Lars Calmfors, professor emeritus of economics at Stockholm University and researcher at the Institute for Business Research (IFN).
Northvolt, once hailed as Sweden's green prestige project and Europe's leading contender for large-scale domestic battery production, is now facing a crisis.
The company is struggling with unpaid invoices, has laid off 1,600 employees, and is racing against time to secure billions in new funding.
However, the right-wing Swedish government has consistently rejected Northvolt's requests for financial assistance.
– Sweden has previously chosen not to pursue massive state aid, and I don't want to go down that path either, says energy and industry minister Ebba Busch regarding government support.
– Politicians often lack the foresight to determine which company investments will endure over time.
This cautious approach aligns with Sweden's traditional reluctance to provide substantial financial support to struggling industries.
In the 1970s, the government bailed out the struggling shipbuilding industry with massive subsidies. This proved costly for taxpayers. As a result, subsequent governments have since adopted a more cautious approach to state intervention
– Sweden previously maintained unprofitable industries for far too long, argues Lars Calmfors, professor emeritus of economics at Stockholm University and researcher at the Institute for Business Research (IFN). He contrasts this with the more generous industrial support policies of other major EU countries, such as Germany.
– Northvolt has received just 600 million kronor in government subsidies, which pales in comparison to the 10 billion kronor invested by Germany in Northvolt's German facility, Calmfors says.
Outside the EU, governments also actively support industries. The United States provides subsidies for green industries through the Inflation Reduction Act, while China invests in various sectors. In Canada, Northvolt has secured government support of approximately 50 billion kronor for its new factory.
– Sweden's approach to industrial support is more restrained than that of many other countries, concludes Calmfors.
Peter Carlsson, CEO of Northvolt.
Can green investments in the north succeed without government support?
– It's a complex question without a straightforward answer, says Calmfors.
– While ideally, we would avoid unnecessary subsidies, the dilemma arises when other countries offer them. But then there's the risk of throwing good money after bad.
Busch expresses hope that Northvolt can thrive without state aid.
– It's crucial for the competitiveness of both Sweden and Europe to have a strong European battery industry, she says.
– Otherwise, we risk being outpaced by China in this crucial sector.