Technological Innovation Crucial for Climate Change but Hampered by High Electricity Prices in Southern Sweden

Nobel laureate economist Joel Mokyr highlights technological innovation as humanity's last hope to tackle two of the gravest crises facing the world today: climate change and demographic shifts. Mokyr, recognized for his research on the industrial revolution, stresses that the breakthrough synergy between scientists, engineers, and industrialists was central to humanity’s historic transition from scarcity to prosperity. However, he warns that political efforts currently fall short in addressing these enormous challenges. According to him, only revolutionary advances in energy production, manufacturing, and climate adaptation technologies can offer a viable solution. Mokyr also voices concern about the risk of these technological advancements being diverted toward militarization, an outcome he hopes to prevent.

Yet, in Sweden, the potential for such technological solutions is being undermined by economic barriers. Electricity prices in southern Sweden have surged to nearly four times those in the north due to production imbalances and transmission bottlenecks, impacting investments in green technology such as solar and wind power. This regional disparity in electricity costs complicates financing new renewable projects, as financial backers require confidence in stable future revenues. Consequently, many projects in the south face reduced profitability and risk delay or cancellation. Moreover, the higher operational costs driven by soaring electricity prices discourage households and businesses from transitioning to electric heating systems and heat pumps, slowing Sweden's broader climate policy goals.

Energy companies attribute the high prices to both global energy markets and domestic supply-demand issues. Internationally, such electricity price volatility also dampens investment momentum in climate-friendly technologies. Thus, Sweden’s climate ambitions confront a dual challenge: the urgent need for technological breakthroughs emphasized by Mokyr and the economic reality of high electricity costs impeding the deployment of those very technologies. Resolving these economic barriers could be pivotal to unlocking innovation's full potential in combating climate change.

As Mokyr underscores, “Politics currently seems to offer no solution,” making the role of sustained technological innovation more critical than ever — but only if accompanied by conducive economic conditions fostering investment.