Here is a general opinion on the matter. I had already mentioned that there are fundamental doubters who see it from the south of Sweden critical with the investments in the north. The author of this opinion makes things clear and explicitly mentions Talga.
"The transition does not stand or fall with Northvolt
It is easy to get the impression that the green transition is about a few large, politically and media-publicised industrial investments in northern Sweden. But in fact, the green transition is taking place every day in thousands of companies around the country on purely commercial grounds. So writes Sven-Olov Daunfeldt.
Sven-Olov Daunfeldt
3 December 2024
Northvolt has major financial problems. But the green transition does not stand or fall with the company.
Recently, criticism has been levelled at the green transition and the major industrial investments in northern Sweden. The criticism has intensified in connection with Northvolt's difficulties with its investment in a large-scale battery factory in Skellefteå. The problems have led to the
dismissal of over 1,100 employees. Northvolt has filed for reorganisation and risks going bankrupt if it fails to find additional financing.
Those who are critical of the green transition, and specifically of the industrial investments in Norrland, are keen to point to examples of previous investments that have failed. Christian Sandström provides several examples in his
trilogy on green bubbles, published by Timbro Förlag.
Many of the examples that Sandström highlights are entertaining to read about, but at the same time frightening from a taxpayer perspective. The initiatives are often characterised by extensive public support. This creates problems because it is easier to spend other people's money than your own. According to Sandström, these misinvestments occur as a result of a consensus culture, where few people ask critical questions about the realism of the investments. ‘Let's call these green investments lemons; like lemons, they look nice on the surface, but they taste really sour.
Those who follow the debate may get the impression that the green transition is about a few large industrial investments in northern Sweden that risk becoming giant lemons. But in fact, the green transition is happening every day in thousands of companies around the country. And the vast majority of these companies are financing their efforts themselves.
As a result, Swedish emissions have
fallen by 38% since 1990 and the trend continues downwards. This is the result of companies investing in green technologies to meet increased demand for products with less climate impact, but also a consequence of effective policy instruments. The phasing out of emission allowances in the EU, for example, means that the costs
for SSAB alone
are expected to increase by around SEK 10 billion per year if emissions are not reduced.
The vast majority of companies that invest in the green transition believe that it makes good business sense.
The overwhelming majority of companies investing in the green transition believe it makes good business sense. They are not doing it to get support from government agencies. Many are viable companies that have long been established in the market. Let's call these green ventures cherries - unlike lemons, they not only look good on the surface, they taste good too.
To get an idea of which companies are making green investments, I asked the regional offices of the Confederation of Swedish Enterprise to provide examples of potential cherries.
One is the mining company Viscaria (formerly Copperstone), which is investing almost half a billion kronor to reopen a copper mine in Kiruna. The deposit's high copper content and estimated mineral resources mean that the company can become an important supplier of responsibly produced copper - a metal that plays a key role in Sweden's and Europe's climate transition.
Meanwhile, seven kilometres east of Kiruna, the mining company Talga is investing several billion kronor to open a graphite mine in Vittangi. The high-grade natural graphite will first be enriched on site and then refined into anode material at Talga's factory in Luleå. This will increase Europe's self-sufficiency in anode materials for the battery industry, which currently relies on synthetic graphite from China, produced using processes that generate high carbon emissions.
In Husum outside Örnsköldsvik, the Finnish forestry group Metsä Board is investing billions to increase production capacity for folding boxboard. The aim is to strengthen the company's position as a leading European producer of sustainably produced packaging materials, with positive effects on the circular economy.
In Uddevalla, Scandinavian Enviro Systems and Antin Infrastructure Partners, with the support of Michelin, have started a collaboration to create the world's first large-scale tyre recycling facility. The aim is to recycle up to one million tonnes of end-of-life tyres annually in Europe by 2030.
