This is only possible if one applies a long-term perspective. The dotted bars include losses within the system. Electric power: 45 % nuclear 45% large scale hydro 9 % from CHP biomass 1% from wind Oil products are mailny consumed by trsp & industry sectors. Loss is marine bunkers etc Note very low Natural gas.

3. Current Energy Supply As of 1970 we can see the most recent transformation. Sweden has no domestic fossil fuel resources, but we have managed to reduce our dependence over the past decades. Since the 70�s our oil dependence has decreased from 77% to 32% of our total energy supply. Oil was replaced by electricity, firstly from hydropower, then from nuclear. Today Sweden has an almost fossil free energy system � except for the transportation sector. Renewable energy makes up 40 percent of our energy consumption. Oil�s share of energy supply is less than a third and it will continue to decrease. As of 1970 we can see the most recent transformation. Sweden has no domestic fossil fuel resources, but we have managed to reduce our dependence over the past decades. Since the 70�s our oil dependence has decreased from 77% to 32% of our total energy supply. Oil was replaced by electricity, firstly from hydropower, then from nuclear. Today Sweden has an almost fossil free energy system � except for the transportation sector. Renewable energy makes up 40 percent of our energy consumption. Oil�s share of energy supply is less than a third and it will continue to decrease.

4. Oil dependence in different sectors Oil dependence is still heavy in the transportation sector and for mobile sources. The agricultural sector is only 2% of Sweden�s GNP. Oil dependence is still heavy in the transportation sector and for mobile sources. The agricultural sector is only 2% of Sweden�s GNP.

5. In Sweden growth in the economy began to separate from emissions after the oil crices in 1970. The original cause was the establishment of nuclear power and switching from oil to electricity heating. That is now being changed again, in towns to district heating and in rural areas to heat pumps primarily, but also pellets and other renewable fuels. We have had a good start. We are rich in natural resources such as hydropower and forestry. But development has not come spontaneously. With strong political instruments we have since 1990 managed to increase the share of renewable energy, reduce CO2 emissions by 9 percent and during the same time our GNP has grown by 44 percent. ---- The real challenge is about combining the care for climate and environment with continuing economic and social progress. The goal is to ensure the long term decoupling of the use of energy and natural resources (economic growth) from GHG emissions. Our experience so far shows that this is doable. ----In Sweden growth in the economy began to separate from emissions after the oil crices in 1970. The original cause was the establishment of nuclear power and switching from oil to electricity heating. That is now being changed again, in towns to district heating and in rural areas to heat pumps primarily, but also pellets and other renewable fuels. We have had a good start. We are rich in natural resources such as hydropower and forestry. But development has not come spontaneously. With strong political instruments we have since 1990 managed to increase the share of renewable energy, reduce CO2 emissions by 9 percent and during the same time our GNP has grown by 44 percent. ---- The real challenge is about combining the care for climate and environment with continuing economic and social progress. The goal is to ensure the long term decoupling of the use of energy and natural resources (economic growth) from GHG emissions. Our experience so far shows that this is doable. ----

6. Main policy instruments in different areas (1) Promoting renewables Renewable electricity certificates/obligation CO2-tax Subsidies for new technologies Promoting energy efficiency Energy taxes Legal demands on buildings Subsidy programs Voluntary agreements with tax refund Part of the Swedish success story has been based on policies that are general in character. With the introduction of a carbon dioxide tax in 1991 we have put a high price on CO2 emissions. (Three framework legislations form the basis of the energy and environment policies. I will come back to some of these issues later in my presentation.) The share of has increased to 40 percent of our energy consumption. Our focus is on general policies like price signals. Energy and carbon taxes have been imposed on electricity and fuels. The current energy taxation policy is aimed at improving energy efficiency and encouraging the use of bio fuels. It creates incentives for companies to reduce their environmental impact. (From the nineties, the CO2 tax is seen as the main cause of the development.) Step by step the country has been shifting towards a green energy system. Some examples are an increasing share of combined heat and power production from waste and a national energy efficiency plan, promoting public transportation. ---- Part of the Swedish success story has been based on policies that are general in character. With the introduction of a carbon dioxide tax in 1991 we have put a high price on CO2 emissions. (Three framework legislations form the basis of the energy and environment policies. I will come back to some of these issues later in my presentation.) The share of has increased to 40 percent of our energy consumption. Our focus is on general policies like price signals. Energy and carbon taxes have been imposed on electricity and fuels. The current energy taxation policy is aimed at improving energy efficiency and encouraging the use of bio fuels. It creates incentives for companies to reduce their environmental impact. (From the nineties, the CO2 tax is seen as the main cause of the development.) Step by step the country has been shifting towards a green energy system. Some examples are an increasing share of combined heat and power production from waste and a national energy efficiency plan, promoting public transportation. ----

