Sweden introduced a carbon tax in 1991, along with an energy tax that has been levied since the 1920s, and both of which remain a foundation of Sweden's climate policy. In Swedish tax law, the tax rate is calculated in trade units (quantity or weight) and the carbon tax is levied on all fossil fuels in proportion to their carbon content. Since carbon dioxide emissions emitted when burning fossil fuel is proportional to the carbon content of the fuel, the Swedish government considers it unnecessary to measure actual emissions, which simplifies the carbon tax measurement system. On the other hand, burning sustainable biofuel does not increase the amount of carbon dioxide and therefore no carbon tax is levied.
Fuel for power generation is not subject to carbon tax, while industrial fossil fuel is taxed at 50% of the general level. In addition, the European Emissions Trading Scheme (EU ETS) was launched in 2005, covering heavy industry and power plants. Swedish companies that are EU ETS members are not required to pay their domestic carbon tax.
Tax rates and utilization of revenue
Swedish carbon tax was introduced at a rate of 250 Swedish krona per tonne of carbon dioxide in 1991 and has increased to 1,200 kr per tonne of carbon dioxide in 2021. Gradual increases in the rate year on year give households and businesses time to adapt. The largest source of tax revenue is transport fuels, but Swedish tax revenue is not earmarked, so other climate-related measures need to be funded by the general budget.
For example, vehicles in Sweden are taxed on carbon dioxide emissions. The emissions are calculated as follows:
Emissions=10523.452+(total vehicle weight*0.063)+(four-wheel drive*23.569)+(vehicle year*(-5.234))+(non-manual*7.127)+(engine power*0.195)
The gross vehicle weight is in kilograms, and the upper limit is 3,500 kilograms.
If the vehicle is four-wheel drive, set the four-wheel drive to 1, otherwise set to 0.
If the transmission of the vehicle is different from manual ones, set the non-manual to 1; if the transmission is manual (or no related information), set the variable to 0.
Engine power is in kilowatts.