Financing the decarbonisation of heavy industry sectors in Sweden

The report estimates that a net increase in investment of approximately 66 billion SEK is required to decarbonise Swedish heavy industry by 2045. This includes 50 billion SEK for the four largest emission sources—steel, petrochemicals, refining, and cement—and 15 billion SEK for carbon capture and storage (CCS) in the pulp and paper sector to achieve net-zero. The analysis reveals that financing challenges vary by sector: steel and petrochemicals face high capital expenditure (CAPEX) hurdles due to the need for transformative new processes, while cement and refining are primarily constrained by high operational expenses (OPEX) associated with adding CCS. The report argues that while the total costs are manageable compared to other national infrastructure spending, current carbon pricing under the EU ETS is insufficient to drive these investments, necessitating increased public risk-sharing and targeted industrial policy.

• Of the total investment, 50 billion SEK is needed for the four largest emission sources, which account for 70% of industrial emissions (approximately 12 Mt CO2 per year).
• Sector-specific investment needs for the four largest sources include 21 billion SEK for hydrogen direct reduction in steel, 16 billion SEK for recycled plastic feedstock in petrochemicals, 12 billion SEK for electrolysis and CCS in refining, and 2 billion SEK for CCS in cement.
• An additional 15 billion SEK investment in CCS for the pulp and paper sector is identified as the most cost-effective way to achieve net-zero by generating negative emissions to offset the remaining 30% of industrial CO2 emissions.
• The nature of the financial challenge differs by sector: steel and petrochemicals are more CAPEX-intensive due to transformative technology shifts, whereas cement and refining are dominated by OPEX increases from adding CCS.
• The cement sector faces the highest production cost increase (approximately 90%) due to high operational costs and low product value per tonne.
• Petrochemicals and steel face high risks of carbon leakage because a large share of their production is exported and transport costs are low relative to production costs.
• The report suggests that doubling or tripling current direct public support (from the Industriklivet programme) over the next decade would be sufficient to meet the financing challenge.

APA

Nykvist, B., Maltais, A., & Olsson, O. (2020). Financing the decarbonisation of heavy industry sectors in Sweden. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2023/12/ssfc-hard-to-abate-v6-final-published.pdf

Chicago

Nykvist, Björn, Aaron Maltais, and Olle Olsson. Financing the decarbonisation of heavy industry sectors in Sweden. Stockholm Environment Institute, 2020. https://www.sei.org/wp-content/uploads/2023/12/ssfc-hard-to-abate-v6-final-published.pdf.

Wikipedia

{{cite report |last1=Nykvist |first1=Björn |last2=Maltais |first2=Aaron |last3=Olsson |first3=Olle |title=Financing the decarbonisation of heavy industry sectors in Sweden |publisher=Stockholm Environment Institute |date=12 November 2020 |url=https://www.sei.org/wp-content/uploads/2023/12/ssfc-hard-to-abate-v6-final-published.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{nykvist2020financing, author = {Nykvist, Björn and Maltais, Aaron and Olsson, Olle}, title = {{Financing the decarbonisation of heavy industry sectors in Sweden}}, institution = {Stockholm Environment Institute}, year = {2020}, month = nov, url = {https://www.sei.org/wp-content/uploads/2023/12/ssfc-hard-to-abate-v6-final-published.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }