When a Swedish court ordered its largest cement manufacturer to stop mining limestone in its huge Gotland factory to prevent pollution, ecologists cheered.
In addition to protecting wildlife and water supply, the ruling could force the plant, which produces 75 percent of Sweden’s cement and is the country’s second largest carbon dioxide emitter, to reduce production while it finds raw materials elsewhere, or even closes completely.
This may be good for Sweden’s emissions targets, but not so good news for the rest of the planet.
A report from the government that Reuters sees can say that it can force Sweden to import cement from countries that pump out more emissions in the total manufacturing process – or risk massive job losses in the construction industry at home.
“Imports from outside the EU would probably lead to greater environmental impact as a result of lower standards related to CO2 emissions and lower standards for land use,” the report said in a request for freedom of information.
Sweden’s dilemma encapsulates one of the challenges nations face in Glasgow UN COP26 climate negotiations: how to show that they do not reduce emissions by simply exporting the problem elsewhere – a phenomenon called “carbon leakage”.
Sweden is a rich, stable Nordic democracy and has long topped international environmental rankings and managed to cut greenhouse gases for several years while preserving economic growth on a path towards the goal of zero emissions in 2045.
It has the world’s highest carbon tax of 118 euros per tonne and is a leader in the use of renewable energy. In 2018, its carbon dioxide emissions per capita were 3.5 tonnes, well below the EU average of 6.4 tonnes, according to data from the World Bank.
But the wait for the Slite cement plant shows the growing tension between local environmental goals and the Paris Agreement in 2015, which was signed by almost 200 countries to try to limit global warming to 1.5 Celsius.
“We must weigh the global focus – do the most for the climate – but also maintain our high ambitions when it comes to our local environmental problems,” Sweden’s Minister of the Environment and Climate Per Bolund told Reuters. “These two things can be balanced.”
What about alternative fuels?
Much of Europe’s imported cement comes from Turkey, Russia, Belarus and countries in North Africa.
They have no similarity to the EU Emissions Trading Scheme (ETS), the world’s largest carbon market and one that determines the price of coal permits for energy-intensive sectors, including cement, within the 27-nation bloc.
The World Bank says only 22 percent of global emissions were covered by price mechanisms last year and the International Monetary Fund set average global price of coal to 2.60 euros per tonne – a small fraction of Sweden’s carbon dioxide tax.
Although the Swedish court’s decision was not linked to Slite’s carbon footprint, but rather the risks that the quarry entails for local groundwater, the effects from an emission point of view depend on the efficiency and energy mix of producers who are likely to supply Sweden with cement to plug any deficiencies.
Slite’s owner, Germany’s HeidelbergCement, also plans to make it the world’s first carbon-neutral cement plant by 2030, but uncertainty about its future after the court ruling could delay or even abolish the project.
“We will soon need a long-term decision for these operations if it is not to be delayed,” said Magnus Ohlsson, CEO of HeidelbergCement’s Swedish subsidiary Cementa, last month.
Koen Coppenholle, head of the European cement lobby group Cembureau, said he was convinced that overall European facilities were “cleaner” because high EU carbon taxes on producers had encouraged them to invest in reducing their emissions.
“In Europe, right now, we are replacing 50 percent of our primary fuel needs with alternative fuels,” he said.
However, according to Cembureau, imports of cement from outside the EU have jumped by around 160% in the last five years, despite the fact that the total volume is relatively small.
But carbon leakage, where emissions are shifting from countries with strict environmental regulations to those with more relaxed and cheaper regimes, is an issue for dozens of industries and decision-makers are trying to deal with it.
In July, the EU presented plans for the world’s first carbon frontier tax to protect European industries, including cement, from competitors abroad whose producers produce at a lower cost because they are not charged for their carbon dioxide production.
Europe’s cement industry supports the move, but warns that it is full of difficulties, such as how to measure emissions in different countries with different processes and fuels.
“If you set strict requirements for carbon dioxide and emissions, you have to make sure that you do it in a way that you do not run companies outside the EU,” says Coppenholle. “That’s the whole discussion about carbon leakage.”
For a country like Sweden, which has reduced its emissions by 29 percent over the past three decades, the issue of domestic action versus global impact goes beyond cement.
The country’s already low and declining emissions from domestic production fell to just under 60 million tonnes of carbon dioxide equivalents in 2018.
But if you measure what Swedes consume, including goods and services produced abroad, the figure is about a third higher, according to Statistics Sweden, which set so-called consumption-based emissions at 82 million tonnes that year.
Climate change is a global issue
The local versus global perspective also raises questions about what type of industrial policy is ultimately greener.
Sweden’s leading steel company SSAB, the state miner LKAB and the tool Vattenfall have, for example, invested heavily in developing a process for producing steel without using fossil fuels.
They say that switching to so-called green hydrogen power would reduce Sweden’s emissions by about 10 percent, a major step towards reaching the country’s 2045 net emissions target.
But for researchers Magnus Henrekson at the Research Institute for Industrial Economics, Christian Sandstrom at Jonkoping International Business School and Carl Alm at the Ratio Institute, this is an example of the “environmental nationalism” that benefits a country, but not the world.
They estimate that if Sweden exports the renewable energy it would use to produce hydrogen to Poland and Germany instead – so that they could reduce coal power – total carbon dioxide emissions would be reduced by 10 to 12 times more than by making “green” steel. .
The EU coal border fee is only expected to be phased in from 2026, potentially too late to affect the fate of Cementa’s lime quarry in Slite.
Sweden’s parliament has agreed to a government proposal to fine-tune the country’s environmental laws to give Cementa a break in implementation, but no long-term solution is in sight.
Environmental activists such as David Kihlberg, climate chief at the Swedish Society for Nature Conservation, say that easing rules give industries an excuse to postpone changes that must take place now.
“It would be incredibly destructive for climate diplomacy if Sweden came to the summit in Glasgow and said that our climate policy is to increase emissions and the local environmental impact to pull the rug from under Chinese cement producers,” he said, referring to a hypothetical scenario that is not Swedish policy.
“The climate issue is global and must be resolved through cooperation between countries.”