Energy Policies of Iea Countries - Sweden - 2004 Review (Electronic book text)

Swedish energy policy combines strong government involvement with the judicious use of market forces, as exemplified by high energy taxes intended to shape supply and consumption patterns, and one of the world's most liberalised electricity markets. This dual approach has generally worked well, giving Sweden a reliable, low-cost and environmentally sound energy supply.

Sweden must now resolve the future of its nuclear power plants, which provide nearly 50% of the country's electricity. This issue has been debated for more than 25 years and the lingering uncertainty undermines investment and other decisions in the energy sector. The government must work with stakeholders to find a credible solution.

Sweden uses energy taxes and a renewable certificate system to curb greenhouse gas emissions. While both instruments are effective, care must be taken in their implementation. Energy taxes are already high and further increases might have only a minimal effect on behaviour. The cost of reaching the country's ambitious renewables target must also be closely monitored

While Sweden is a successful model of electricity market reform, it faces challenges such as tightening supply-demand balance throughout the Nordic market, concentration of ownership and the emergent constraints on the Nordic transmission network, notably for interconnectors. These challenges need to be addressed in concert with other Nordic countries.