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Business tackling climate change – when is it not profitable?

Obstacles for a fossil-free Sweden Report 3 / 2016

Executive summary

For many years, the companies of the Haga Initiative have pledged to take ambitious climate action and have consistently proved the profitability of taking the lead in addressing climate change. Following the climate agreement in Paris, the rest of the world is now joining the same path: we must meet the climate challenge. To lead the way, the 15 companies of the Haga Initiative have mapped out what is required to move towards emissions close to zero. What are the main obstacles along the way, and what actions do we need to take to clear the path?

THE IDENTIFIED OBSTACLES:

• Transportation

• Fossil fuel in industrial processes (oil, coal, natural gas and propane/butane)

• Emissions related to agriculture

• Plastics and packaging material

• Refrigerants

• Heavy equipment

• Steel and concrete

The companies of the Haga Initiative call for a combination of policy instruments that will allow business to face these challenges without jeopardizing profitability.

• Adaptation of the overall governance and targets (in Sweden as well as in the EU) to the ambitions of the Paris agreement.

• A tax shift as well as clear and long-term financial incentives that promote fossil free alternatives for energy production, transportation and industrial processes in relation to coal, oil and gas.

• A redirection of financial flows from fossil assets towards climate investments. For this purpose, the finan-cial sector needs to report how climate change affects financial risk.

• Strategies for a circular and more bio based economy. For this purpose, current packaging fees need to be differentiated to benefit recycled and bio based material over fossil based alternatives.

• Support for strengthening innovation and escalating transition.

It is clear that companies want to become fossil free – and it is becoming increasingly clear that they can do so. The Haga Initiative has drawn the map towards emissions close to zero, identified the obstacles and pro-vided suggestions for solutions. With the right policy and politics, the Haga Initiative’s vision can be realized: A profitable business sector without climate impact.

Contents

Introduction 4

A business sector with zero climate impact – how to get there 5 OBSTACLES FOR CLIMATE EFFORTS 5

ELECTRICITY – AN OBSTACLE NO MORE? 7

HIGH AMBITIONS 7

RESPONSIBILITY FOR EMISSIONS 9

Solutions 10

Company stories 12 AKZONOBEL 15

AXFOOD 17

COCA-COLA EUROPEAN PARTNER SVERIGE (CCEPS) 19

FOLKSAM 21

FORTUM VÄRME 23

GREEN CARGO 26

HKSCAN SWEDEN 28

JM 30

LANTMÄNNEN 32

LÖFBERGS 34

MCDONALD’S SVERIGE 37

PREEM 40

SIEMENS 43

STENA RECYCLING 46

SVEASKOG 48

Appendix: Terms and abbreviations 50

Published by: Haga Initiative, november 2016Authors: Nina Ekelund, Program director, Haga Initiative; Nils Westling, consultant, 2050 ConsultingGraphic Design: Mathias Martinsen Foto & Form (Front page – Grön idé AB)

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Introduction

In this report, we the companies of the Haga Initiative, outline the barriers that need to be overcome in order to minimize our carbon footprint and realize our vision: a profitable business sector without climate impact. Our joint commitment is to reduce emissions of greenhouse gases by 40 percent by 2020. When the commitment was made, it was immensely ambitious, but today many of us can conclude that emissions have been reduced much faster than we had anticipated. More than half of us can already say that we will meet the target by a wide margin, several years in advance. Therefore, it is time to start talking about the long-term goal: emis-sions close to zero. This is a visionary ambition, but with the development we have seen in recent years, it is no longer impossible. With this report, we aim to point out the obstacles that keep us from completing the journey towards zero, and to identify solutions that can help us overcome those obstacles.

In 2014, we published the report Climate efforts – profitable? It was a review of how the climate efforts of businesses affected profitability. The results were clear: companies that are active and ambitious in tackling climate change are profitable. Climate efforts often lead to cost savings for businesses and in many cases, increased revenue.

Only two years have passed since the report was released, but much has happened in the world of sustain-ability, not least in terms of the climate ambition of businesses. In 2015, world leaders agreed on 17 new sustainable development goals, as well as a new global climate change treaty: The Paris agreement. These agreements would not have been possible without a strong and genuine commitment from the business community and the financial sector. Ahead of the Paris meeting thousands of companies and investors made commitments to ambitious emission reductions (see for example the database NAZCA1) in order to show world leaders that the sacrifice is not as great as it is sometimes described. In Sweden, the government launched the initiative Fossil-free Sweden, with several large companies participating, including the Haga In-itiative. In our report from 2015 A winning policy for the climate and for business, we suggested that Swedish climate policy should aim towards emissions close to zero in Sweden by 2030.

In our first report, we showed that corporate profitability is not threatened by climate efforts, and in our second report we showed that climate policy must be developed to further facilitate the climate efforts of businesses. Now we want to take it one step further. The question is no longer if companies will do their part to combat climate change, the question is how they will do it. This report is about finding out how each com-pany in the Haga Initiative can move towards emissions close to zero and how it will affect their profitability. What type of policy is needed to take this giant leap?

In this report, we describe the challenge of moving towards emissions close to zero and we highlight the obstacles that we see along the way. The title of this report refers to our first report, but is also based on a realization that the market does not always reward those in the forefront. If it is impossible to make money pursuing a fossil-free or carbon neutral business – then who will try? Therefore, we ask ourselves, in line with our previous report on climate and economic policy: How can it become more profitable to tackle climate change?

1 http://climateaction.unfccc.int/

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A business sector with zero climate impact – how to get there

The Haga Initiative aims to gather companies from different sectors, so it is no coincidence that the companies in the group are very heterogeneous, and that their climate challenges are diverse. Where some companies must minimize their emissions from agriculture others must primarily work to reduce emissions from their travel and transportation. Some of the companies have very low emissions in their own operations, and must instead focus on how they can reduce emissions in their value chains. Folksam, for example, which is a major institutional investor in the capital market, must consider how emissions in their portfolio companies can be reduced, while Preem’s work with renewable fuels has focused on reducing emissions from their customers’ vehicles. Some of the companies, notably Green Cargo and Stena Recycling, find themselves in the situation where the more they deliver of their existing products and services, the lower the carbon footprint of their clients.

The starting point of this report is that all companies have different challenges. Therefore, we cannot expect to find a single solution. By studying each company’s roadmap towards emissions close to zero, a better un-derstanding of the challenges facing society can be gained. In this report, you will find a story from each of the Haga Initiative companies about their individual challenges and possible solutions. The primary patterns identified in interviews with the Haga companies, will be outlined on the subsequent pages of the report.

Obstacles for climate efforts

The obstacle that most companies in the Haga Initiative have pinpointed is transport-related emissions. Several of the companies depend on road transportation of their goods and air travel for their employees. This is unsurprising. Transportation accounts for roughly a third of the emissions within Sweden and is one of the sectors where emission

Figure 1: These are the factors pointed out as obstacles by the Haga companies. ”Other fuels” include non-transport uses of natural gas, coal and oil.

Obstacles

Obstacles

Transp

ortati

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Other fu

els

Heavy

equip

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Refrig

erants

Steel

and c

oncre

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Plastic

s and

pack

aging

Agric

ulture

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reductions have been challenging historically. Many companies, however, are optimistic about the possibilities of reducing transportation emissions and several companies are working on solutions to lower transportation emissions. For example, Siemens is developing electric drive and Lantmännen and Preem produce renewable fuels. Several companies have an increasing number of their transports running on biofuels, and the current development around electric vehicles gives hope.

When companies talk about future emission reductions, the need for policy instruments that are reliable and long-term is often mentioned. It is what companies need to be able to invest in new and better technology. Several companies have recently reduced their transport-related emissions by using biofuels, especially HVO. One advantage of HVO is that it is interchangeable with diesel, so emissions can be reduced without having to replace any vehicles. However, if the price difference between HVO and diesel should become significant, it will be difficult for many companies to hold on to the bio-based option. It should therefore be in the interest of society to ensure that this development towards bio-based fuels does not stop or slow down. Considering that Sweden is affluent in forestry and agriculture, bio-fuels present an opportunity to increase the value of these domestic resources.

Due to rapid technological development, optimism on reducing transport-related emissions is on the rise. Unfortu-nately, the same cannot be said for other emission sources. Some of the Haga companies are dependent on resources such as steel, concrete and liquefied petroleum gas (LPG). These are products that are associated with relatively high greenhouse gas emissions and for which substitutes has not been developed as far as in the transportation sector. Hence, technological development in these areas is urgently needed. The same applies to plastics, which some com-panies depend heavily on. Bio-based options are available, but supply is limited and the price is much higher than for conventional fossil-based plastics. Technological development and investments in new production are needed. Like bio-fuels, bio-based plastics can provide an opportunity to increase the value of an abundant local resource: the Swedish forest.

Some of the Haga companies use agricultural products, which cause emissions in production processes. Within agri-culture, solutions need to be further developed to avoid greenhouse gas emissions. Positive examples exist, however. Lantmännen has recently launched their new product Friendlier wheat, an identical product to conventional wheat but with a significantly lower carbon footprint, proving that it is possible to reduce emissions significantly, even in the agricultural sector. When it comes to agricultural products, greenhouse gases are emitted in production, often by the Haga companies’ suppliers. The purchasing company’s ability to reduce emissions are clearly more limited in the production process of the company’s suppliers, compared to its own operations. It is however increasingly more common for purchasing companies to include climate change related requirements in their procurement processes.

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1 In Sweden, all electricity, regardless of the production method, is distributed through the same network. When a consumer chooses to buy electricity from wind power, for example, the consumer’s carbon footprint is assigned to other consumers. Emissions from the residual mix are the remaining emissions from electricity generation when everyone who bought a certain type of electricity received credit for their reductions.

Electricity – an obstacle no more?

In the focus of this report are the obstacles that the Haga companies point out. But there is one aspect that is worthy of attention, just because it is not highlighted as an obstacle. Virtually all companies in the Haga Initiative currently procure fossil-free electricity, and consequently their energy use barely gives rise to emis-sions of greenhouse gases. This does not mean that electricity is uninteresting for the Haga companies and much remains to be done before Sweden has a sustainable electricity production. By actively choosing which electricity to purchase, the Haga companies reduce their emissions and send an important signal to electricity producers and society. In addition to this, several of the companies work consistently to improve energy efficiency and some of them strive to become more self-sufficient, for example by producing renewable electricity. In some cases, companies rent their offices, stores or warehouses, which forces them to use the electricity chosen by the proprietor. This is often unspecified electricity, which means that emissions are calculated based on the so-called residual mix. In these cases, the companies have limited control of energy- related emissions. An increased production of renewable electricity in Sweden will therefore make it easier for companies to reduce their electricity-related emissions. Energy efficiency is still an important way for companies to reduce their carbon footprint as well as their costs in the long term. Even those who purchase fossil-free electricity obviously make a significant contribution to tackling climate change by reducing their own consumption, as the renewable electricity can then be used elsewhere in the system and reduce the need for non-renewable electricity.

