Challenges and Solutions of Sweden’s Environmental Sustainability: A Comparative Analysis of National Carbon Pricing Policy and Volvo Cars as an Industrial Role Model

Abstract

Sweden is consistently identified as one of the clear leaders in the field of environmental sustainability, supported by over 30 years of carbon pricing, structural decarbonization and a bold legislative goal of reaching a net-zero position for greenhouse gas emissions by 2045. The paper includes a two-level analysis: at the macro level a comparative analysis of the carbon pricing architecture in Sweden as compared with Canada within the Brundtland sustainable development paradigm, and, at the micro level, an analysis of electric vehicle (EV) and lithium-ion battery (LIB) systems in Volvo Cars from a life cycle assessment (LCA) perspective (cradle to cradle). Compared to other policy approaches, the authors find that understanding the success of the national policy in Sweden needs to be analysed alongside the transformation of the industrial sector at a firm level, and that Volvo exemplifies how circular economy concepts and systems thinking can be put into practice in a complex, global value chain that is resource intensive. The findings demonstrate that the carbon tax in Sweden, participation in the EU Emissions Trading System (EU ETS), and the fossil-free electricity mix have actually achieved quite significant reductions in per-capita emissions and climate reduction pathways compared with Canada’s more decentralized approach, but large-scale structural weaknesses were still identified regarding fossil emission mitigation in transport, dependency on mineral resources, and climate risk exposure across the border. From a firm perspective, the impacts of decarbonization due to electrification are tempered by upstream battery extraction impacts, reliance on imported battery cells and infrastructure-related emissions generated by the battery lifecycle of Volvo. A robust concluding argument for the paper would be the need for integrated governance to find the balance between usage of fiscal instruments, industrial policy, circular resource management and systems-level infrastructure planning, to achieve GHG mitigation and policy-relevant recommendations are made in the pursuit of short-term GHGs against long-term structural energy transformation in Sweden.