”Policy lags behind as business drives the fight against climate change”

A major UN environment conference, Stockholm +50, was held in the Swedish capital on 2 to 3 June. The event marks 50 years since the first UN environment conference. It is an opportunity to reflect on what has been achieved since 1972, but above all to look ahead.

Since 1972, many of the major local environmental problems of the time have been solved or mitigated. This also applies to major global challenges such as the threat to the ozone layer. Much remains to be done, but a combination of technological development, a vibrant and innovative business sector and wise policies has enabled substantial progress.

At the same time, the world has undergone an economic revolution that has lifted billions of people out of poverty to a better standard of living. That process has not been painless or without environmental challenges, and we also see a deteriorating situation in the wake of the pandemic, but essentially it is a story of fantastic progress. Many of those who met in Stockholm 50 years ago had a far more pessimistic view of the world’s development opportunities.

This is a lesson we need to take with us into this year’s conference and when we tackle the crucial environmental challenge of our time – climate change – with the clear goal of halving emissions as early as 2030. This will require the same combination of far-sighted policy making, scientific progress, and an innovative and competitive business community.

We need to apply a number of basic principles for successful solutions to environmental problems:

• Global problems require global solutions. The most effective way to reduce global climate impact is to price emissions globally. Sweden and the EU should strive for as global a price structure as possible in all contexts, and assist other countries with financial and technical support to introduce effective environmental taxes or emissions trading systems.
• Let business show the way. Business today is driving the fight against climate change, and Swedish companies in particular are at the absolute forefront of development. With an almost fossil-free electricity system, efficient production processes and a transition to climate-smart processes and business models, companies create global climate benefits. Swedish exports already reduce global greenhouse gas emissions by the equivalent of half of our own emissions. With the right conditions, we can double that.
• Free trade in focus. Demand and competition in a global market drives innovation and encourages companies to follow leading companies in their work on fossil-free products. Climate change will require innovation, technology, capital and knowledge. These are resources that can first and foremost be mobilised by the business community. With economic transparency, exchange of the best solutions can go from being local to global. EU trade policy will continue to be based on climate-friendly imports and external investment.
• Effective climate policy. Policy sets the framework for business-driven climate transition, while poor policy is the most important obstacle. Measures taken must be based on proper impact assessments and be subject to systematic follow-up. A clear cost-benefit focus is needed to ensure that every climate krona invested provides as large a reduction in emissions as possible. Effective and efficient policy is based on our responsibility for the climate transition, but it is also necessary for citizens to feel confident in climate policy. Short-term symbolic policy making complicates the transition in both these respects.

From a Swedish – and European and international – perspective, this means that politics first and foremost needs to prioritise a number of areas.

Ensure a cost-effective electricity system that delivers fossil-free electricity when and where it is needed. The goal for Swedish energy policy must be to establish a 100 per cent fossil-free electricity system. This would enable a climate transition at a lower cost and with greater security of delivery, which is crucial for the business community to make the necessary investment.

At the same time, the conditions for a rapid expansion of wind power must be safeguarded. There is no contradiction between the types of power needed in the future. If we are to address climate change, enormous amounts of electricity are required, and hydropower, wind and nuclear power all have a role to play.

The pace and predictability in permitting processes must increase. Time limits in proceedings need to be introduced. At the same time, the authorities’ duty to investigate must be strengthened with the aim of refining and focusing the process. Today, for example, several authorities can appeal the same decision, which creates significant uncertainty for the applicant.

The transition to a circular economy – based on the principles of the market economy – must be facilitated. For example, companies need to have the right to own their waste and to operate in competitive markets. Work to enable the circular transition needs to be conducted at EU level and be part of the common internal market.

Business is leading the climate transition. It is policy that is lagging behind with effective legislation and the insight that the global impact of innovative solutions is a crucial part of the solution.

At the 1972 environment conference, policy took the initiative. But business followed suit and ended up leading efforts to solve many of the environmental challenges of the time. Fifty years later, the relationship is the other way around. Business – especially Swedish business – is driving progress and is ready to fully contribute to solving the climate issue. This time, politics must follow. And fast.