7. Main policy instruments in different areas (2) Reducing emissions of greenhouse gases CO2-tax Emission trading Subsidies  Research, Development, Demonstration, Dissemination International Cooperation Reasons for national implementation => credibility (in addition to the imperative and obvious need of measures at home) INTERNATIONAL COOPERATION - An important part of developing the future sustainable energy system is working together with other countries. The driving force for International Cooperation is twofold: Developing countries have the right to the same technological development as industrialized countries Sharing knowledge by exchange between developed countries in addition to competition will move technological development forward at a faster pace That is one reason why Sweden in June 2007 signed an agreement with the US to co-operate in the field of research and development concerning biofuels and renewable technology. We are now in the process of realising its potential. And there is no shortage of ideas. The co-operation has, at least in Sweden, received much attention. Many scientists and companies have been inspired by the agreement and reached out across the Atlantic for partners. Getting our countries together is very much the result of the dedication and enthusiasm of one person, the US ambassador to Sweden, Mr Michael M. Wood. And it is of course also very much due to the support and interest of the US Department of Energy, and - to be especially recognized today � the efforts of the Michigan Board of Economic Development and Consular Lennart Johansson. USA is a huge economy with enormous capabilities in science. We are proud that Swedish research in some specific areas can match this and be part of a win-win cooperation, that will result in the strengthening of the competitiveness of both our countries. Reasons for national implementation => credibility (in addition to the imperative and obvious need of measures at home) INTERNATIONAL COOPERATION - An important part of developing the future sustainable energy system is working together with other countries. The driving force for International Cooperation is twofold: Developing countries have the right to the same technological development as industrialized countries Sharing knowledge by exchange between developed countries in addition to competition will move technological development forward at a faster pace That is one reason why Sweden in June 2007 signed an agreement with the US to co-operate in the field of research and development concerning biofuels and renewable technology. We are now in the process of realising its potential. And there is no shortage of ideas. The co-operation has, at least in Sweden, received much attention. Many scientists and companies have been inspired by the agreement and reached out across the Atlantic for partners. Getting our countries together is very much the result of the dedication and enthusiasm of one person, the US ambassador to Sweden, Mr Michael M. Wood. And it is of course also very much due to the support and interest of the US Department of Energy, and - to be especially recognized today � the efforts of the Michigan Board of Economic Development and Consular Lennart Johansson. USA is a huge economy with enormous capabilities in science. We are proud that Swedish research in some specific areas can match this and be part of a win-win cooperation, that will result in the strengthening of the competitiveness of both our countries.

8. Renewable electricity certificates Tradable certificates combined with mandatory share of renewable energy sources for electricity users Financial instrument, introduced in 2003 Cost efficient support system Independent of state finances In 2003, a market based green electricity certificate system was introduced. The aim is to promote cost effective electricity production based on renewable sources such as bio energy, wind power and hydropower. It creates a competition between different renewable energy sources. And it gives us the most renewable energy for our money. And the result is striking: Carbon free heating � in one of the coldest countries in the world! The system is planned to go on through 2030. The current goal for electricity production from renewable sources is set for 2016. To reach it, there has to be an advanced speed in the development, which is expected as there is currently a slump after �low hanging fruit� has been picked. (Bio-fuelled CHP.) In 2003, a market based green electricity certificate system was introduced. The aim is to promote cost effective electricity production based on renewable sources such as bio energy, wind power and hydropower. It creates a competition between different renewable energy sources. And it gives us the most renewable energy for our money. And the result is striking: Carbon free heating � in one of the coldest countries in the world! The system is planned to go on through 2030. The current goal for electricity production from renewable sources is set for 2016. To reach it, there has to be an advanced speed in the development, which is expected as there is currently a slump after �low hanging fruit� has been picked. (Bio-fuelled CHP.)

9. Certificate Trade Principles Just a simple picture to show the general principle behind the electricity certificate system.Just a simple picture to show the general principle behind the electricity certificate system.

10. Emission trading system A part of the European Climate Change Programme (ECCP), 2005 Main purpose to contribute to the union�s target in a cost-effective way plus preparing for the Kyoto Protocol Part of the UN system, 2008 Emissions trading is one of the flexible mechanisms (IET, JI and CDM) under the Kyoto Protocol. 2005 � 2007 was a testing period. As of this year we are connected to the UN system. All European Union member states are part of the system. As of 2013 the system will be more centrally managed by the European Commission. At present the price of the certificates indicates that there is an effect. Emissions trading is one of the flexible mechanisms (IET, JI and CDM) under the Kyoto Protocol. 2005 � 2007 was a testing period. As of this year we are connected to the UN system. All European Union member states are part of the system. As of 2013 the system will be more centrally managed by the European Commission. At present the price of the certificates indicates that there is an effect.