Another example is NKT in Karlskrona. Here they are building the world's largest facility for the production of high-voltage cables at sea, including a 200-metre high cable tower that will be Sweden's second tallest building. The submarine cables will be exported to offshore wind turbines all over the world. Combined with major defence investments, this makes Karlskrona one of the hottest growth regions in Sweden.
However, it is not possible to know in advance whether this type of green investment will be cherries or lemons.
The list could be much longer. However, it is not possible to know in advance whether these types of green investments will be cherries or lemons. They are often large investments made under genuine uncertainty. We know from economic research that such investments are important for the emergence of innovations that strengthen countries' competitiveness. Even failed investments can be important because they can lead to the building of important competences and new firms learning from past mistakes.
So what is the role of government in the green transition of business?
The most important thing is for the government to ensure that good general conditions for the green transition are in place. This involves, not least, investing in a fossil-free and reliable energy system where industry has access to electricity when it is needed. But we also need regulations that make it easier for companies to obtain licences, a functioning supply of skills and an infrastructure that can handle both goods transport and commuting in growing regions.
In addition, the government must pursue a long-term credible, stable and cost-effective climate policy. A credible climate policy that is sustainable over economic cycles focuses on maximising emission reductions per krona invested.
However, selective direct government support to companies should be avoided. This is because it is impossible for policymakers to predict future winners. Moreover, this type of support can have anti-competitive effects and favour subsidy entrepreneurs who specialise in seeking support rather than developing their own business.
Another instrument that policy makers can use is various types of tax deductions, for example for investments in R&D that reduce climate emissions. The great advantage of such a policy is that entrepreneurs know with certainty that their investment costs will be reduced, which is better than spending time and money on applications with a low probability of receiving support from any authority. Deductions for R&D investments are also generalised and technology-neutral, eliminating the risk of distortionary effects on competition.
As costly as sour lemons are, or as marvellous as cherries are, they are only isolated examples.
The above argument is supported by the article ‘
A Toolkit of Policies to Promote Innovation’, published in the top-ranked scientific journal
Journal of Economic Perspectives. In this study, the researchers analyse the effectiveness of different government support measures in increasing innovation. The results show that generalised tax credits are more effective in boosting R&D investment than selective direct subsidies to firms. This is interesting because this policy instrument is
less widely used
in the EU (and especially in Sweden) than in the US; while the US is characterised by higher growth and more innovations.
It is only in hindsight that we know which green investments became lemons and which became cherries. And no matter how expensive the sour lemons are, or how great the cherries become, they are only isolated examples. These examples
cannot therefore be used to draw generalised conclusions about different government support measures for companies' green transitions. Despite this, many commentators draw such conclusions about the major industrial initiatives in Norrland.
It is complicated to evaluate the effects of selective government support measures targeted at companies. An impact evaluation requires a control group of companies that have not received any support. In addition, objective data is needed on, for example, investments, number of employees, turnover and productivity.
The Swedish National Audit Office's review of industrial policy evaluations does not make for cheerful reading. Only 2 out of 37 evaluations reviewed fulfil the criteria for a credible impact evaluation.
But there are methods for evaluating the effects of different support programmes. We need more of this independent research and less of anecdotal evidence from single examples. It is not possible to draw generalised conclusions about business investment in the green transition from the performance of individual projects, no matter how much media attention they have received. In 2021, Swedish companies exported products and services that reduced global carbon emissions by between 22 million and 87 million tonnes
, according to Statistics Sweden. This corresponds to at least about half of Sweden's total climate emissions. The green transition is much bigger than a few individual projects in the north of Sweden - it is in full swing in thousands of companies across Sweden.
Sven-Olov Daunfeldt
Sven-Olov Daunfeldt is Chief Economist at the Confederation of Swedish Enterprise."
Det är lätt att få intryck att den gröna omställningen handlar om några större, politiskt och medialt uppmärksammade, industrisatsningar i norra Sverige. Men i själva verket pågår den gröna omställningen varje dag i tusentals företag runt om i landet på rent affärsmässiga grunder. Det skriver...
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