Sweden’s pulp, paper, and sawmill industries are bracing for at least a 2 billion kronor (or €270 million) rise in costs for 2026, as a wave of political and regulatory uncertainty in energy, climate, and transport crunches one of the world’s largest producers of pulp, paper, and sawn timber. That is according to a new 19-page report published by Swedish Forest Industries Federation, At What Cost? When Short-Term Politics Threaten Competitiveness and Growth, warning that current policies risk the future of one of Sweden’s largest export industries.
According to the report, the single largest cost increase stems from reforms to the EU Emissions Trading System (EU ETS). Beginning this year, mills with less than 5% fossil emissions are no longer eligible for free emission allowances. Because Swedish pulp and paper mills are 96% fossil‑free, the sector now faces 1.85 billion kronor per year in new carbon‑related costs, despite forestry being among Europe’s cleanest industrial producers.
And Transport costs are rising just as sharply, too, with charges for heavy rail freight having increased more than 600% since 201 adding 100 million kronor to expenses. The 2026 state budget introduces a further 15% increase, a move the federation says risks making rail transport, a cornerstone of Sweden’s low‑carbon logistics, economically unviable for forest companies.
Maritime transport is also under pressure. New EU climate measures, including the extension of the EU ETS to shipping and the introduction of FuelEU Maritime, are expected to raise sea‑freight costs by roughly 400 million kronor between 2024 and 2026. With more than 80% of Sweden’s forest products exported by sea, the industry has few alternatives.
Beyond rising operating costs, the new report warns of deeper structural risks linked to the EU Nature Restoration Regulation. If productive forest land is withdrawn from use to meet restoration targets, the federation estimates Sweden could lose 1.6 million hectares of harvestable forest. In effect, this would reduce raw material supply by about 8 million cubic metres every year, cutting more than 11,000 jobs and shrinking industrial value‑added by 13 billion kronor.
The Swedish Forest Industries Federation argues that the combined effect of these measures threatens Sweden’s position in global markets, particularly as competing regions face lower regulatory burdens and more predictable policy environments. Instead, it is calling on the government to coordinate taxes, fees, and climate measures to ensure that Sweden’s forest sector, a major export engine and a pillar of the green transition, remains internationally competitive.
