Sweden has long enjoyed some of Europe’s cheapest electricity, powering its steel, aluminium and paper industries for decades. But as international electricity prices climb and Sweden’s grid grows more tightly linked to Europe, calls to restrict exports and keep domestic prices low have grown louder. A new study from the Centre for Environmental and Resource Economics (CERE) suggests that “cutting the cable” would be a costly mistake.
In the CESifo Working Paper “Soaring Electricity Prices: Is Cutting the Cable a Good Idea? A Computable General Equilibrium Analysis for Sweden,” economists Christoph Böhringer (University of Oldenburg) and Bengt Kriström (CERE, Swedish University of Agricultural Sciences) model the Swedish economy to weigh the pros and cons of export restrictions. Their conclusion: export restrictions do shield electricity-intensive industries such as steel, non-ferrous metals and paper, but at a steep price for the country overall. Given a doubling of international electricity prices, free trade would boost welfare (i.e. real consumption) for the representative Swedish consumer by more than 3.5%, versus less than 1% under an export quota — a large share of the gains from trade are thus lost to protect industries that account for only around 4% of Swedish production.
The researchers find a cheaper way to protect these industries: targeted subsidies to output or employment. Since the sectors are a small slice of the economy, the subsidies needed are modest — yet they preserve nearly all the gains from free trade while still safeguarding jobs.
“Overall, higher electricity prices are good for the Swedish economy. It might sound paradoxical, but some win while others lose,” Kriström noted when the findings were first covered by Energyloop. The study also flags an important caveat: rising prices shift income away from workers and capital owners toward those holding stakes in power generation, an equity issue policymakers will need to address.
The findings have already drawn national attention: alongside Energyloop.se, the study was picked up by Sveriges Radio’s Ekot, which reported that increased electricity exports could benefit Sweden despite higher prices.
The research was conducted at CERE, a joint centre of Umeå University and the Swedish University of Agricultural Sciences, with support from the Mistra Electrification programme.
Read the full working paper: Böhringer, C. and Kriström, B. (2026), “Soaring Electricity Prices: Is Cutting the Cable a Good Idea? A Computable General Equilibrium Analysis for Sweden,” CESifo Working Paper No. 12765.