The green transition has gone from vision to reality. Industry is leading the way, investing billions in fossil-free steel, green cement, electrification, and hydrogen. Today, however, these investments face new challenges. Higher interest rates, geopolitical tensions, and a shift in voter sentiment are putting pressure on both industry and politics. What will happen to Sweden’s green ambitions – and what role can the government play in the ongoing transition?
In the summer of 2020, the European Commission crowned its green wave with a historic investment of over €430 billion to turn Europe into a green hydrogen economy. The investment was too big for the industry to ignore, and a wave of green initiatives was launched. In Sweden, this further accelerated the development of fossil-free steel and other industrial projects. We took a leading position in the green transition.
A turning point in the transition
The war in Ukraine, Northvolt’s bankruptcy, geopolitical uncertainty, and growing skepticism about costly sustainability projects are now reshaping the landscape. Five years after the EU presented its Green Deal, climate change is no longer high on voters’ agendas – not because it is considered unimportant, but because other issues are prioritized.
It is now increasingly clear that the transition will be both costly and affect businesses and millions of people. At the same time, electrification is already so far advanced and profitable that, in many sectors, the political and economic costs of turning back would be greater than those of completing the transition. Meanwhile, narratives of “green bubbles” and fears of tax money funding failed projects, such as a repeat of the infamous “Stålverk 80,” have taken root in public debate.
Yet investing in green innovation and fossil-free energy remains an important part of strengthening Europe’s competitiveness – a point highlighted in Draghi’s report on competitiveness. Politics has more to gain by adapting to the new reality while continuing to drive the transition than by hitting the brakes.
What are the implications for Sweden?
Climate policy is important, but it should be seen more as part of a broader industrial strategy. A century ago, access to affordable electricity was a key factor in Sweden’s industrialization and economic growth. The starting point is largely the same today. Nevertheless, Sweden is struggling to create an attractive environment for green industry. Lengthy permitting processes, a lack of capacity in the electricity grids, and an inconsistent policy strategy are holding back business investments.
Historically, the government has played a central role in energy investments – from the early days of hydropower to the expansion of nuclear and wind power. Politics sets the timeframe for the green transition; therefore, it makes sense for the government to also play an active role in its implementation. The Skellefteå bankruptcy does not change this.
2025 sets the tone for the next term of office
The government is running out of time to turn election promises into real results. 2025 will be a critical year, testing political support, funding, and the pace of major projects before the focus shifts to the 2026 election campaign. Anyone hoping to influence the direction of policy for the next term of office needs to act quickly.
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Anders Oremark, Founding Partner
Björn Nyblom, Founding Partner