High ambitions

The Haga companies are already planning for a future with zero climate impact. In the previous report A win-ning policy for the climate and for business the Haga Initiative established the ambition of emissions close to zero by 2030. This ambition requires dedicated policies and firm decisions. Based on their varying starting points, companies use different wording to describe the goal. Some companies aim to become fossil-free, others to become climate neutral and some are talking about minimizing climate impact. These are all expres-sions of dramatically increased climate ambition and a decrease in greenhouse gas emissions.

The various expressions all point in the same direction, while at the same time depicting the different condi-tions that the companies are facing. The argument behind aiming for climate neutrality before fossil-free may be that climate neutrality allows the company to buy carbon offsets or use technology to capture and store

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carbon dioxide, so-called CCS or BCCS, provided the technology is commercialized and environmentally reliable. Climate neutrality would therefore mean that fossil fuels do not necessarily have to be abandoned altogether. It is also important to keep in mind that fossil-free is not necessarily synonymous with sustain-able. A company could, for example, become fossil-free by using biofuels from palm oil, grown on former rainforest land, which in no way reduces the company’s carbon footprint. Climate-friendly, sustainable and renewable energy requires that renewable raw materials are produced sustainably without cultivation or pro-cessing that lead to large emissions. It should be noted that the concept of sustainability includes a wide range of parameters, other than climate change mitigation.

Considering the Haga companies’ diverse way of expressing what the end goal is, they were asked whether their current climate targets take them ”close to zero” – a consciously vague phrasing that includes all the expressions mentioned above. Com-panies may interpret the question as ”close to zero fossil fuels” (fossil-free), ”close to zero net green-house gas emissions” (carbon neutral) or close to zero carbon footprint. A third of the companies in the Haga Initiative claim they have a climate target that takes them close to zero, which shows a tremendous level of ambition. Several companies are currently in the process of renewing their targets, since their pre-vious targets were reached long before the appointed date. The combined ambition of the Haga Initiative is a Sweden with emissions close to zero by 2030.

Figure 2: The companies have themselves assessed whether their current emission reduction target takes them close to zero emissions. To be considered here, the target should have an end date, a general ambition is therefore not suffi cient.

The conventional way to calculate a company’s

greenhouse gas emissions (in accordance with

the GHG protocol) requires a division of the

emissions into three parts: Scope 1, which re-

fers to direct emissions from the company’s own

facilities; scope 2, relating to emissions from pur-

chased electricity and heat and scope 3, which

relates to emissions in the company’s entire value

chain. Scope 1 is what many intuitively see as a

company’s emissions while Scope 2 and 3 are

more abstract. Scope 3 emissions are hardest to

calculate, since they refer to emissions from the

company’s suppliers as well as to the emissions

that the company’s products generate when used

by customers. What is most relevant to measure

and report differs from company to company.

For a car manufacturer, for example, emissions

at the production plant (Scope 1) are relatively

small, whilst emissions can be signifi cant when

customers use the products (scope 3). The total

emissions from a country’s business sector is cal-

culated by adding together scope 1 emissions

from all companies.

Are current targets aiming for emissions close to zero?

67 %

33 %

54 %

13 %

33 %

Yes – 5

Targets are being reconsidered – 10

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Responsibility for emissions

The classic image to illustrate a company’s emissions is the chimney. The pollutants and greenhouse gases emitted from the chimney has undoubtedly been the company’s responsibility. The same applies, for exam-ple, to the exhaust pipes of cars owned by the company, and all other devices from which carbon dioxide is physically emitted. These emissions are known as Scope 1 (see box). As the knowledge of how companies affect society and the environment has grown, the chimney and the exhaust pipe become too narrow as im-ages of the company’s greenhouse gas emissions. Many companies have much greater emissions from, for example, purchased electricity and heat (Scope 2) than from their own production. This puts the company’s responsibility in a new light. Does it make a difference if the company’s goods are transported by truck driv-ers that are employed directly by the company or by a contractor?

The Haga companies have committed themselves to reducing emissions in scope 1 and 2 as well as emis-sions from business travel in scope 3. Some have voluntarily chosen to include more categories from scope 3. Even though it is positive that companies choose to take responsibility for emissions that occur upstream and downstream in the value chain, it is important to remember that their potential influence on suppliers and customers can be limited. In road transport, for example, the use of contractors is common, which means that a shift to biofuels or better vehicles requires that the company wields influence over the contractor. The same applies to rented offices, stores and warehouses, where the landlord determines electricity contracts, for example.

Many of the Haga companies pointed out the difficulty of reducing emissions that the company does not fully control, and the lack of mobility arising from it. What is relevant to measure differs from company to com-pany. In this report the boundaries used by the companies is assumed to cover the relevant emissions of each company. The complexity and uncertainty of measuring and reporting increases the further away in the value chain emissions occur. However, taking upstream and downstream emissions into account is an important step towards lower emissions.

Figure 3: Note that the answer ”No” does not mean that the company does not reach its goal, but that they do not exceed the goal. The answer ”Partially” refers to companies that have multiple goals and exceed at least one of them.

Will current targets be exceeded?

67 %

33 %

54 %

13 %

33 % Yes 8No 5

Partially 2

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SOLUTIONS

For companies to be able to carry out the work required to reach the Haga Initiative’s vision of a profitable business sector without climate impact they must not be punished by the market because of, for example, weak politics. To avoid this, policy instruments are necessary that reward forerunners without compromising the competitiveness of Sweden or its businesses. After having identified the obstacles of reaching emissions close to zero, it is only natural to point out which policy instruments that would make it easier to remove those barriers. The companies in the Haga Initiative have already done much to reduce their climate impact. But to reach the goal, ambitious politics are required so that the companies can do more without jeopardizing profitability.

The Haga companies have jointly declared their ambition that Swedish climate policy should be directed towards emissions close to zero in Sweden by 2030. This is necessary because research clearly shows that greenhouse gases must be reduced dramatically in the near future, otherwise costs will be substantial and unreasonable for companies as well as society. The close-to-zero ambition should apply to most EU member countries and the EU should reach this goal by 2040 at the latest. The Haga Initiative is convinced that force-ful and dedicated political decisions and measures, that simultaneously combat greenhouse gas emissions and strengthen competitiveness, would contribute to emissions close to zero by 2030. In addition, this would strengthen Swedish businesses. The goal would require, among other things, that the suggestions below or similar measures are implemented.

ADAPT GOVERNANCE TO THE PARIS AGREEMENT

• Climate ambitions should be clearly stated in society, through nationally binding targets and milestones adopted for greenhouse gas emissions, energy efficiency and renewable energy in the EU. In Sweden, the parliament should adopt the proposals from the Cross-Party Committee on Environmental Objectives (Miljömålsberedningen): a climate law with net zero emissions through 2045, of which 85 per cent of the emissions reductions occur within Swedish borders. This should be combined with annual follow-ups, ac-tion plans every four years and the establishment of a climate policy council. Within the EU, climate targets must be tightened and in line with the objectives of the Paris agreement.

• In Sweden, as well as in the EU, environmental concerns should govern public procurement. The top en-vironmental quartile of each product category should be promoted. To avoid unfair competition, criteria that correspond to Swedish environmental requirements, should always be used. In spite of improve-ments, new legislative proposals presented in this field have not been proactive enough.

• The EU emissions trading system (cap and trade) should be entirely based on auctioning of allowances, the ceiling should be lowered predictably in accordance with the stricter European climate objectives proposed above and well-functioning mechanisms for price stabilization should be introduced. The sur-plus of allowances in the system should be cancelled and this should be done by the EU, not by Swedish taxpayers.

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• The Swedish government should establish a large-scale cooperation – a handshake between different sectors and parties – to reduce emissions. Testing new things can be too risky for individual companies, even though the risk can be economically sound for society as a whole. This is particularly relevant when it comes to heavy industry, forestry and agriculture, where the potential to contribute to the tran-sition towards a low-carbon future is immense and brings great opportunities for the Swedish economy, competitiveness and innovation. To further share the risk between government and industry, and make capital more accessible to speed up the transition, the Swedish government should set up a national green investment bank.

• The Swedish government should strengthen entrepreneurship and climate related innovation and devel-opment within Sweden, instead of cancelling emission allowances. Instead of spending SEK 300 million annually until 2040 on cancelling allowances, the money could be used to support sustainable business practices. Let us create new businesses and jobs whilst developing new technologies.

PROMOTE FOSSIL-FREE

• Subsidies to fossil fuels should be phased out as soon as possible. Sweden needs to push this agenda within the EU to speed up the political process.

• Sweden should raise the carbon tax, in line with the more stringent climate targets proposed above. The tax should then slowly but gradually be increased. This tax increase should be exchanged for an equiv-alent reduction in other taxes to ensure the competitiveness of Swedish industry. The same principle of taxation should be implemented in other EU countries. To succeed in the transition, the competitiveness of agriculture and forestry cannot be jeopardized. These industries face unequal competition in the short term but are fundamental in the long term for reaching the fossil-free society.

• An emission reduction quota system should be put in place, that makes increased drop-in of biofuels mandatory in petrol and diesel. Besides this, the current tax reduction for high shares of drop-in and pure biofuels should be kept in place. Discernible long-term policies will increase the production of biofuels in Sweden, such as the cutting-edge products developed by Preem and Lantmännen. This contributes to job creation and increased competitiveness for the Swedish industry and the green sectors, agriculture and forestry. It is important that policy instruments for biofuels do not lead to increased emissions and/or other negative environmental impacts abroad. Sustainable and renewable raw materials for biofuels should be ensured through ambitious requirements regarding climate performance, sustainability and traceability of the raw material. Sweden must act so that the EU commission changes its negative view on crop based bio-feedstock. There are negative as well as very positive examples of crop based biofuels. Upcoming EU rules must lead to the phasing out of non-sustainable biofuels while rewarding those that are sustainable.

• The need for tax reduction on bio-based fuels applies not only in the transportation sector. For example, the support for renewable alternatives to liquefied petroleum gas (LPG) is justified on the same grounds as renewable vehicle fuels. Policy instruments should be developed in other sectors to promote the use of

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renewable before fossil and simplify the market introduction of renewable products – just as in the energy and transportation sectors. The main factor behind decisions about support policies or taxes should be the product’s potential to generate overall reductions of greenhouse gas emissions.

• The Swedish government has proposed to allow 74-tonne trucks – a measure that will reduce emissions per unit of weight of truck transport. However, if this change is implemented without strengthening the competitiveness of rail transport, it risks being counterproductive and lead to more emissions, since com-panies might transfer goods from rail to road. To stimulate rail transportation, rail companies should be given a discount on the so-called access charges due to their environmental performance.

• Additional taxes, such as those on solar energy should be phased out quickly.

SHIFT FINANCIAL FLOWS AWAY FROM FOSSIL RESOURCES AND TOWARDS CLIMATE INVESTMENTS

• Policy instruments that promote a more transparent financial sector and help customers make more in-formed choices should be introduced.

• Financial institutions should be required to take a broader risk perspective into account in their reporting, including climate change related risk. The reporting requirements of carbon reserves in listed companies should be strengthened, and institutional investors should report on greenhouse gas emissions, in line with new legislation in France.

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Can your company be fossil free, given that policy instruments are designed according to your needs?

Yes No but climate neutral

The companies that consider climate neutrality, but not fossil-free, to be possible claim that they will have emissions of fossil carbon in the foreseeable future, but will be able to buy carbon offsets to achieve net zero emissions.

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DEVELOP STRATEGIES FOR A CIRCULAR AND MORE BIO-BASED ECONOMY

• The Swedish government should formulate a strategy for how a resource-efficient circular economy with a higher share of bio-based resources and an increased circulation of materials can strengthen the Swed-ish economy. Sweden should push for a similar approach in the rest of the EU.

• The EU and Sweden should develop strategies to promote a circular economy and make it easier for companies to utilize their own waste.

• The current packaging fee should be differentiated such that bio-based and recycled materials are fa-voured in relation to fossil-based alternatives.

• A vision-zero group should be created with the mission to make sure that the potential of the agricul-ture and forestry sectors in the bio-based economy is utilized. The group should bring together relevant stakeholders and develop a proposal for how the agriculture and forestry sectors can reduce emissions while strengthening their competitiveness. Important aspects are, for example, the production of biogas, increased carbon storage in soil and climate counselling.

STRENGTHEN THE LEVEL OF INNOVATION AND ACCELERATE THE TRANSITION

• Support for the development of new technologies with less climate impact should be increased.

• Investment support should be given to modern refrigeration systems to accelerate the phasing out of refrigerants with substantial climate impact and speed up the development of modern alternatives.

• Support should be given to research and development that could lead to new sustainable technologies and climate-smart materials being developed and commercialized.

There is a particular need for policy instruments that enable faster transition of the transportation sector. Regulations in this area must be long-term and effective and must promote sustainable and climate-efficient biofuels. This would enable fuel producers as well as those that procure transportation services to invest. In addition to this, investments in the Swedish railway network should be increased and railway access fees, which have seen a sharp increase in recent years, should be reduced. This would boost the competitiveness of railway compared to road transportation, and benefit the climate and the business community at large.

Although the focus of this report is on the obstacles to reach close to zero greenhouse gas emissions, it is ob-vious that there is confidence among businesses. When asked about whether their own company can become fossil-free given that the right policy instruments are put in place, the clear majority of the Haga companies said yes. Some of them claimed that it will be impossible to be fossil-free by 2030, but that climate neutrality could be accomplished.

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In addition to the general policy instruments and decisions mentioned above the following table includes a summary of what the individual companies of the Haga Initiative has identified as their main obstacles and which policy decisions they need to overcome these.

The remainder of this report will describe each company’s efforts to minimize climate impact and provide a perspective on the challenges of each sector.

Company name

Main obstacle to reach emissions close to zero

Policy instruments needed to overcome obstacle

AkzoNobel Transportation, fuel for boilers. Support for new technologies, taxation, subsidies that do not differentiate between applications or sectors.

Axfood Refrigerants, electricity and heating, transportation, fossil-based plastics.

Economic instruments that make refrigerants and fossil-based plastics more expensive, in exchange for reductions in other taxes / fees. Long term policies that promote biofuels.

Coca-Cola European Partners Sverige

Packaging, transportation, agriculture. Investment in railroads, economic instruments that promote environmentally friendly packaging.

Folksam Business travel. Policy instruments for a more transparent financial sector and more informed customers.

Fortum Värme

Coal, oil and fossil waste as fuels in energy production, transportation.

Fewer emission permits in the EU-ETS, further research to more rapidly commercialize new technologies for CCS, biogenic plastics and renewable fuels in shipping.

Green Cargo

Transportation. Reduced railway access fees.

HKScan Sweden

Liquefied petroleum gas (LPG), agriculture. Research to promote new technologies, tax incentives for renewable energy.

JM Transportation, machinery, concrete, steel. A green tax shift and better financial incentives, support for research and new technologies.

Lantmännen Transportation. Policy instruments for climate-efficient biofuels, support for R & D and investment.

Löfbergs LPG for coffee roasting, transportation, agriculture. Long-term regulation for renewable fuels, tax incentives for bio-based alternatives to LPG, support for research and new technologies.

McDonald’s Sverige

Waste, business travel, refrigerants, agriculture, plastics.

Incentives for recycled materials and bioplastics, changes in waste regulation, long-term instruments that promote biofuels.

Preem Energy use. Long-term regulations on the market for vehicle fuels.

Siemens Transportation, business travel. Support for new technologies and research that aim to be commercialized. Long-term instruments for climate-efficient fuels.

Stena Recycling

Transportation, machinery, LPG. Allow heavier trucks, tax incentives for recycled materials, environmental requirements in public procurement.

Sveaskog Transportation, machinery. Long-term financial instruments, education.

Company stories

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AkzoNobel

AkzoNobel is one of the world’s largest paint and chemical companies with 45 000 employees in some 80 countries and is headquartered in Amsterdam. The Swedish part of the business employs around 2 700 people at 12 sites.

Today, 87 percent of AkzoNobel’s raw materials are fossil-based, which means that a complete change of the whole commodity portfolio is required for AkzoNobel to become fossil-free throughout the value chain. The company is working continuously to find suppliers of renewable raw materials. However, changing the commodity portfolio is not necessarily required to go towards emissions close to zero in their own operations (scope 1 and 2). This requires, first and foremost, focus on two areas: boilers used by the company in their own facilities and transportation.

Johan Widheden, global sustainability expert at AkzoNobel, is optimistic about both these areas. The Swed-ish part of AkzoNobel is now planning to look at what it takes to achieve zero emissions at their facilities, and what this would cost.

Emission reduction targets AkzoNobel’s global target is to reduce emissions per ton of sold product by 25% through 2020 (base year 2012). The target covers emissions in the entire value chain.

Achieved to date It is too early to say whether the global target can be met. In Sweden, AkzoNobel has reduced absolute GHG emissions by 58% between 2012 and 2015 in scope 1, 2 and business travel in scope 3. There is, however, no target set for only scope 1 and 2.

Main obstacle to reach emissions close to zero (scope 1 and 2)

Transportation in company vehicles, fuel for boilers used to initiate chemical processes.

Main obstacle to reach emis-sions close to zero (scope 3)

Fossil-based raw material.

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When it comes to transport related emissions, Johan Widheden is an optimist. Thanks to the attention that the issue has been given by society in general and industry in particular, development has been quick in recent years and Johan Widheden believes this will continue.

With a few exceptions, the boilers used in the manufacturing process today are driven by oil or natural gas. There are substitutes, however. In 2015 AkzoNobel exchanged three oil-fired boilers at its plant in Alby, south of Stockholm, for electricity and hydrogen. This way, emissions were reduced by 5 400 tonnes of car-bon dioxide equivalents per year. Cost considerations are currently holding back replacement of additional boilers, but Johan Widheden thinks it will be impossible not to replace them in the longer term.

– Nobody will want to be using oil in the longer term, because better alternatives exist, says Johan Widheden. Another measure that is being discussed within AkzoNobel is to use the facilities more intensively when there is a surplus of energy and less intensively when supply is low. Adjusting production to the energy sup-ply reduces the amount of electricity – often with higher climate impact – that Sweden must import.The climate target that AkzoNobel has set up globally include reductions of emissions throughout the value chain. To achieve this goal cooperation is required with both suppliers and customers and there is a need for an open and transparent exchange of information. According to Johan Widheden, the necessary processes are in place, but it takes time before concrete effects on emissions can be seen.

POLICY INSTRUMENTS

Johan Widheden argues that public support for new climate-smart technology is justified, not only because of environmental concerns, but for purely economic reasons.

– There are costs involved in starting up, getting pilot plants up and then there are costs in raising the vol-umes. Considering that Sweden has expertise in the area and good access to raw materials, it should be eco-nomically justified to provide financial support initially, says Johan Widheden.

Just as the transportation sector consider biofuels a possible solution to the problem of climate change, bio-based materials are an important alternative to AkzoNobel for lowering emissions. Johan Widheden points out a potential problem in the fact that economic policy instruments are often designed for a particular use or sector, rather than for a specific material. When biofuels are subsidized to compete with fossil fuels in the transport sector, AkzoNobel’s ability to buy the same product for their application is limited. This is an unwanted market effect, because the climate benefits of using bio-based materials can be significant in the chemical industry.

Johan Widheden, global sustainability expert at AkzoNobel.

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Axfood

Modern refrigerators take Axfood towards the goal of climate neutrality in 2020.

Axfood is one of the largest companies in the Swedish food sector and operates Willys and Hemköp, two large supermarket chains. The company has around 8800 employees and has a turnover of SEK 41.2 billion.

Åsa Domeij, head of environmental and social responsibility at Axfood, says that the discussion about how the company can become fossil-free has been going on for some time. However, the concept of fossil-free is not perfectly adequate for Axfood, since the company’s largest emissions item is refrigerants, which are not of fossil origin. Instead, they have chosen to strive towards becoming carbon neutral – a goal to be reached already in 2020.

In addition to refrigerants, the main obstacles that prevent Axfood from climate neutrality in their own opera-tions are transport, electricity and heat. Adding emissions from the value chain, agricultural and meat products as well as plastic packaging are major challenges.

The reason why electricity and heat is a challenge for Axfood is because they have a number of supermarkets where they rent the space and the proprietor chooses electricity and has not been willing to shift to renewable electricity. In these instances, Axfood must try to convince the owners rather than doing the job themselves. The supermarkets with this particular problem are few but account for a relatively large part of Axfood’s total emissions.

Regarding transportation, Axfood has almost completely shifted to biofuels in the form of HVO (a biodiesel). It might seem like transport related emissions are no longer a problem for Axfood, but the company’s director of environmental and social responsibility, Åsa Domeij, does not see it that way. According to Domeij it is a prob-

Emission reduction targets Reduce emissions by 75% through 2020 and reach climate neutrality the same year. The targets cover Axfood’s own operations.

Achieved to date Results are so far in line with what is required to reach the targets.


Refrigerants, transportation in company vehicles.


Fossil-based plastics, agriculture.

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lem that the tax rules for biofuels are short-sighted, which means that the HVO supply cannot be taken for granted. In addition, the infrastructure for refuelling HVO must be expanded to enable Axfood to shift completely.

The challenge of minimizing emissions related to agriculture and meat pro-duction is very difficult, according to Åsa Domeij. In the long term, research is

needed to come up with new solutions, she says. Even though the emissions from food production belong to the upstream value chain, the company is still working on the issue. One way to do this is by working to increase sales of vegetarian food, a strategy that also happens to coincide with what makes business sense, because meat prices are so low in Sweden that food retailers earn very little money from it.

Plastic packaging is another source of emissions that falls outside Axfood’s own operations (since carbon di-oxide is not emitted until the plastic is burnt) but where the company tries to reduce its footprint. Axfood has switched to bio-based plastics for its organic products, but to do the same for the entire product range would make the products significantly more expensive, according to Åsa Domeij.

POLICY INSTRUMENTS

– Given that we get the right policy instruments in place the transportation sector will not be a problem, says Åsa Domeij. But then again, that is actually true for all other sectors as well.

Axfood’s head of environment and social responsibility is convinced that the company’s greenhouse gas emissions can be minimized if policy pushes them in that direction with smart and competition neutral in-struments. Regarding the company’s biggest challenge, the use of refrigerants, Domeij believes that these very potent greenhouse gases had been phased out much faster if current policies had been in place earlier. Instead, companies have been completely free to do what they want and the result is that the change has been slow. Today Axfood always installs modern cooling systems without greenhouse gas refrigerants when they invest in new equipment. All their warehouses have switched to refrigerators without greenhouse gases as well. However, those facilities that are not at the end of their lifetime are currently not replaced, as it would be too costly to replace them prematurely.

– Environmental taxes in exchange for reduced employer fees would have been a good way to speed up the phasing out of refrigerants, says Åsa Domeij. If combined with investment subsidies it would go even faster.Domeij has a similar approach to how the problem of fossil-based plastics can be solved. With packaging fees that are differentiated between fossil-based and bio-based plastics, the phase-out of fossil plastics would go faster and more production would be converted, she says.

Like several other companies in the Haga Initiative, Axfood calls for more long-term policy instruments regarding biofuels.

Åsa Domeij, head of environmental and social responsibility at Axfood.

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Coca-Cola European Partner Sverige (CCEPS)

Plant bottle, a bio-based innovation from Coca-Cola.

Coca-Cola’s flagship product, the drink with the same name, has been sold since the late 1800’s and the com-pany today has a product portfolio with several beverages. The Swedish branch employs around 800 people and has a turnover of SEK 3.1 billion.

Coca-Cola measures greenhouse gas emissions throughout the value chain, which is a consequence of partic-ipating in the Science-Based Targets initiative. One of the main challenges when reducing emissions in the entire value chain, is to tackle emissions from the company’s packaging, namely plastic and glass bottles and aluminium cans. These currently account for around half of Coca-Cola’s total emissions. Coca-Cola does not own the production of packaging, but works to influence their producers to reduce emissions and ensure that material is being recycled. The packaging-related emissions can be cut in different ways – one is to use more recycled materials and Coca-Cola has reached around 50 percent in Sweden today. Another way to reduce these emissions is to produce bottles from bio-based plastic. Coca-Cola has developed the PlantBottle, which is bio-based. According to Rønnaug Vinje, sustainability manager for Coca-Cola European Partner Sverige, the problem right now is that this type of material is too expensive.

Emission reduction targets Coca-Cola participates in the initiative Science-Based Targets, which requires the company to globally reduce its emissions by 50% within their own operations and 33% in the entire value chain by 2020. The Swedish part of the business has pledged to reduce emissions by 50% by 2020 (base year 2007).

Achieved to date

Coca-Cola has reduced emissions throughout the value chain by 24% since 2007 (40% in their own operations). Within the so-called Haga scope, emissions have been reduced by 75% since the base year of 2007.


Transportation in company vehicles.


Transportation services, agriculture, packaging, refrigeration.

20

– Using PlantBottle or recycled materials costs us more in the current situ-ation, than if we were to buy new oil-based material, says Rønnaug Vinje.The emissions related to agriculture currently account for around 19 percent of the total of Coca-Colas emissions, but there are fewer apparent solutions to how these can be minimized. Like the packaging related emissions, those from agriculture are supply chain emissions and Coca-Cola is working with other major food companies on this issue, through the Sustainable Agriculture Initiative for example.

The remaining significant sources of emissions are transportation and cooling of drinks at retail outlets. CCEPS currently receives deliveries of sugar by train directly into its production plant outside Stockholm and Rønnaug Vinje claims that the company could transport a significantly larger volume via rail if it was more stable and reliable.

– In many cases we are forced to choose road transport due to customer demands of short delivery times, says Rønnaug Vinje.

Emissions from transportation with the company’s own vehicles have fallen sharply in recent years (by 85 percent from 2007 to 2015), partly because of a shift to renewable fuels such as RME and HVO.

Emissions from the cooling of beverages account for 17 percent of total emissions and is in large part due to energy use. According to Rønnaug Vinje, these emissions could be reduced if CCEPS manages to convince sellers to choose electricity labelled renewable.

To summarize, there are technical solutions available to reduce emissions from plastic packaging, transpor-tation and refrigeration. What is required, according to Rønnaug Vinje, is that fossil-free plastics become cheaper, that the rail network becomes more reliable, and that CCEPS vendors choose clean electricity. Agricultural emissions might be a harder nut to crack.

POLICY INSTRUMENTS

CCEPS demands more forceful policy on transport and trains. The company would also like to move to more innovative packaging solutions, not least its own innovation PlantBottle, which would be easier if policy instruments pushed the market that way. That could speed up the transition to renewable materials.Although emissions from CCEPS own operations are less significant than the emissions in their supply chain, CCEPS in Sweden have been considering investments in solar panels on their roofs to supply the premises with energy. This did not prove to be a good option financially, however.

– The financial incentives for solar electricity are very bad in Sweden right now, says Rønnaug Vinje.

Rønnaug Vinje, sustainability manager for Coca-Cola European Partner Sverige.

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Folksam

Folksam’s head quarters at Södermalm in Stockholm.

Folksam is one of Sweden’s largest insurance companies. They insure almost every second swede and manage pension savings for more than two million people. The company has nearly 4000 employees and managed SEK 368 billion in capital in 2015.

As a major institutional investor, with millions of customers and a portfolio that includes thousands of compa-nies, Folksam’s greenhouse gas emissions in the value chain (Scope 3) are closely related to the entire country’s greenhouse gas emissions. This is because the emissions of companies where Folksam owns shares should be accounted for, according to the GHG Protocol’s scope 3 category 15. – Since we are a large asset owner and have several million customers throughout Sweden, we cannot really be fossil-free unless the entire country is, says Karin Stenmar, environmental manager at Folksam.

Karin Stenmar believes that that the company will be free of fossil fuels in its own operations (Scope 1 and 2) before 2030. But setting such a goal would be making it too easy for themselves, according to Stenmar. More-over, she believes that the work Folksam is doing to reduce emissions in the value chain have a greater effect than emission reductions in the company’s own operations.

– We have reduced our emissions in scope 3 by approximately 200 000 tonnes per year since we stopped in-

Emission reduction targets Reduce emissions from business travels and offices by 40% by 2020 (base year 2002).

Achieved to date The target will soon be reached.


Business trips in company owned cars.


Business trips by airplane, emissions related to investments.

22

vesting in coal and through actively working with our capital. Such an effect is difficult to achieve by cutting emissions from own operations, says Karin Stenmar.

The main obstacle for Folksam to become fossil-free in their own operations is business travel, primarily by air.

– Our employees must have the possibility of flying, because we have offices across the country and there is a need to have physical meetings from time to

time. In the ideal world, there would be high-speed trains or fossil-free jet fuel but we are not there yet, says Karin Stenmar. Many business trips are also made by car and Folksam wants to shift to electric vehicles, but have not been able to yet.

– As an insurance company, we cannot compromise on safety, and no electric car on the market has lived up to our high standards so far. Within a few years, we expect that this will not be an obstacle anymore, says Karin Stenmar.

Taking Folksam’s emissions in the value chain towards zero is complex, since Folksam is financially involved in almost all parts of the economy. However, the company has direct financial incentives to work against climate change because they will have to pay insurance compensation for climate damage. For this reason, the company is working to reduce emissions from cars around the country by offering lower insurance premium for environ-mentally friendly cars. They also produce the Building Environment Guide each year, a digital checklist that helps consumers make informed choices regarding building materials.

Given that a very large part of Folksam’s climate impact results from their asset management, some might ask if they shouldn’t just sell their holdings in sectors that emit greenhouse gases? The answer is both yes and no, says Karin Stenmar.

– We are seeing a greater effect from engaging with the companies we own than to simply sell them off. If we divest from all fossil companies, we lose the ability to influence the transition to renewable energy. At the same time, it is important to be aware of the risks with fossil investments. For example, we no longer own coal com-panies and look for investments in green bonds as an alternative, explains Karin Stenmar.

POLICY INSTRUMENTS

Since Folksam’s emissions in the value chain are so large it is difficult to say which policy instruments would best help Folksam to move towards emissions close to zero. Karin Stenmar points out that the polluter pays principle (often called PPP) is important, but it’s hard to say exactly how the principle should be incorporated into practical policy.

Policies that make the financial industry more transparent would help Folksam redirect their investments, and create a more sustainable portfolio. This would enable Folksam’s customers to make more informed choices. In addition, Karin Stenmar sees a need for more green bonds and points out the possibility that the govern-ment could establish a national green investment bank.

Karin Stenmar, environmental manager at Folksam.

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Fortum Värme

Fortum Värme’s modern bio-based plant in Stockholm. Photo: Per Myrehed.

Fortum Värme produces and distributes electricity and heat in Stockholm. The company is jointly owned by the Finish energy company Fortum and the City of Stockholm. The company has a turnover of approximately SEK 6 billion per year and employs more than 700 people.

Fortum Värme’s vision is for district heating to have net zero or even negative greenhouse gas emissions. In 2030, at the latest, the district heating shall be based on renewable or recycled energy, but the company is working to reach this goal much earlier than that. Since Stockholm’s district heating depends on burning the waste from the city for fuel, the remaining fossil carbon dioxide emissions will be from fossil-based material in the waste. In order to achieve a net zero emissions per kWh of district heating, carbon offsetting may be used, but there are also efforts to develop other concepts that could eventually create carbon sinks, so that emissions per kWh of heat becomes negative.

– New houses that are being constructed or planned today will, if they are supplied with district heating, to a large part of their life be supplied with carbon neutral heat or even negative emissions. This will compensate

Emission reduction targets District heating climate impact should be net zero or negative by 2030. In the shorter term, emis-sions per unit supplied district heating shall be reduced from about 80 g CO2e / kWh (2014) to 60 g CO2e / kWh to 2017.

Achieved to date The 2017 target seems to be within reach.


Coal, oil and fossil-based waste are used as fuels.


Transportation.

24

for the emissions during production and give the house a lower carbon foot-print from a lifecycle perspective. Each property using district heating will also produce more renewable energy than it consumes, says Ulf Wikström, sustainability manager at Fortum Värme.

In order for Fortum Värme to reach the goal of only using renewable or recycled energy, it is vital that the use of coal and oil is phased out. Alongside this, the goal also requires that the waste being burned in Fortum Värme’s plants is free from fossil-based materials. The latter aspect is of course difficult for Fortum Värme to influence, but Ulf Wikström is convinced that an increasing proportion of the plastic in the combustible waste will be bio-based in the future.

In addition to the efforts to phase out coal, Fortum Värme together with the City of Stockholm and a few other municipalities are involved in a project to create new capacity for sorting the combustible waste. This way, they hope to increase the production of biogas and simultaneously sort out plastics to increase recycling.

– In the future, we will be required to deliver more renewable energy from existing plants, find new energy sources and establish commercially attractive concepts for increased recycling, says Ulf Wikström. I also think that the energy we supply must be used more efficiently.

Even though a large part of Fortum Värme’s transportation is made by rail, a small percentage of the compa-ny’s emissions come from boat transports. Ulf Wikström is optimistic that progress towards better and more renewable fuels in this sector will be relatively quick. As efforts to reduce emissions from the use of coal and oil produces results, transport emissions will receive more focus from Fortum Värme.

POLICY INSTRUMENTS

The price of emissions in the energy system is crucial for Fortum Värme to be able to reduce their emissions, according to Ulf Wikström. It provides incentives for the creation of more sustainable energy in general.A common strategy of heat consumers with climate ambitions today is to pay energy producers to allocate re-newable electricity on their behalf. This does not mean that production or emissions change, but is primarily a question of accounting where the so-called “additionality” is limited. According to Ulf Wikström, it is mainly the system of electricity certificates and to some extent tax subsidies that has led to investments in additional renewable energy, says Ulf Wikström.

– Our transition must be done responsibly so that we do not increase the need for primary energy resources and maintain the district heating system’s ability to generate a significant surplus of renewable electricity simultaneously with delivering heat. Otherwise, there is a risk that emissions are only redistributed, not re-duced, says Ulf Wikström.

Ulf Wikström, Fortum Värme’s sustainability manager.

25

– The low electricity price that we currently have sends a signal that it is better to provide heating with elec-tricity than with district heating, which is unfortunate because we are using a high-value energy source to something as simple as heating, says Ulf Wikström.

Solar and wind power have increased their competitiveness through lower investment costs and especially wind power is expected to increase its share in the Nordic region. These power sources are intermittent, how-ever, which means that they require a power balance that can be utilized when there is no sunshine or wind. The bio-energy that will be produced each year in Fortum Värme’s new biofuel-fired plant would be enough to entirely replace gasoline and diesel in Stockholm with electric vehicles. This energy is also controllable, which is especially valuable as a complement to weather dependent renewable energy.

In order to achieve the vision of producing district heating with negative emissions, carbon capture and us-age (known as CCU technology) will be crucial, according to Ulf Wikström. With such technology, Fortum Värme could use bio-based fuels to generate energy and then use the carbon dioxide for new products. To achieve this, policy instruments will be required, Wikström believes.

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Green Cargo

Low carbon transport.

Green Cargo is a transport company with a focus on rail freight. They offer door-to-door transport in a rail-based network that reaches over Sweden and the European continent, certified by the Swedish Society for Natural Conservation (SSNC) as a good choice for the environment. The company has nearly 2 000 employ-ees and a turnover of SEK 3.9 billion.

Green Cargo is the type of company for which the very essence is an activity that leads to the reduction of greenhouse gases. Although rail transport itself consumes energy and produces greenhouse gases, it must be compared with other transport alternatives, and the main option is road transport, where the emissions are many times larger. All in all, Green Cargo has a positive effect on their customers’ emissions, which more than compensate for its own emissions.

In 2015, Green Cargo had an average emission of 2.6 grams of carbon dioxide equivalents per tonne-kilo-meter of rail transport, which can be compared with heavy trucks at just over 120 grams per ton-kilometer.1 A truck transporting 40 tons of cargo (equivalent to a full car with maximum authorized weight in Sweden) between Stockholm and Gothenburg thus release approximately 2.2 tons while the same amount of goods by train gives rise to emissions of 0.05 tonnes. This means that Green Cargo’s contribution to a fossil-free

Emission reduction targets Reduce diesel consumption in relation to the amount of transported goods.

Achieved to date The amount of goods has been decreasing, making it difficult to reach a relative target.


The use of diesel.


1 See the Haga Initiative’s Annual Climate Report for 2015 and the report from Swedish authority Trafikanalys: Lastbilars klimateffektivitet och utsläpp. The figures are not fully comparable, since the Haga Initiative reports emissions in carbon dioxide equivalents (CO2e) whereas Trafikanalys reports only carbon dioxide (CO2).

27

Sweden may be more significant if they are expanding their operations and help their customers reduce emissions, than if they reduce emissions from their own operations.

Green Cargo’s total emissions in scope 1 and 2 plus business travel in scope 3 amounted to 35 293 tonnes in 2015. A thousand truckloads between Stockholm and Gothenburg can thus be considered to compensate entirely for the company’s emissions and each train can accommodate the load of approximately 36 trucks.This does not mean that Green Cargo refrains from pursuing an ambitious climate agenda. The company’s largest emissions item is the small proportion of locomotives that run on diesel. The vast majority of lo-comotives are powered by renewable electricity, but all railways in Sweden are not electrified. Where it is not, diesel is used. Diesel locomotives account for around 70 percent of Green Cargo’s total greenhouse gas emissions, purchased road transports about 30 percent and the electric trains less than 1 percent. This is in spite of the fact that over 90 percent of all Green Cargo’s transport is done with electric trains. One thing that is being done today to reduce emissions from diesel engines is to minimize idling. Green Cargo has for example invested in a so-called start-stop function for the locomotives that shuts off the engine when the train is standing still. But the company’s CEO, Jan Kilström, stresses that more measures are needed to reduce emissions to zero.

Although it represents only a fraction of total emissions, Jan Kilström points out the company offices as an area where work is needed to reduce emissions. For offices, it should be possible to be fossil free within a reasonable time horizon, he believes.

POLICY INSTRUMENTS

Since Green Cargo’s main climate impact is to replace road transport, policy instruments should primarily be designed to encourage more companies to choose rail transport. Such instruments are absent today. As railway access charges have steadily increased – they have more than doubled since 2009 – truck transport has only become cheaper. To promote rail transport, several other European countries have introduced a so-called eco discount for freight trains. Railway access charges cannot be dropped without violating EU state aid rules. However, a discount can be given with reference to the fact that rail transport pays for a larger part of their external costs than competing modes of transport.

– One million trailers reach Malmö and Trelleborg each year. Three percent of those are then transported by train and the rest by truck, so it seems a little petty to talk about our diesel locomotives in that context. What matters is getting more of the goods go by train instead of by truck, says Jan Kilström.

According to Kilström, companies increasingly want to shift to rail transport, but the low price of road trans-port makes the train a difficult choice.

Jan Kilström, CEO of Green Cargo.

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HKScan Sweden

HKScan is one of the largest food companies in northern Europe. They produce, market and sell meat, char-cuterie and convenience foods under brands such as Scan and Pärsons. The company has a turnover of SEK 8 billion and employs approximately 2100.

HKScan’s climate target of a 50 percent emissions reduction by 2020 (base year 2003) has already been exceeded by a wide margin – the decline was over 70 percent by 2015. The work so far has obviously been successful.

– I cannot think of a single thing that has not resulted in a good outcome. Climate efforts and profitability go hand in hand. And my boss is also totally convinced of this, which makes my job easier, says Annelie Lun-dell, HKScan’s quality and sustainability director.

However, HKScan has concluded that some energy efficiency measures currently have payback times that are too long for the investment to make economic sense. Renewable fuels for transportation is also not nec-essarily a profitable choice and would require long-term policy instruments and a more stable situation on the market.

Emission reduction targets Reduce emissions by 50% until 2020 (base year 2003) within scope 1 and 2 plus the following scope 3 emissions: business travel, purchased inbound transport, production and distribution of energy and fuels. Since these targets have already been exceeded by a wide margin, the process of putting new goals is now underway.

Achieved to date HKScan has already surpassed its goal for 2020.


Liquefied petroleum gas, leased cars.


Agriculture, transportation.

29

One of the major challenges for HKScan to reduce emissions from their own premises is the use of liquefied petroleum gas (LPG). It is a fossil gas that HKScan uses and for which there is currently no fossil-free substitute.

HKScan has chosen to set targets for their emissions in scope 1 and 2 and a few categories in scope 3; business travel, purchased inbound transport, production and distribution of energy and automotive fuels. Emissions from meat production are not included. The solutions to reduce these emissions are not obvious today, but there is much that can be done in agriculture over all. Vera Söderberg, HKScan’s sustainability manager, highlights the possibilities of making biogas from manure, improving efficiency and reducing waste and increasing carbon sequestration in soil.

– Much research is needed to bring emissions down to zero in primary production. It is our responsibility as a company to do as much as we can – but there is not much we can do about the anatomy of the animals.

POLICY INSTRUMENTS

HKScan separates customers, the supermarket chains, from consumers, those who shop in supermarkets and eat HKScan’s products. According to Annelie Lundell, customers have higher demands on sustainability than what consumers do. And the customers choose Swedish meat to a large extent.

– If we are to achieve the Swedish environmental objectives, we must have livestock and meat production. But livestock causes environmental problems and to mitigate these we need research and that requires public sector involvement and financing, says Annelie Lundell.

To deal with emissions from LPG, investments must be made in the production of substitutes, says Vera Söderberg, sustainability manager of HKScan. Fossil-free LPG options also need to be competitive on price. Some type of tax benefit should therefore be equally justified in this context as in bio-based automotive fuels.Vera Söderberg also sees potential for energy efficiency improvements in agriculture but says that pay-off times are often too long under current circumstances. To make these investments happen, there is a need for investment support.

Annelie Lundell, quality and sustainability manager of HKScan Sweden.

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JM

JM builds and develops housing and residential areas in Sweden, Norway, Denmark, Finland and Belgium. The company is also involved in project development of commercial premises and contract work. They have approximately 2300 employees and a turnover of SEK 14 billion.

Since JM has already surpassed their 2020 emissions target by a wide margin, they recently formulated a new goal: emission close to zero by 2030. The process is now underway to define what exactly should be included in the goal, but according to JM’s sustainability director Per Löfgren, it is important that the goal is very ambitious.

– I believe companies must set the bar high, if they are to create a greater change. Putting up really ambitious goals means that we must leave no stone unturned and try new ways of thinking, says Per Löfgren.Even though JM has signed up for the Swedish government’s initiative Fossil-free Sweden, Per Löfgren is hesitant about whether fossil-free is the right target.

– The word fossil-free is limiting. It is an important milestone, but it does not give the full picture of an organ-ization’s carbon footprint. Total climate impact is what really matters, and targets should be set accordingly.One of the main challenges for JM to be able to move towards emissions close to zero is to come to grips with the emissions from steel and concrete, which are essential materials for JM as well as for the rest of the construc-tion sector. These emissions are upstream of JM in the value chain, i.e. the emissions take place at the premises

Emission reduction targets Emissions close to zero in 2030. Energy performance 25% below the norm.

Achieved to date The goal for 2020 was to reduce greenhouse emissions by 40% (base year 1990). This has already been exceeded by a wide margin.


Transportation and heavy equipment vehicles. Heating at construction sites.


Dependence on concrete and steel.

31

of companies that produce steel and concrete. Development of production methods are required. When it comes to steel, Swedish steel producer SSAB, together with mining company LKAB and energy producer Vattenfall initi-

ated a project to manufacture steel without carbon during the spring of 2016. Also among producers of con-crete, much work is done to reduce the material’s carbon footprint. Per Löfgren at JM stresses the importance of the development of new, more climate-friendly materials that meet JM’s quality in the finished buildings.

In addition to building materials JM also must reduce emissions from transportation and heavy equipment vehicles. The transition of the transport sector has gained momentum in recent years, but the same cannot be said of heavy equipment vehicles. There are few climate-smart choices at the market. Per Löfgren hopes and believes that technological development will make it possible to reduce emissions in the future through increased electrification and use of biofuels. JM does not own any vehicles, so even in this case change de-pends on the choices of suppliers.

A third important aspect of JM’s climate impact is that the houses they build will remain standing for a long time and people will live and work there, which causes emissions. To reduce emissions from the use of the building, JM has set a target for the energy performance of their houses: it should be 25 percent below the norm in the countries where they operate. This is done, for example, by robust and climate-friendly shells, LED lighting, energy-efficient technologies and charging sockets for electric cars in newly developed houses with parking spaces. Energy consumption in new homes has dropped by 11 percent between 2010 and 2015 (this refers to the consumption during the first two years).

POLICY INSTRUMENTS

According to Per Löfgren, JM can reach the goal of emissions close to zero by 2030 if policy pushes busi-nesses to reduce their climate impact with competition neutral policy instruments. However, this requires the introduction of long-term policy instruments for biofuels and the electrification of transport and heavy equip-ment, at the expense of reducing the use of fossil fuels. Policy instruments that create incentives to develop and use new technical solutions with a smaller carbon footprint in both the construction process and in the finished buildings are also needed.

JM works with many different materials and the quality of more climate-friendly alternatives is important. Hence there is a need for the kind of policies that encourage development and innovation. It can be economic incentives as well as research grants, says Per Löfgren.

Per Löfgren,sustainability manager at JM.

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Lantmännen

Lantmännen produces the biofuel ethanol and hence reduces emissions in the transport sector.

Lantmännen is an agricultural cooperative and northern Europe’s leading player in the agriculture, machin-ery, bio-energy and food sectors. The company is owned by 27,000 Swedish farmers, has 10,000 employees with operations in 20 countries and a turnover of SEK 37 billion annually.

Like many other companies in the Haga Initiative, Lantmännen has already achieved their climate target for 2020 and is in the process of setting new goals. The global climate treaty that world leaders agreed to in Paris in December 2015 has increased the pressure to set ambitious goals, says Lantmännen’s sustainability director Claes Johansson.

– The agreement showed that the pace of the transition must increase, he says.

At the time of writing this report, Claes Johansson could not say which new goals the company will set, but concepts such as ”fossil-free” is no stranger in the discussions about the long-term goals. The company has operations in more than 20 countries and since conditions are different, goals might have to differ between countries. The previous climate objective was limited to transport and energy, but according to Claes Johans-son, there is a chance that Lantmännen will choose to take a broader approach going forward and set goals for emissions throughout the value chain.

According to Claes Johansson, there is one challenge for Lantmännen that overshadows all others: the emis-sions from the transport sector. Freight transportation accounted for 55 percent of Lantmännen’s greenhouse gas emissions in 2015. Lantmännen procures their transport services from hauliers and emissions therefore fall outside Lantmännen’s own operations. Still, this is where the potential to make a difference is greatest.

Emission reduction targets Reduce emissions from transportation and energy consumption by 40% until 2020 (base year 2009) in all divisions and all countries.

Achieved to date The target is already achieved and new targets are being discussed.



Transportation and agriculture.

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– Already today diesel often comes with 40 percent drop-in of renewable fuel, so we don’t start from zero, says Claes Johansson.

When it comes to emissions from agriculture, also upstream in Lantmän-nen’s value chain, the company has recently launched a product that they call Friendlier Wheat. It is a flour with approximately 20 percent lower climate impact throughout the chain from farm to table.

According to Claes Johansson, the idea of Friendlier Wheat had been waiting for a while, as Lantmännen was unsure whether demand would be large enough to allow the investments required. Only recently did they decide that the market was ready. Lantmännen also produce the biofuel ethanol at Agroetanol in Norrköping. This is a product that helps customers reduce their emissions, compared to if they were using fossil fuels.

POLICY INSTRUMENTS

As regards policy instruments, Claes Johansson believes that it is important that products stand on their own – regardless of political whims.

– At the same time it is easy to forget that it’s very easy to make money doing nothing about sustainability at all, says Claes Johansson. A large part of the food industry consists of discount stores, for example, and for them it is only the legislative requirements that matter. Making those at the bottom do more is at least as important as what happens among the top actors. In the current situation, a large proportion of imported food products on the Swedish market are produced in a way that would be illegal in Sweden. According to Claes Johansson it can be either policy or consumer power – or both – that push the actors who are not doing enough today.

– If nothing happens, then perhaps policy must lift those at the bottom.

Claes Johansson also sees potential for energy efficiency measures in Lantmännen and considers the gov-ernment grant program Klimatklivet (“The climate step”) to be a good instrument because it shortens the payback period and can push investments that would otherwise be financially impossible over the edge to become viable.

Lantmännen’s ethanol production, like other biofuels, is very dependent on policy. This is partly because fos-sil fuels do not fully pay their external costs today. For the competition in the fuel market to become reason-ably fair, policy instruments that level the playing field is required. When tax rules for ethanol were suddenly changed in Sweden, Agroetanol faced a bleak future. Thanks to the German market, which has opened up for biofuels through an instrument model that rewards climate performance, a large part of Lantmännen’s etha-nol is now exported to Germany. Lantmännen would welcome an instrument model for biofuels in Sweden similar to that in Germany.

Claes Johansson,Lantmännen’s sustainability director.

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Löfbergs

A mini coffe roaster.

Löfbergs is one of Sweden’s largest producers of coffee and their production is equivalent to over 10 million cups a day. The company is based in Karl-stad and have coffee-roasting facilities in Sweden, Norway, Denmark and Latvia. With more than 300 employees, Löfbergs turnover amounts to 1.7 billion a year.

Löfbergs is one of very few companies in the Haga Initiative that cannot currently say that they will meet their climate targets. However, this should not be considered a result of insufficient efforts. Rather, the situation is the opposite – Löfbergs began their climate work so early that many of the low-hanging fruit has already been picked long ago. Furthermore, they chose an un-strategic base year, 2005, when the company’s emissions were exceptionally low. Reduc-tions from an already low number are naturally more difficult to accomplish.

Despite this, Löfbergs have reduced emissions per tonne produced coffee by almost a quarter in their own operations, including purchased energy and business travel, and by 13 percent if one includes the cultivation of coffee, transportation and packaging. The latter makes a very big difference, because the agriculture related emissions accounted for 89 per-

Emission reduction targets 100% renewable in scope 1 and 2 of the plant in Karlstad and in Viborg (Denmark) by 2020. Greenhouse gas emissions in relation to production volume shall decrease by 40% by 2020 (base year 2005, the target refers to scope 1 and 2 and business travel in scope 3).

Achieved to date The targets can be difficult to achieve and fossil-free alternatives to LPG for roasting are required.


Coffee roasting.


Purchased transportation, packaging materials, coffee cultivation.

35

cent of Löfbergs total emissions during the 2014/2015 financial year. To re-duce emissions in their own operations, Löfbergs devote much effort in finding a replacement for LPG during roasting. The company’s plant in Viborg in

Denmark uses biogas for roasting and this could be an option even on the facility in Karlstad. However, it is considerably more complicated in Karlstad since there is no gas network there. It is also unclear whether there would be any biogas to buy for Löfbergs in Karlstad.

– Should we start using biogas, that would require some refurbishment, says Jan Möttönen, technical manag-er at Löfbergs. Ideally, we would be able to use the same tank as we use for the LPG. We built it in 2008, and it was a big investment. Liquefied biogas (LBG) requires another type of tank, for which we also lack space.

According to Jan Möttönen and Löfbergs sustainability manager Eva Eriksson, there is a chicken and egg situation with biogas at Löfbergs Karlstad plant. Demand is required to get supply up and supply is needed before they can demand any. They have been in contact with producers that want to tie up Löfbergs as a cus-tomer to get biogas production going, but right now this seems too risky.

Another possible solution is bio-propane. This is a byproduct of HVO production, which has grown dramat-ically in Sweden in recent years. As with biogas, Löfbergs do not feel sure that they can get secure access to this fuel.

Another challenge for Löfbergs is transportation. The company calculates emissions from the cultivation to the factory, all transportation to Karlstad and Viborg as well as distribution to customers. Green coffee arrives by boat to Gothenburg and is then transported by train directly to the premises in Karlstad. In the summer of 2015 Löfbergs inaugurated a newly built environmentally certified warehouse on the outskirts of Karlstad and they have managed to make their transporter firm run the products with an HVO / electric hybrid truck between the warehouse and the plant. Moreover, Löfbergs are considering a lease of hybrid cars to reduce emissions from business travel. The goal is 100 percent fossil-free fuel for all leased cars in 2020.

In addition to transportation and LPG, packaging materials are another barrier to cross.

– Ideally, we would prefer that the plastic in our packaging was produced from Swedish forest products. The technology exists, but it is currently too expensive, says Eva Eriksson. We tested a fossil-free product – a plastic laminate from Brazil – but the supplier’s own lifecycle analysis showed that there was almost no im-provement at all, probably because of the transportation from Brazil and the fact that the factory was using fossil-based energy.

Eva Eriksson,sustainability manager at Löfbergs.

36

POLICY INSTRUMENTS

According to Eva Eriksson, Löfbergs have come to a point where further climate efforts are very expensive.

– Renewable gas, renewable vehicle fuel and bio-based packaging materials – all these things are not yet available or are more expensive than conventional alternatives so they would hit hard against profitability in a market with such price pressure as the coffee market, says Eva Eriksson.

To take the next step, we need policy instruments that make our calculations reasonable. Moreover, these instruments must be reliable in the longer term, says Eva Eriksson, because it is investments that are needed.

– If we could know that tax conditions are reliable, investment decisions would be significantly easier, says Eva Eriksson.

Another important thing that government could do is to improve support for developing new technologies, says Eriksson.

– Anything that can be produced from oil, can also be made from the Swedish forest. There are many initia-tives but progress is not fast enough.

37

McDonald’s Sverige

McDonald’s is the largest restaurant chain in Sweden, with more than 215 restaurants, 400 000 guests daily and a turnover of approximately five billion SEK. The company has approximately 12 000 employees in Sweden and is thus the largest private employer of young people. More than 90 percent of the restaurants are owned and operated by local entrepreneurs.

McDonald’s in Sweden must reach the sustainability goals that are set by the company globally, but they also have local targets: carbon dioxide emissions are to be reduced by 40 percent in relation to the number of guests, and delivery of goods to the restaurants are to be made with 95 percent renewable fuel by 2020. McDonald’s has already achieved the first of these targets and are therefore discussing new goals.

– We are currently discussing how we can have influence in a larger part of the value chain than today, but we have no answers yet, says Henrik Nerell, Environment Manager at McDonald’s Sverige.

McDonald’s road to becoming a company without carbon footprint looks very different, depending on the limitations made. In the company’s own operations, the emissions from waste, refrigerants and business trips must be minimized.

Emission reduction targets 1) Reduce CO2 emissions by 40% in relation to the number of guests in 2020 (base year 2010). 2) Reach 95% renewable fuel in the delivery of goods to the restaurants 2020.

Achieved to date 1) is already exceeded by a wide margin and 2) appears to be achievable.


Business trips, Refrigerants.


Wastes, agriculture, plastics.

38

Waste related emissions is the major emission factor of those that McDon-ald’s measure today. In this area, the company is working on several projects to increase recycling while minimizing transport.

– Our long-term cooperation with our logistics partner gives us interesting opportunities for increased recy-cling, which is positive, says Henrik Nerell. But we need simplified waste legislation, where waste from busi-nesses and households are not treated similarly. In the current situation, there are large differences between different municipalities, which hampers our efforts to streamline the handling of waste.

For refrigerants, there is a plan mapped out in EU directives and national laws that stretches out until 2030. However, development could go much faster with the help of effective policy instruments, according to Henrik Nerell, such as investment aid for the replacement or upgrading of existing facilities.

In addition to the above, there are also transport-related emissions. Regarding the goal of 95 percent renew-able fuel, the outlook has been positive, since McDonald’s logistics partner were able to run on the biodiesel HVO to a large extent during 2016, expected at around 90 percent. However, the supply of HVO cannot be taken for granted in the long term. Demand is increasing rapidly and the tax rules for biofuels are short term and unpredictable.

Looking at the entire value chain, McDonald’s challenge is very different. It is not clear today how emissions from agriculture and meat production can be minimized. The emissions from food production fall outside McDonald’s own operations, but the company is working with the issue and have done so for a long time. McDonald’s is a member of the SAI Platform (Sustainable Agriculture Initiative) and initiated the Global Roundtable for Sustainable Beef together with other actors in 2011. In addition, McDonald’s is working to increase the proportion of protein coming from, for example, vegetables and chicken.

– Over 30 percent of sales is for other protein than beef today, and we are convinced that this percentage will increase in coming years, says Henrik Nerell.

Another challenge for McDonald’s is the use of fossil-based plastics. There are bio-based alternatives, but they would need to be developed further and the price needs to be lower, says Henrik Nerell.

Henrik Nerell, Environment Manager at McDonald’s Sverige.

39

POLICY INSTRUMENTS

Henrik Nerell has a positive view of economic instruments to make businesses go in the right direction.

– The things that we want more of, we should tax less and the things we want less of, we should tax more. Perhaps taxes on fossil plastics could be higher – that would accelerate demand and technology development, says Nerell.

Moreover, he believes that the use of recycled resources should be rewarded in relation to virgin materials.

– The problem today is that environmental taxes are raised, while other taxes are kept constant, resulting in higher overall costs. We would prefer a tax shift and a more holistic approach, says Henrik Nerell.

The most important policy instrument for McDonald’s to be able to reduce their emissions would be a change in the rules regarding waste, says Henrik Nerell. What McDonald’s are asking for is that their waste is clas-sified as industrial waste, which would mean that they could build up a system for waste handling that looks the same throughout the country. This is not possible today, since different municipalities have different requirements and make different interpretations of the law. According to Henrik Nerell, such a rule change could be made in connection with a strategy for circular economy, with incentives for companies to increase recycling, and the use of recycled materials is rewarded.

40

Preem

Preem is a Swedish vehicle fuel company that has started producing bio-based automotive fuels. The compa-ny processes and sells gasoline, diesel, heating oil and renewable fuels, and is one of Sweden’s largest export companies. Preem has 1300 employees and a turnover of SEK 66 billion. The two refineries in Gothenburg and Lysekil are among the most modern and environmentally friendly in Europe, with a refining capacity of over 18 million tonnes per year.

Preem has undoubtedly been a pioneer in the Swedish market for vehicle fuels since they invested in a major production site for the product Preem Evolution Diesel together with forest companies Södra and Sveaskog.

– There was hardly anyone who believed in us when we launched this product, says Helene Samuelsson, Preem’s communications manager. Our investment has shown that it is possible to take renewable raw mate-rials and make ordinary fuels that work in today’s vechicle fleet. Petrol and diesel can be renewable, just like electricity can. We showed that this was not a PR stunt – it was real.

Emission reduction targets Three billion litres of production and sales on the Swedish market will be renewable by 2030.

Achieved to date Last year, Preem had 16 % renewable fuels, which was in line with expectations.


Energy use at refineries.


Preem’s customers emit CO2 from their vehicles.

41

Preem’s goal is to increase sales of renewable fuels to three billion litres by 2030. A critical factor in achieving the goal is to increase the production of sustainable renewable fuels in Preem’s refineries in Gothenburg and Lysekil.

Since emissions from fuel occur when used in a vehicle, the emission reductions that Preem is working to achieve are downstream in the value chain. However, there is little doubt that the company is addressing its biggest climate impact when they help their customers replace fossil fuels with renewable sources.

For Preem to reduce emissions in the company’s own operations, they must reduce work with emissions from the refineries. The refining process is very energy-intensive where electricity, natural gas and fuel oil is used. Despite this Preem’s refineries stand out in an international comparison with 17 percent lower carbon dioxide emissions than the average refinery in Western Europe, 95 percent less sulfur oxides and 72 percent less nitrogen oxides.

– We already have an efficient production, largely because of high external demands but also because we have taken initiatives ourselves, says Helene Samuelsson. And one initiative that I think makes us unique in the world is that we switch our fossil production towards renewable fuels.

In order to deal with the emissions from refineries, Preem has explored the possibility of producing wind pow-er and invest in carbon capture and storage (so-called CCS technology). Unfortunately, it is not particularly beneficial economically to invest in wind power these days, and CCS technology is still under development.Another important issue is the waste heat produced at the refineries. Today much residual heat from industries is wasted and only at Preem’s refinery there is a potential to reuse approximately 1 terawatt hour of heat. By changing the rules and making district heating networks a competitive market and allow more suppliers in the networks, Swedish district heating would be even better, claims Helene Samuelsson. The calculations made in the District Heating investigation show that the use of residual heat in Sweden can be doubled, which would mean a reduction of carbon dioxide emissions in Sweden by approximately 2 million tonnes annually.

POLICY INSTRUMENTS

The crucial thing that Preem can do for the climate is to get more renewable fuels on the market. This requires long-term rules and tax conditions, says Helene Samuelsson.

– Money rules when it comes to fuels, so we cannot compete with anything other than price. Our green fuels must be price competitive. Therefore, we are extremely dependent on regulations and tax conditions, says Helene Samuelsson.

Helene Samuelsson, communications manager at Preem.

42

Under current tax policies Preem can only predict sales of their renewable fuel for one year ahead. This means that they had to make their investment without having any idea of whether the product would be pos-sible to sell or not.

– It has gone well so far, but the tax policy could change tomorrow and make our green investment virtually worthless, says Helene Samuelsson. What we need is long-term rules for renewable fuels, designed to pro-mote sustainability and low GHG emissions. Some renewable raw materials are not good from a sustainabili-ty and climate perspective, such as palm oil-based raw materials. And then there are renewable materials that are excellent. The key to a sustainable transition is to push the market towards the right raw materials. And this should be done from a lifecycle perspective.

Helene Samuelsson points out that the current system in Germany is similar to what Preem would like to see in Sweden. The system is based on a so-called emission reduction quota system, which is a law that mandates fuel companies to ensure that a certain percentage of everything they sell must be from renewable sources and reduce GHG emissions by a certain amount. The emission reduction quota should, according to Helene Samuelsson, increase from year to year in order to stimulate increased sales and production of climate-effi-cient renewable fuel.

– It may seem strange that we, as a fuel company, are in the forefront, asking for more regulation. Many probably think that we are lobbying against regulation, but we really want to see legislation that is competi-tion and technology neutral and that makes all stakeholders move towards more renewable fuels and reduced greenhouse gas emissions.

43

Siemens

Siemens 3D printer workshop.

Siemens is a global industrial and technology company working with innovative solutions for intelligent infrastructure, sustainable energy, future of manufacturing and healthcare through electrification, automation and digitalization. The company has been present in Sweden since 1893 and has about 4200 employees in over 40 locations, with headquarters in Upplands Väsby. In 2015, Siemens had a turnover in Sweden of ap-proximately SEK 19 billion.

Before the climate conference in Paris in December 2015, Siemens pledged to become a climate neutral com-pany by 2030. Siemens was the first big industrial company to set such a goal, but followers came quickly. The target covers scope 1 and 2. Even though the company’s products in many cases help customers reduce their emissions, this does not count to the goal of becoming a climate-neutral company. When the target was chosen, they also set an interim target of halving emissions by 2020, with 2014 as the base year. It looks like this goal will be reached before 2020, thanks to several energy-efficiency projects and the fact that the com-pany started purchasing renewable electricity at their production facilities and buildings. Siemens is investing almost SEK 1 billion over three years to reduce emissions and aims to reduce energy costs by nearly 200 million per year.

Emission reduction targets Reduce emissions by half by 2020 (base year 2014) and reach carbon neutrality in scope 1 and 2 by 2030.

Achieved to date The 2020 target will be reached in advance.


Vehicle fleet, offices.


Business trips with car or plane.

44

– We do this by investing in new technologies in our buildings and plants. The payback time for the investment is only five years, so our work to reduce emissions is not only good for the environment but also for our profitability, says Maria Baldin, Siemens communications and sustainability manager.

