What Sweden’s fuel-price debate misses about the Reduktionsplikt
The Reduktionsplikt (engl. reduction duty) requires Swedish fuel suppliers to reduce the greenhouse gas emissions of their petrol and diesel, in practice mostly by blending in biofuels. It has become a much-contested policy of the 2026 election, and the debate is almost entirely about the policy’s impact on the pump price.
We argue this focus is too narrow. So long as compliance runs through blending, any price effect is simply what follows from mixing two products with different prices: the mandate level scales it, but its size depends on the gap between biofuel and fossil diesel, which is largely determined by broader market conditions rather than by the mandate level alone. What deserves attention is where that gap is heading, and whether the mandate's cost is reasonable relative to the emissions it avoids — a question Sweden must answer if it is to choose efficiently between policies to reach its 2030 emissions goals.
Key highlights from the FREE Network policy brief
- A higher Reduktionsplikt does not automatically create a large fuel-price increase, because the final cost depends just as much on the changing price difference between biofuel and fossil diesel as it does on the required blending level.
- The policy is estimated to have avoided around 14 million tonnes of CO₂e from 2018 through 2023, with 94 percent of the reduction coming from replacing fossil diesel with biofuel rather than from people consuming less fuel.
- Future reforms should make the rule less vulnerable to biofuel shortages and price shocks by allowing broader ways to comply, including renewable-electricity credits, while ensuring that the fuels used are genuinely sustainable and support the transition toward electrification.
Click here to read the full policy brief to learn more
Meet the authors
Jakob Oberhammer, Research Assistant, Stockholm Institute of Transition Economics (SITE) at the Stockholm School of Economics.
Pontus Larsson, Analyst of sustainable fuels, Swedish Energy Agency (Energimyndigheten); SSE Alum
About SITE
The Stockholm Institute of Transition Economics (SITE) is a leading research and policy center on economic development in low-and middle income countries, with a particular emphasis on transition in the former Soviet Union and Central and Eastern Europe.
About the FREE Network
The Forum for Research on Eastern Europe and Emerging Economies (FREE Network) is a joint initiative by SITE (Stockholm), BEROC (Vilnius), BICEPS (Riga), CenEA (Szczecin), ISET-PI (Tbilisi), AUA (Yerevan), and KSE Institute (Kiev). Together, these research institutes form an extensive network of leading academic experts on economic issues in Central and Eastern Europe and the former Soviet Union.
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