11. Carbon taxes in Sweden The carbondioxide tax was introduced in 1991, following a major tax reform that involved practically all taxes, especially income and capital taxes. In the beginning the CO2 tax was the same for all sectors, but for international competition reasons industry was relieved of it. The EU-minimum level of 0,5 % can be avoided by voluntary participation in an energy efficiency programme. (PFE) Red lines = industry, blue line other sectors. 100 SEK = 15 USD. As this picture shows, politicians have chosen to increase the taxes for non-completive sectors (e.g. transport, residential) thus strengthened the environment policy. At the same time taxation in the industry have not been changed. In later years market prices have increased and the reason for tax adjustment have been weak.The carbondioxide tax was introduced in 1991, following a major tax reform that involved practically all taxes, especially income and capital taxes. In the beginning the CO2 tax was the same for all sectors, but for international competition reasons industry was relieved of it. The EU-minimum level of 0,5 % can be avoided by voluntary participation in an energy efficiency programme. (PFE) Red lines = industry, blue line other sectors. 100 SEK = 15 USD. As this picture shows, politicians have chosen to increase the taxes for non-completive sectors (e.g. transport, residential) thus strengthened the environment policy. At the same time taxation in the industry have not been changed. In later years market prices have increased and the reason for tax adjustment have been weak.

12. Historical taxes on oil and coal in Sweden Sweden has a long experience in energy taxes. In other words, the consumers are used to high energy prices. Today half of the price for fuel oil in the residential sector consists of taxes; e.g. carbon tax, energy tax and value added taxes. In the transport sector, the level is higher, 60-75 %, depending on oil prices.Sweden has a long experience in energy taxes. In other words, the consumers are used to high energy prices. Today half of the price for fuel oil in the residential sector consists of taxes; e.g. carbon tax, energy tax and value added taxes. In the transport sector, the level is higher, 60-75 %, depending on oil prices.

13. Programme for Energy Intense Industry - PFE Industry gets tax exemption on electricity In return, the companies have to improve their energy efficiency 126 companies participate, using in total 30 TWH electricity per year (2004). This has proven to be a highly cost-effective measure. Saving is calculated at 3TWh !!This has proven to be a highly cost-effective measure. Saving is calculated at 3TWh !!

14. Swedish Energy ResearchFocus areas Buildings as energy systems Energy intensive industry Transport sector Electricity generation and distribution Bioenergy including CHP (Combined Heat & Power) Energy system studies The Swedish programme on energy research, development, demonstration and market introduction is a main component of our energy policy. We cannot hope to meet the challenges and retain economic growth unless new technology is made available. This programme is being strengthened and refined to focus on the challenges and opportunities ahead. More and more emphasis is put on the innovation and market introduction phases. (Sweden�s largest biomass resource is forests. Therefore one of our main targets for research and development is conversion of wood to biofuel. )

15. We need new technology for everything from the smallest energy efficient household appliance to huge new biorefineries. These services have to be made available not only to the industrialised economies of today but to the whole global community. This makes the challenge even greater. However, these challenges are also opportunities. Opportunities for new clean-tech business. In fact this is a growing market. � The Swedish and European experience is that strong market based policy instruments do lead to new investments. We need new technology for everything from the smallest energy efficient household appliance to huge new biorefineries. These services have to be made available not only to the industrialised economies of today but to the whole global community. This makes the challenge even greater. However, these challenges are also opportunities. Opportunities for new clean-tech business. In fact this is a growing market. � The Swedish and European experience is that strong market based policy instruments do lead to new investments.

16. Cleantech enterprises in Sweden This is to show you the increase in exports and �green jobs� as a result of increased investments in Cleantech.This is to show you the increase in exports and �green jobs� as a result of increased investments in Cleantech.

17. Thank you for your attention! Sweden has high ambitions for the transformation to a future energy system. We take the challenges of climate and security of supply very seriously. We have to look at energy and increased use of renewable energy with a broad international perspective. A sustainable solution to the world�s growing needs for energy is truly important for peace and security in the world. We have to learn from each other and we have to compete with each other. The bilateral cooperation between our two countries is an example of this. We have a common challenge and are working together to provide the solutions. The inauguration of the SBI-Flint project shows this in practice. I hope I have been able to inspire you and to strengthen your trust for further collaboration. Thank you! Sweden has high ambitions for the transformation to a future energy system. We take the challenges of climate and security of supply very seriously. We have to look at energy and increased use of renewable energy with a broad international perspective. A sustainable solution to the world�s growing needs for energy is truly important for peace and security in the world. We have to learn from each other and we have to compete with each other. The bilateral cooperation between our two countries is an example of this. We have a common challenge and are working together to provide the solutions. The inauguration of the SBI-Flint project shows this in practice. I hope I have been able to inspire you and to strengthen your trust for further collaboration. Thank you!