Sweden reduces fuel reduction obligation to 6 percent amid climate concerns

On January 1, 2023, Sweden reduced its fuel reduction obligation to 6 percent for both diesel and gasoline, a significant decrease from the previous 30.5 percent for diesel. Gasoline saw a smaller reduction from 7.8 percent. This change was one of the key campaign promises of the Tidö parties. The measure is projected to result in an additional four million tons of carbon dioxide emissions, drawing harsh criticism from opposition parties and several stakeholders. It also risks causing Sweden to fall short of its climate goals and the commitments made to the EU, potentially leading to hefty fines and loss of billions in subsidies.

Recent budget negotiations indicate the Tidö parties have agreed to incrementally raise the reduction obligation from 6 to 10 percent. While considered a minor adjustment, it could lead to a reduction of at least half a million tons of CO2 emissions annually. However, reverting the reduction obligation symbolizes a broken promise, particularly for the Sweden Democrats and the Christian Democrats, who previously held strong positions on this issue.

The Tidö parties have pledged that Sweden will meet its EU emissions reduction commitments, necessitating government action to cut emissions. The sooner such actions are taken, the less severe they need to be. They also intend to further lower fuel taxes, hoping to stabilize pump prices despite a higher blend of biofuels. The forthcoming change in the reduction obligation is anticipated to take effect on July 1, 2025, despite the government’s earlier decision to maintain the lowered obligation for the entire term.