Central government efforts on climate transition in agriculture

Our audit shows that the Climate Leap and the compensation schemes for catch crop and intermediate crop cultivation help reduce net emissions of greenhouse gases from agriculture at a cost below or on a par with the carbon tax. The subsidy for biogas production from manure and advisory services on climate measures have also helped reduce emissions, although their climate impact and cost-effectiveness have not been evaluated.

The Swedish Environmental Protection Agency has, under the Climate Leap, been prioritising measures in the agricultural sector since 2019, which has led to more such measures receiving support. However, the Swedish Environmental Protection Agency has excluded support for measures that reduce emissions of methane and nitrous oxide under the Climate Leap, apart from investments in biogas production from manure. This entails a risk that support has not been directed at the most cost-effective measures. At the same time, this audit shows that there is a risk of overlap between investment subsidies for measures that could reduce emissions of methane and nitrous oxide linked to manure management (Kväveklivet – the Nitrogen Leap – and investment support to boost competitiveness).

The Government has improved the design of the compensation schemes for catch crop cultivation and the subsidy for biogas production from manure by simplifying administration and improving flexibility for farmers. On the other hand, in some respects the Government has not provided agencies with the means to effectively implement these policy instruments. The absence of a long-term perspective in the Government’s financial management has created uncertainty as to whether support will actually be available, which may deter farmers from investing. For example, for many years, the Government has proposed an authorisation level for the Climate Leap that has not been in balance with appropriations, resulting in cancelled application rounds and affecting which measures received support. Another example is the Government’s proposed allocations for the subsidy for biogas production from manure, which has led to fluctuating levels of support when allocated funds were inadequate.

The Government and government agencies have followed up on whether some of the policy instruments are effective. However, regarding central government measures for biogas production from manure (the Climate Leap, the subsidy for biogas production from manure and advisory services) there is no overall evaluation of the effect of these subsidies, or of their cost effectiveness. It is consequently not possible to assess how the central government’s efforts to increase biogas production from manure can be made more efficient and effective. Since they were assigned responsibility for the subsidy for biogas production from manure in 2024, the Swedish Energy Agency has not received any instructions from the Government to follow up and evaluate the subsidy. In addition, the Swedish Board of Agriculture has not performed any evaluation of the climate impact or cost-effectiveness of the advice on climate measures. The number of advisory visits has decreased and is limited by the fact that a substantial portion of funding going to administrative costs.

The Government has not presented a plan for limiting the climate impact of agriculture to help achieve the 2045 climate target and for managing conflicting objectives. Our audit shows that the potential for existing policy instruments to influence emissions from agriculture is limited, and that policy instruments are absent for certain major emission sources, such as drained organic agricultural soils and enteric fermentation, which together accounted for 68% of total greenhouse gas emissions from agriculture in 2023. Our audit also shows that the effects of some climate measures in the agricultural sector are not captured in the greenhouse gas inventory.

The Government has to some extent taken measures to identify cost-effective policy instruments to reduce the climate impact of agriculture, by conducting investigations and instructing agencies to submit proposals on an ongoing basis. Nevertheless, this audit shows that there are measures available in the agricultural sector that could contribute to cost-effective achievement of the climate targets, but for which there are no policy instruments. These include afforestation of abandoned agricultural land, rewetting of organic agricultural soils and methane-reducing feed additives. To implement measures that are not commercially viable, policy instruments are needed. The Government’s measures with a climate purpose were scant in Sweden’s Strategic Plan for the EU’s Common Agricultural Policy for 2023–2027. Because of the risk of Sweden potentially falling short of the EU’s minimum budget allocation for environmental and climate measures in the Strategic Plan, the Government has decided to introduce a compensation scheme for the cultivation of forage crops aimed at increasing carbon sequestration. This decision was made despite the Swedish Board of Agriculture’s assessment that the support will have inadequate additionality and thus climate effect.

The Government has not reassessed the tax reductions for diesel used in agricultural machinery to ensure that their impact in relation to the climate targets have been identified and considered. The Government has investigated the reduction of the carbon tax, but has not taken a position on the Inquiry’s proposal.