Trade policy can accelerate electrification

News

Electrification of Sweden’s transport and industry sectors is integral to achieving Sweden’s climate goals, strengthening competitiveness and reducing dependence on imported fossil fuels. A new report from the National Board of Trade examines how trade policy can contribute to electrification.

The report emphasises that the transition to electrified transport and industry will entail a large increase in electricity use and thus a vast expansion of electricity generation from fossil-free sources, and of transmission and vehicle charging infrastructures. In turn, extensive imports of raw materials, inputs, equipment and specialist services will be needed. To enable this, four trade policy priorities are identified: securing access to critical raw materials, improving cross-border transport for recycling, standardising key technologies and reducing trade barriers for products of importance to electrification.

Another issue is reforming and cooperating on distortionary subsidies. Fossil fuel subsidies distort competition and make it more difficult for electrified alternatives to take hold. Renewable energy subsidies are much lower than fossil fuel subsidies but have been repeatedly challenged within the WTO. In addition, the report suggests that Sweden and the EU should maintain a predictable and stable policy environment for carbon pricing and the EU’s Carbon Border Adjustment Mechanism to ensure investments in industrial decarbonisation.

Read the full interview with Neil Swanson and download the report.