A Swedish parliamentary committee with members from seven parties is tasked to submit proposals on how Sweden’s environmental targets can be reached. One area for the committee is the goal of eliminating net greenhouse gas emissions in the foreseeable future: a task likely to require major changes in the coming years, especially as regards the energy supply system. Analysing the economic consequences of such changes is an important input in the decision-making concerning both design and administration of climate policy, what short-term targets to set, and which instruments to use. In Sweden, it is particularly important to understand the impact of measures to reduce emissions from the transport sector, since assumptions regarding future emissions from this sector strongly drives the economic impact analysis of climate targets.
The report considers 12 different model scenarios that assess the impact of Swedish climate targets. The scenarios consists of ones made with a so-called general equilibrium model called EMEC, and a technology-oriented energy system model called TIMES-Sweden.
We find that estimates of the socioeconomic impacts to achieve climate targets vary greatly between different analyses. In certain scenarios, greenhouse gas emissions are reduced to target levels with very modest costs (equivalent to less than 0.5 percent of gross GDP in 2030). In others, reductions of greenhouse gas emission cause considerable economic consequences, with up to a 9 per cent decrease of GDP in 2030. The results illustrate that it is impossible to form a clear view of the impact of climate policy based only on available model results, and that individual results are strongly driven by for example model limitations and assumptions regarding available measures to reduce emissions.
Our recommendation is to supplement the current decision basis with complementary analysis to the extent possible. Given the importance of transport sector emissions in Sweden, a “hybrid“ model – that is, a general equilibrium model with a clear technology representation in the power and transport sectors – would have particular value in the Swedish context.
The study is commissioned by Miljömålsberedningen.
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