Financing green industrial transitions: A Swedish case study

Abstract

Achieving global climate targets requires massive reductions in greenhouse gas emissions from energy-intensive industrial sectors. We investigate whether financing is an important obstacle for radical emission reduction in industry. We study Sweden as a case of a country that is comparatively advanced in its planning for transitions to low-carbon industrial production. We find that the size of capital investments or the availability of financing for these investments is not perceived as a significant obstacle. There are a number of factors explaining this, such as the fact that the companies involved in this study are well-established, large corporates, and hence well placed to finance their transition plans through conventional corporate finance channels, that conditions for market demand are good in the EU, and that many of the firms are in early stages of developing new technologies, when capital need is smaller compared to later stages. We also find that many financial actors express a strong appetite for sustainable investments. Finally, we observe that despite financing not being perceived as an obstacle, there is still a large and important role to play for public actors for reducing the risk of investments and accelerating the pace of change going forward.