IEA report highlights Sweden’s opportunity to lead on the clean energy transition

Sweden’s advanced electricity system, natural resources and geology mean the country is well placed to accelerate electrification and transform energy-intensive industries by drawing heavily on low-emissions electricity, according to the IEA’s new Sweden 2024: Energy Policy Review.

However, advancing electrification will come with a sizeable increase in new electricity demand that the current system will need to accommodate. Uncertainties across the electricity system in Sweden persist, including the scale of industrial power demand in the north, offshore wind development in the south, the outlook for new nuclear power plants, and permitting delays for transmission lines. In addition to removing barriers to new clean electricity generation, Sweden will need to undertake more coordinated system-level planning to prepare for a potential doubling of electricity demand by 2045.

IEA’s Director of Sustainability, Technology and Outlooks, Laura Cozzi, is launching the report in Stockholm today alongside Daniel Liljeberg, Sweden’s State Secretary to the Minister for Energy and Enterprise, Ebba Busch.

Leveraging access to fossil-free electricity, Sweden’s industrial sector is focused on low-emissions hydrogen as a key decarbonisation pathway to produce ‘green steel’. While encouraging, the IEA report notes that the sector would benefit from a hydrogen strategy that clarifies the potential role for hydrogen in the future energy system and that maps the roles and responsibilities for system development.

Transport remains a challenging sector for Sweden to meet its emissions targets, according to the IEA report. The country has made notable progress on electric vehicles penetration in recent years, supported by government incentives. However, incentives have been lowered recently as has an ambitious biofuels quota, which had successfully displaced oil and associated emissions in road transport. Therefore, Sweden will need to assess whether its current policy settings in the transport sector can effectively accelerate emissions reductions to keep on track with domestic and EU targets. 

With a typically cold climate and a sizeable energy-intensive industry sector, Sweden’s energy intensity is relatively high compared to other IEA countries. The buildings sector, in particular, would benefit from additional measures to support energy efficiency. Considering the additional demand for electricity that the energy transition will bring, electricity savings achieved through energy efficiency can play a critical role in optimising resources.  

Overall, the IEA report concludes that Sweden will need to assess the energy system and its policy levers holistically to ensure that they are aligned with the accelerated decarbonisation outcomes that climate targets require. Sweden’s opportunities to become a global leader in clean energy technologies and low-emissions industry are considerable, and actions taken in the short-term will inform its long-term ability to capitalise on this opportunity.

The IEA regularly conducts reviews of the energy and climate related policies of its member countries and provides recommendations – a process that supports energy policy development and encourages the exchange of international best practices and experiences. The latest review of Sweden took place in June 2024, and it finds that Sweden is in a promising position to realise its climate ambitions. The country already has a low-emissions electricity system and a generous endowment of natural resources ensuring that it is well positioned to advance its energy transition and maintain a competitive edge as an export-oriented economy.