Alexander Paulsson

Economic policy instruments are commonly used to address environmental problems. This study examines the historical development of the carbon tax in Sweden. By using the concept of epistemic culture, this study shows how carbon emissions, rather than energy use alone, emerged as an object of taxation. While the leading politicians saw the carbon tax as an innovative instrument for demonstrating climate action, the experts responsible for designing and evaluating the tax were highly critical of the policy instrument itself. The economic experts generally supported the use of economic policy instruments, but in this specific case, they advised against it. A domestic carbon tax would not significantly reduce global emissions, they warned. Rather, it would disadvantage Swedish industry due to increasing competition driven by the loosening of capital controls. Yet, the carbon tax was introduced in 1991, albeit at a relatively low level so as not to impose additional costs of energy use on domestic industry. By situating this historical development within debates in the social studies of expertise and climate politics, this study shows how fiscal environmentalism emerged from the interplay between economists’ epistemic culture and the Social Democratic Party’s established practices of using tax-based policy instruments in their state-making efforts. In conclusion, the analysis connects to ongoing discussions about climate justice and the significance of governments—rather than markets—in pricing carbon.