Sweden probes subsidies and environment

Environment minister orders investigation of subsidy impacts on sustainable development

Sweden's environment minister, Anna Lindh, today ordered a study of the role of subsidies in obstructing sustainable development. Two government agencies are to submit a report by January 1988 on selected tax and other financial subsidies which are "obstacles to sustainable development".

Interaction between financial and environmental policies is receiving increasing attention in the EU and internationally. Sweden is a leading promoter of taxation as an incentive for environmental protection (ENDS Daily 14 March). Today's move is designed to complete the circle by identifying financial disincentives to environmental protection as a first step to their removal.

"We have adopted a broad definition of subsidies", a Swedish environment ministry official told ENDS Daily, "taking into account not just money handed over but also tax differentials such as rebates for energy-intensive companies."

Sweden currently charges reduced levels of its national tax on carbon dioxide in fuels to energy-intensive companies. In February, it won approval from the European Commission under EU rules on state aid to industry to provide similar compensation to steel firms who had complained about the effect of the tax on their international competitiveness (ENDS Daily 26 February).

"We know these are subsidies which are against sustainable development", the official told ENDS Daily. "But we also want to find subsidies that we don't know about now and that might be easily remedied, for example in the fields on construction and housing."

The Environmental Protection Agency and the national audit office - Riksrevisionsverket - are to cooperate on the study. The agency has been asked to prepare an outline list of "suspected" harmful subsidies by June. The audit office will then study a few of them in more depth. "When the project was first discussed we thought we would do a broad overview", the environment ministry official said. "But we found that that would mean going over the whole state budget, so we decided to focus on the most interesting ones."

The results of the study will feed in to a broad range of Swedish official activity on sustainable development. Two weeks ago, five government ministers proposed an ambitious plan to redirect the whole of Swedish government and the economy towards sustainable development (ENDS Daily 21 March).

Follow Up:
Environment Ministry , tel: +46 8 ; Environmental Protection Agency , tel: +46 8 698 1000; Riksrevisionsverket , riksrevisionsverrket@rrv.se

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