For Siemens, the use of renewable electricity and modern technologies for energy efficiency is also about using their own products. Siemens has a so-called Environmental portfolio, which is a line of products that helps the user to reduce energy use and emissions.

– It’s about practicing what we preach. We know that our products work well and reduce energy consump-tion, and therefore we invest in them ourselves, says Maria Baldin.

These measures are all about reducing emissions from Siemens’ plants. It is not possible to reduce these emis-sions completely to zero, according to Maria Baldin, which is one reason why the objective is formulated as climate neutrality and not fossil-free.

Emissions from offices is another challenge, not least because Siemens hires several of their offices and therefore is dependent on convincing the owners to act.

– In the fall of 2017 we will be moving our Stockholm office into a modern environment in sustainable and energy-efficient premises in the Arena City in Solna. Our own smart technology solutions in real estate will be used, says Maria Baldin.

Another recent investment by Siemens is Sweden’s first 3D printer workshop at the company’s factory in Finspång. It is the first facility of its kind in Sweden and will be used within Siemens for development, man-ufacture and repair of components in metal for power industry. Only a few companies in the world cover all these areas with 3D printing technology.

Transport and business travel is one of the obstacles that Siemens has identified to achieve the goal of carbon neutrality. Although a great many of the company’s cars have been replaced with electric hybrids lately – Siemens’s City Account Manager Tina Karlberg explains that there is a lack of charging stations outside the headquarters these days – there will remain a proportion of conventional cars for the foreseeable future. And air travel is difficult to avoid entirely.

– We do have a lot of web meetings and such, but it will be difficult to do much about our air travels. We must be able to travel to Kiruna, for example, and meet our clients there. And there is no reasonable alternative to flying, so we must rely on the aviation industry to develop the use of alternative fuels, says Maria Baldin.

Maria Baldin, communications and sustainability manager at Siemens.

45

Electrification of the transport sector is an area of focus for Siemens, and the company already has solutions for electric cars, buses, ferries and electrified roads for heavy vehicles. Siemens also has a role to play in de-veloping electrification of aircraft, as they are developing electric-powered aircraft together with Airbus with a view to reducing aviation emissions radically. The goal is for the first electric aircraft with 100 passengers to become operational in 2030. They have already tested the world’s first electric aircraft for a short distance in Germany and in the near future it will be possible to drive four or more people in a hybrid-electric aircraft.

POLICY INSTRUMENTS

Asked about which policy instruments would speed up Siemens climate efforts further Maria Baldin and Tina Karlberg mention transport-related regulation, such as tax benefits for better cars, which has already made several Siemens employees switch to plug-in hybrids.

Something that could also impact the company’s climate efforts would be if the public sector had environ-mental standards in public procurement, says Maria Baldin. Customers in general should also focus more on low lifecycle costs and a little less on the initial cost. That would benefit the environment and energy efficiency.

– We also want to see long-term policy instruments and a political direction in general that is maintained over time, regardless of party affiliation, she says.

46

Stena Recycling

Stena Recycling collects, processes and recycles metals, paper, plastics and hazardous waste. The company has more than 1,000 employees and a turn-over of SEK 6.6 billion annually. The company’s op-erations are essentially positive for the climate, since recycling reduces emissions of greenhouse gases compared to using virgin materials. However, the re-cycling business itself produces emissions, and these are the focus of Stena Recycling’s climate efforts.

To investigate what it would mean for Stena Recy-cling to move towards zero carbon, the company will appoint a few plants as fossil-free branches, where the company will test what it takes to be fossil-free. Out of more than 80 facilities around Sweden, four will test this.

A large part of Stena Recycling’s emissions are with-in the transport sector. Since they buy this service from transportation companies, the work to reduce emissions must be based on influencing these actors. According to Cecilia Våg, sustainability manager at Stena Recycling, transportation companies are pro-gressive and the transition towards more renewable fuels, for example HVO, has gone well. However, there are challenges in the transition, including the availability of fuel and fuel logistics. Stena Recy-cling also must ensure that all heavy equipment that may be relevant for using biodiesel are approved for it. Another challenge is to ensure that the raw mate-rial used in the fuel is sustainable.

Emission reduction targets Reduce the carbon footprint relative to the amount of collected material by 40% by 2020 (base year 2008).

Achieved to date Likely to meet the objectives with some margin.


Transportation, heavy equipment, LPG.


Transportation.

47

– High demand could lead to producers compromising on certain specifica-tions. For example, they might begin to use more palm oil, says Cecilia Våg. Our position is that the HVO we use should be free from palm oil.

Stena Recycling is dependent on LPG for cutting through materials and for heating tanks. In the current situ-ation, this stands for a fairly small share of the company’s emissions, but as other emissions are reduced, the climate impact of LPG is likely to grow in relative importance.

POLICY INSTRUMENTS

According to Cecilia Våg, the connection between recycling and climate benefits has just begun to be discussed in recent years. A good way to reduce society’s emissions would be to create policy instruments that lead to increased recycling. A tax benefit on recycled materials could be a way to make recycled material more com-petitive against virgin materials.

Another way to promote recycling would be to make this aspect matter in public procurement. This could be done either through a requirement that recycled materials are used in products that the public sector buys, or through a requirement that the products bought are recyclable after use.

– We follow closely the development of how products and packaging are designed. Our position is that they should be designed to be reusable or recyclable, as far as possible, says Cecilia Våg.

Regarding emissions from transport, Cecilia Våg believes that it would be reasonable to allow 74-tonne trucks on public roads (current rules allow 60 tons). This would provide less emissions per transported quantity. An important aspect for Stena Recycling is that policy instruments are long term and provide continuity.

Cecilia Våg, Stena Recycling’s sustainability manager.

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Sveaskog

Transport companies are engaged in reducing emissions, says Sveaskog’s Olof Johansson.

Sveaskog is a forest owner and sells forest products such as timber, pulpwood and biofuel and they supply the production of wood products, paper, packaging and energy. Sveaskog is Sweden’s largest forest owner, with customers throughout the country and the company has a turnover of above SEK 6 billion and just under 700 employees.

Sveaskog has a positive climate impact by maintaining and increasing the amount of forest in Sweden, since their forests bind carbon dioxide which is then locked into the products. Some forest products may also re-place fossil-based products, which means that Sveaskog can help their customers to reduce greenhouse gas emissions.

– We would benefit from talking about climate neutral instead of fossil-free because we can already say that we are strongly climate positive, says Olof Johansson, Sveaskog’s head of forest and environment. The positive impact of the forest that is growing is several orders of magnitude greater than the emissions from our processes. But we do not want to mask our emissions and intend to show that we are doing what we can to reduce them.

Emission reduction targets 1) Reduce emissions by 40% by 2020 (base year 2005) and 2) reduce emissions related to production by 30% by 2020 (base year 2010). These objectives include scopes 1 and 2 and business travel in scope 3.

Achieved to date Target 1) is already achieved, but target 2) is not.


Heavy equipment.


Transportation.

49

According to Olof Johansson, Sveaskog has a long-term ambition to become fossil-free, but they have not yet set a time-line or decided when this shall be achieved. For Sveaskog to become a fossil-free company requires that

they primarily reduce emissions from transport and their heavy equipment vehicles. Since these are often purchased services, the emissions are upstream in Sveaskog’s value chain, hence scope 3.

– We often perform our work at the end points of a far-stretched road network. That limits our options in terms of transport and we are very dependent on the development of non-fossil fuels to be able to reduce transport related emissions, says Olof Johansson. With the options available today, it is unknown to us how to cope with the last few percentage points of our transportation emissions. We hope that technological de-velopment can help us solve this, says Olof Johansson.

Sveaskog uses HVO biodiesel in their own forestry machines today but for the vehicles and machinery owned by contractors, things are more complicated. All wood transports are procured services, but transport companies have started working with their emissions, says Olof Johansson. – The climate efforts of our transportation contractors started after a dialogue with us, but without any ac-tual demands from our side. During the last two years, we have seen that the contractors are really engaged. We try to get as much of our transportation as we can made by train, but since much of it is at the tip of the road network in the forests, we can only replace certain long-distance transport by rail.

POLICY INSTRUMENTS

Sveaskog is not only dependent on fossil-free fuels to reduce their emissions – they are also a potential supplier of raw materials to this type of vehicle fuel. Therefore, they are in many ways dependent on policy instruments that accelerate the transition to increased production of biofuels.

– The most important thing is to establish a long-term policy orientation, says Olof Johansson. It is a major obstacle today that we lack a long-term perspective in policy.

– In addition to this, I would say that brands and certificates that increase consumer awareness around dif-ferent products would be an important instrument. If consumers begin to demand fossil-free products and services, the transition would go much faster. It is largely a question of knowledge, says Olof Johansson.

Olof Johansson, head of forest and environment at Sveaskog.

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Additionality An additional climate action means that its climate impact had not been achieved if the action were not performed.

Biogas Methane can be produced from various types of waste and crops. Just like fossil methane (natural gas), biogas can be used as vehicle fuel or to produce electricity or heating.

CCS (and BCCS) Abbreviation for Carbon Capture and Storage, ie to capture carbon dioxide and store it somewhere where it will not be released into the atmosphere. If the carbon stored is biogenic instead of fossil, the concept is called BCCS. With BCCS, carbon emissions can be said to be negative.

EU-ETS Abbreviation for the European Union Emission Trading System, ie the EU’s system for tradable emissions permits.

External effects A concept in economics that refers to costs or benefits arising from a transaction but affecting a third party outside of the transaction.

District heating A system for the distribution of heat used in many Swedish cities.

HVO Abbreviation for Hydrogenated Vegetable Oil, a type of diesel based on organic material.

Cogeneration A technique where electricity is produced while heating can be distributed.

Refrigerants A collective name for a group of substances used to transport frigidity. Traditionally, many of these have been greenhouse gases with very high climate impact, often thousands of times greater than carbon dioxide.

Scope 1, 2 and 3 A concept related to companies’ climate reporting. It is based on the GHG Protocol, which is an inter-national standard to categorize a company’s climate impact. The three ”scopes” grade the accounting company’s ownership and control of the emission. (See also http://www.ghgprotocol.org/).

State aid rules The EU’s state aid rules often come up in discussions around Sweden’s climate efforts, because they hamper aid to certain environmental and climate action. The rules aim to hinder market distortions from government support and subsidies, but where the market is already distorted by external climate effects (see above) the rules can become problematic.

Residual mix All electricity in Sweden, regardless of the production method, is on the same network. When a consumer chooses to buy electricity from wind power, for example, this reduces the consumer’s carbon emissions. Emissions from the residual mix are the remaining emissions from electricity generation when everyone who bought a certain type of electricity has received credit for their emission reductions.

Appendix: Terms and abbreviations

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