“The general reason used is competition. However, I would say that it is more adequate to describe it as an issue of carbon leakage. The obligation to pay full tax could in, for example, the agricultural sector mean that large parts of the business would have to shut down. This would lead to increased import from elsewhere, that in the end would potentially mean higher emissions.
We therefore need to make an analysis of which effects each case would have on the global emissions with a changed tax rate, says Runar Brännlund. At the moment, there is a lacko of clear motives as to why Swedish subsidies remain, this was established by, for instance, OECD in a review from 2014.”
Read the full article ”Statliga miljarder göder utsläppen” (only in Swedish), published online April 12th, 2017.