In news that has some broad implications for the combustion industry, the Swedish government is to reduce the requirement for the amount of biofuel that needs to be added to diesel and petrol.

Currently, the requirement is for biofuel to make up 30.5% of diesel, and 7.8% of petrol, and the plan was to increase these percentages over time. To battle increases in the cost of living, the government has announced it will reduce the amount to 6% for 2024-2026 (it is unclear from the Reuters article if this applies both to diesel and to petrol).

In response, the Swedish Environmental Protection Agency has said that the change will make it difficult for Sweden to meet its 2030 greenhouse gas emissions reduction goal, which has a sub-aim of reducing transport emissions by 70%. Stefan Nystrom, the Swedish EPA’s Director of Department of Climate said that a “year ago we were on track with a high probability to reach all of our 2030 goals but with this decision the conditions have worsened significantly.” The government has said that the biofuel requirements “have not been effective climate policy” and penalise people living in the country (as they tend to drive more); it has already cut fuel taxes and ended subsidies for electric vehicles, as well as providing higher tax breaks for people driving to work.

There is clearly some tension between the Swedish Environmental Protection Agency and the current government. However, the broader lesson of the announcement is that, faced with higher cost of living pressures, governments may roll back decarbonisation measures, even in affluent countries that have traditionally been ambitious in regards to environmental policy. (There is also a lesson in the distribution of the burden of costs across the population.)

Though many decarbonisation initiatives are lower cost than business-as-usual, many are not, and how governments decide to approach those costs in the remainder of this decade, and what pressure voters put on governments regarding decarbonisation, will be pivotal in the fight to mitigate climate change. How inflation plays out across the world in the coming years may play a large role in that.