International climate initiatives – Unclear objectives and uncertain outcomes
(RiR 2025:28)
Summary
International climate initiatives, whereby Sweden purchases emission reduction units from projects that reduce greenhouse gas emissions in other countries, especially in developing countries, are an important complement to national climate measures in Sweden’s strategy to fulfil its climate targets by 2045. The Swedish National Audit Office has examined whether central government efforts to purchase international emission reduction units fulfil the intentions of international climate initiatives: to reduce global greenhouse gas emissions; to promote climate transition and sustainable development in the countries where they are implemented; and to enable contributing to cost-effective achievement of the Swedish climate policy objectives.
The overall conclusion of the Swedish National Audit Office is that the emission reduction units purchases partly fulfil these intentions. International climate initiatives have the potential to cost-effectively contribute to attaining Sweden’s climate objectives, and to climate transition and sustainable development. However, the results are inconsistent, follow-up is inadequate, and the Government is weak in its management by objectives. Although the Swedish Energy Agency has improved its internal governance, work still remains to be done.
Initiatives with uncertain outcomes
Central government purchases of international emission reduction units feature considerable uncertainties and varying results. Most projects supported deliver emission reduction units as intended, with a low price per emission reduction unit. However, many initiatives are delayed, generate fewer emission reduction units than initially agreed upon or are terminated without results. How and to what extent these initiatives contribute to climate transition and sustainable development is difficult to determine.
Incomplete follow-up and evaluation
The Government has not established any method for monitoring and evaluating the objective fulfilment of international climate initiatives at an overall level. For several projects and funds, the Swedish Energy Agency has not prepared any final report, rendering insight, learning and improvements in future investments difficult. Follow-up of sustainability aspects is weak, but under development. The Swedish Energy Agency’s reporting to the Government does not fully provide a fair presentation of the progress and results of these initiatives. The extent of write-downs and delays needs to be reported more transparently.
Cost-effective initiatives with uncertain developments
The cost-effectiveness of international climate initiatives is overestimated when assessed solely by price per emission reduction unit. This measure does not account for administrative costs for aspects such as procurement, contracting, monitoring and evaluation. All in all, the initiatives have so far been cost-effective compared to other supplementary measures, even including administrative expenses. However, future developments are more uncertain, and the emission reduction unit price is already much higher than before. Therefore, the Government needs to continuously monitor cost effectiveness, taking account of both price per emission reduction unit and administrative expenses.
Government’s management by objectives is weak
The Government’s direction of the Swedish Energy Agency lacks clear and measurable targets for international climate initiatives. This means that the Government is incapable of assessing whether the measures contribute sufficiently to attaining the 2030 and 2040 interim targets and the 2045 climate objective. For the Swedish Energy Agency, this presents difficulties in planning and prioritising between different tasks within the organisation, with a risk of inefficient resource use.
Energy Agency has strengthened internal governance
The Swedish Energy Agency has improved internal governance of international climate initiatives, applying a new set of policy documents that take account of the intentions of international climate initiatives. Parts of this governance are still under development. It is important for the Swedish Energy Agency to continue developing monitoring and evaluation procedures so that the results of the initiatives can be monitored in relation to intentions.
Recommendations
The effectiveness of Sweden’s international climate initiatives can be improved by clearer management by objectives, better monitoring and more comprehensive reporting of costs and results. The Swedish National Audit Office therefore makes the following recommendations to the Government and the Swedish Energy Agency.
To the Government
- Clarify objectives and expectations in the governance of the Swedish Energy Agency. Consider setting quantitative targets for emission reduction unit purchases in relation to the 2045 climate objective and the 2030 and 2040 interim targets.
- Monitor cost-effectiveness based on total cost, so that both price per emission reduction unit and administrative costs can be considered and compared with other supplementary measures.
To the Swedish Energy Agency
- Monitor administrative costs to enable easy estimation of total costs of emission reduction unit purchases.
- Continue to develop project monitoring and evaluation, including verification of projects’ contribution to sustainable development.
- Systematically evaluate and document completed projects to enable insight and promote organisational learning.
- Enhance annual reporting to the Government to provide a more accurate account of the progress and results of international climate initiatives.