Sweden is often hailed as an example by the greens and the left for creating a “green welfare state” and eliminating all non-renewable energy resources by the year 2020. This certainly sounds very comforting for a European Union facing an energy crisis. “If Sweden can do it, so can we,” one could say. Unfortunately, mostly the cheerful reports of Sweden’s switch to renewable energy sources only look at government communiqués.
Sweden does have a large need for energy. Winters are cold and Swedish industries are often energy intensive. With an ample supply of hydropower and nuclear energy this demand was met. However, in the name of the green welfare state no more hydropower plants will be built, and in a referendum in 1980 it was decided to close down all nuclear power plants.
The process has slowly started, and last year the nuclear power plant of Barsebäck was closed at the cost of 18.5 billion Swedish krona (€1.92 billion) according to parliamentary report. A very high cost in order to not produce energy.
Mona Sahlin, minister for sustainable development, is still keeping the Swedes in the dark about what is to actually replace nuclear energy. The slow pace in abolishing nuclear power is due to the fact that the social democratic government is well aware that oil and nuclear power provide about 80% of Swedish energy. But international press releases cost less.
Sweden’s neighbour, Finland, has a similar need for energy. The Finnish are currently building new nuclear plants. They regard nuclear energy as a reliable energy source that does not contribute to CO2 emissions. They are also wisely building a discrete cable for energy export to Sweden. Discussions about building new nuclear plants are also brewing in France and the UK.
There is a strong correlation between the availability of cheap, reliable energy and economic growth. Environmental policies often seem to be conceived to damage economic growth in the name of a green myth, while, hypocritically, the power needed is being bought from polluting Polish coal power plants.
These policies have already begun to affect ordinary people in Sweden. They have to pay higher energy prices and suffer recurring power shortages. Some municipalities have advised the citizens to stock up on candles and canned foods in winter. The situation for the Swedish consumer is especially tragic since the social democratic government actually introduced some good reforms in the past. Back in 1996 they introduced extensive market reforms in energy production and in the trade for electricity. The government monopolies on different parts of the production and distribution chains were removed or at least decreased. The reforms made it possible for the consumer to freely choose between electricity providers and to personally renegotiate contracts. Today 50% of all consumers have either changed provider or made new deals with their old provider.
Many nations in the EU could still take cues from the earlier Swedish reforms. But market reforms have to be upheld, and in the decade since these reforms the Swedish politicians have failed to do so, while the government’s “green welfare state” project has worsened the situation.
The Swedish Competition Authority recently pointed out that the electricity market is again dominated by a few companies, owned by the Swedish, Finnish and Norwegian governments.
While this certainly is not a positive development, a problem that the Authority did not address is that the consumer, owing to extensive taxation, is increasingly unable to influence the price he is paying for electricity. Of the total price the Swedish energy consumer pays, the cost for producing electricity is only about 30%. Around 25% of the energy bill has to account for various types of fees to the energy providers. As much as 45% is made up of taxes. The high degree of taxation means that the consumers’ choices barely affect the costs they are paying. The advantageous situation of the Swedish energy market in the late 1990’s, due to government’s reforms, was taken as a signal by the government that fresh tax money could be made by undercutting the beneficial effects.
Moreover, the implementation of the European emission trading directive has increased the marginal cost of energy production. The Swedish Competition Authority asserts that this increase has been fully redirected to the consumers.
What Sweden is currently experiencing is not a bold experiment in “sustainable development.” There are still some positive effects of the market reforms introduced previously, while the failures, misjudgements and revocations of market reforms are being covered up in green rhetoric that will not keep the Swedes warm in the winter nor keep their industries competitive.