The Role of Business

Let's talk now about business, because business is an important player in all of this. On the one hand, it makes investment decisions with regard to current processes and the evolution of those processes, and then in addition is the whole question of investment in new technology. Describe the relationship that the EPA in Sweden has with business. What kinds of programs do you have, to point business in a new direction?

We take part in each other's programs, so to speak. When we set up a program about environmental issues or something like that, the people from the business community take part in that. And also, we take part in their different types of projects. So, there is a fairly close relationship, and in general, I must say that the Swedish business community is not problematic when we talk about environment -- quite the opposite. Of course, it's a challenge for them, because Sweden nowadays has some rather huge companies who act over the whole world and they are, of course, at the same time, rather interested to have more routes on the global arena than on a national arena. But my feeling is that we have a very good climate to discuss environmental problems and challenges with businesses.

So, you don't have to drag the Swedish business community -- you know, pulling them by the rope, so to speak?

No. Of course, you have a scale, but what is hopeful is that those who are leaders of really huge companies, like Volvo, Stora Enso, Saab, Ericsson, and so on, are very much committed to environmental shifts.

Is that partly because they're trying to service the greater Europe, and Europe is also initiating policies in this area?

Yeah, for several reasons. They [don't want to be] connected to processes that destroy the environment. I think that's the main reason, because the press is, of course, looking at them the whole time.

What about a company that gets bought by an American company? I believe Volvo is owned by Chrysler?

No, by Ford.

Okay, and then Saab is owned by ... ?

General Motors.

So, what is that synergy like? I believe Saab has a bio-car of some sort. Is that something that emerges out of Swedish technology? And then what is the synergy with the home office, so to speak, if it's now a United States company?

They are running, as I understand, fairly free from what's happening in other GM or Ford [plants]. Talking about Ford and Volvo: it's only the personal cars who belongs to Ford. The trucks and the buses are still a Swedish company. But I think that the ethanol Saab is a real success for GM, and as far as I understand, totally developed in Sweden. So, it seems that they are fairly free to do what they want.

So whatever is going on in Sweden, whether it's because of the political consensus, your tradition of being concerned about the environment, [or] the work of your agency, as Sweden is moving forward with whatever difficulties, there undoubtedly is a synergy with the global companies that Swedish companies may be a part of.

Yeah. There are different type of synergies that can go in both directions, because now we are talking about cars. We have another huge Swedish company which is not on the stock market, and that is Ikea. They are working enormously with corporate social responsibility and environment. We have often discussions with the management of Ikea in Sweden and they are really trying to [operate responsibly]. They are operating in, more or less, all countries of the world, and they are trying [hard], but they are not talking about it so much. I think that is interesting, because some companies would like to [gain] support [for] their brand with environmental work, but Ikea is not doing that.

I guess the challenge for companies is to make them internalize the cost of polluting in a way that has the effect on the climate. That cost has to become real to the manufacturer, and then to the customer, so that you create incentives, whether they choose to do this or not. They may be priced out of being able to continue on the present course.

That's a reason, also, why we are working so much with market-based instruments to make it more expensive to do harmful things to the environment. Of course, you always need regulations as a baseline, but for example, when we talk about climate change, market based instruments [are a good incentive]. We have this trading scheme in the European Union, all twenty-five countries have carbon trading, and I think it's excellent in combination with taxes and other types of economical incentives.

Explain what the carbon trading is, because that may be new to an American audience.

It's run by the European Commission, and it means that all countries had to send in an allocation plan for plants of a defined size. In Sweden, about 30 percent of the carbon emissions belong to the trading sector. Then there is an acceptance in Brussels of these allocation plans, and still we have the system that we give the companies permits to emit carbons. We are not allowed to give more permits than [what has been established], so we are on a stabilized level. In the next period, we are going to give them permits so they have to decrease. But if they expand, they have to buy permissions from the market. So, it means that, for example, a company in Poland who has permissions can buy investments, decrease emissions of carbon, and then sell their permits to a Swedish company who'd like to expand, for example, a steel plant.

I see. And over time, presumably, the price of these permissions will go up, so the cost would be reflected in the market.

Yeah. 2005 was the first year in Europe, and during that time the permits increased three times. So, they are three times more expensive now than when the trade started at the beginning of the year.

Now what about government investment incentives in new technologies? I assume that that doesn't necessarily happen in your agency, but I guess as part of a broader Swedish program. Do you see much of that, and is that successful?

Yeah, it's successful. We had a project called the Green Car. I think it's [finished] now and Volvo has developed a hybrid bus. So, that type of investment is done. We also have an investment program we are running on the local level, for the municipalities. We can give up to 50 percent of the investments they are doing. If they change, for example, the district heating system from oil to biofuel, or if they develop the local transport system, and so on; so, we have funds for local investments.

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