Carbon dioxide and energy tax

Published on November 13, 2019

The carbon dioxide tax, based on the fossil carbon content in fuel, aims at reducing the emissions of carbon dioxide mainly in sectors outside the EU Emissions Trading System. The tax has been raised in several steps since it was first implemented. In total, the tax has increased from SEK 0.25/kg (1991) carbon dioxide to SEK 1.20/kg (2021). In addition to specific tax increases stipulated in government bills, a yearly indexation of the tax level is applied.

The tax level is proportionate to the calculated amount of carbon dioxide emissions, based on the fuel’s fossil carbon content. This means that biofuels currently are not subject to carbon taxation, if not used within the Swedish reduction obligation scheme for motor fuels.

Due to the risk of carbon leakage, some sectors have a reduced tax or are exempted from the tax.

By setting a higher price on fossil fuel, other options, such as biofuel and electrification, has a better chance to enter the market. A higher price on the fossil fuel also gives incentives for energy efficiency actions.